DaVita HealthCare Partners has announced that it will pay up to $495 million to settle a whistleblower lawsuit. The Denver company is accused of defrauding the federal Medicare program of millions of dollars.
The company, which is not admitting any wrongdoing, has now settled its third whistleblower lawsuit since 2012. DaVita‚Äôs payouts total nearly $1 billion, the Denver Post reports.
The civil suit was filed in Atlanta in 2011 and involves a claim by DaVita employees Dr. Alon J. Vainer and nurse Daniel D. Barbir that DaVita was throwing out medicine and but billing Medicare and Medicaid for it according to legal documents. Vainer and Barbir said in court filings that they questioned DaVita about the waste and claimed the company submitted fraudulent claims for reimbursement between 2003 and 2010, according to the Post. In a statement, DaVita Kidney Care CEO Javier Rodriguez said, “Our 67,000 teammates across 11 countries look forward to putting this behind us. We can now renew our focus on collaborating with regulators to avoid situations like this going forward.” DaVita announced the settlement in an April 15 Securities and Exchange Commission filing.
The case began with a lawsuit filed with the federal government in 2007. After a two-year investigation, the government decided not to join the lawsuit, the New York Times reported. The two employees filed their case again in 2011, under the federal False Claims Act, a law dating back to the Civil War, which permits private parties to sue on behalf of the government for the submission of false claims for government funds. If the case is successful, the whistleblower receives a share of the funds recovered.
The lawsuit cited inefficient use and waste of the drugs Zemplar, vitamin D, and Venofer, an iron supplement. If, for example, a patient needed 25 milligrams of Venofer, the physician would use 25 mg. from a 100-mg. vial, discard the rest, but bill Medicare for the full 100 mg. Or a doctor might use a 10-mg. vial to give an 8-mg. dose instead of four 2-mg. vials.
According to the lawsuit, the Centers for Disease Control and Prevention (CDC) recommended against allowing multiple uses of the same vial in 2001, based on infection outbreaks caused by such use of the drug Epogen. But the CDC later changed the policy and allowed re-entry of single-use vials Epogen, Zemplar and Venofer if proper procedures were followed, the Post reports. According to the lawsuit, DaVita did not follow the revised policy and acted to ‚Äúpurposefully create and maximize their waste and receive significantly higher reimbursements and revenue for Venofer and Zemplar usage.”
Under the False Claims Act, violators face penalties of $5,000 to $10,000 for each false claim and every instance where a patient was given one of the drugs counts as a claim. If DaVita lost during a jury 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 government will handle the compensation to the two former DaVita employees, which could amount to $135 million.