DaVita HealthCare Partners, based in Denver, Colorado, has announced that it will pay $495 million to settle a whistleblower lawsuit. The company is accused of defrauding the federal Medicare and Medicaid programs of millions of dollars.
The Denver Post reports that this is DaVita’s third whistleblower lawsuit since 2012, and the company’s payments now approach $1 billion.
The lawsuit was filed in Atlanta in 2011. Two DaVita employees, a doctor and a nurse, claim that DaVita employees were throwing out useable medicines but DaVita was billing Medicare and Medicaid for the discarded drugs. In court filings, the whistleblowers say they questioned DaVita about the waste. Their filings indicate DaVita submitted fraudulent claims between 2003 and 2010. Javier Rodriguez, CEO of DaVita Kidney Care, said DaVita’s 67,000 employees “look forward to putting this behind us. We can now renew our focus on collaborating with regulators to avoid situations like this going forward.” The settlement was announced in an April 15 Securities and Exchange Commission filing, the Post reports.
A lawsuit was first filed in 2007 but the federal government, after a two-year investigation, decided not to join the lawsuit, the New York Times reported. The two employees filed the case again in 2011, under provisions of the federal False Claims Act. This law dates back to the Civil War and permits private parties to sue on behalf of the government when false claims have been submitted for government funds. In a successful case, the whistleblower receives a share of recovered funds.
The former DaVita employees gave examples of waste and inefficiency in the use of the Zemplar, vitamin D, and Venofer, an iron supplement. If, for instance, a patient was to receive 25 milligrams of Venofer, the physician would draw 25 mg. from a 100-mg. vial, discard the rest, but Medicare would be billed for the full 100-mg.vial. To give an 8-mg. dose, a doctor might take the 8 mg. from a 10-mg. vial instead of using four 2-mg. vials.
At one time, the Centers for Disease Control and Prevention (CDC) recommended against taking multiple doses from the same vial because of infection outbreaks caused by such use of the drug Epogen. The CDC eventually changed the policy, permitting re-entry into vials of Epogen, Zemplar and Venofer if proper procedures were followed, the Post reports. The whistleblowers claim DaVita did not follow the changed policy and acted instead to maximize waste and “receive significantly higher reimbursements and revenue for Venofer and Zemplar usage.”
The False Claims Act can impose penalties as high as $5,000 to $10,000 for each violation. Every patient dose of one of the drugs would constitute a violation. If DaVita had lost at trial, the company would have to pay thousands of dollars per claim. Under the settlement, DaVita will pay the government $450 million and will reserve an additional $45 million to cover fees. The payment to the two whistleblowers could amount to about $135 million, according to the Post.