By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

In a significant legal development, DaVita Inc., a prominent healthcare company headquartered in Denver, Colorado, has agreed to pay $34.487 million to resolve allegations that it violated the False Claims Act by engaging in illegal kickback schemes. These schemes were designed to induce referrals to DaVita Rx, a former subsidiary providing pharmacy services for dialysis patients, and to DaVita’s dialysis centers.

Allegations and Violations
The settlement addresses multiple allegations of misconduct by DaVita:
1. Kickbacks to Competitors: DaVita allegedly paid kickbacks to a competitor to secure referrals to DaVita Rx. In return, DaVita acquired certain European dialysis clinics and committed to purchasing dialysis products from the competitor, deals which would not have been made without the referral agreements.
2. Improper Management Services: The company provided management services to vascular access centers owned by physicians who could refer patients to DaVita’s dialysis centers. These services were provided without collecting the appropriate management fees, effectively constituting kickbacks to induce referrals.
3. Payments to Nephrology Practices: DaVita allegedly paid a large nephrology practice for the right of refusal to staff medical director positions at new dialysis centers, even paying $50,000 when the practice decided not to staff these positions.

Legal Framework and Enforcement
The Anti-Kickback Statute prohibits offering or paying any remuneration to induce referrals of services covered by federally funded healthcare programs such as Medicare and Medicaid. Violations of this statute undermine the integrity of healthcare services by prioritizing financial incentives over patient care.

“Improper financial arrangements between Medicare providers can distort the healthcare marketplace,” said Principal Deputy Assistant Attorney General Brian M. Boynton. This sentiment was echoed by Acting U.S. Attorney Matthew Kirsch for the District of Colorado, who emphasized the importance of restoring integrity to the healthcare marketplace.

Whistleblower Involvement and Settlement
The case against DaVita was initiated under the qui tam provisions of the False Claims Act by Dennis Kogod, a former Chief Operating Officer of DaVita Kidney Care. Under these provisions, private individuals can file actions on behalf of the government and share in any recovery. Kogod will receive $6.37 million from the settlement proceeds.

Government and Agency Efforts
This settlement is the result of a coordinated effort involving the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Colorado, with substantial assistance from the Department of Health and Human Services Office of Inspector General (HHS-OIG).

For more information on health care legal developments and compliance, stay tuned to Parrella Health Law’s Pulse at www.parrellahealthlaw.com or email me directly at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)