Whistleblower gets $6M of $34M federal kickback settlement with Denver-based DaVita

(The Center Square) – A whistleblower will get approximately 18% of a $34 million settlement with a Denver-based company to resolve allegations it violated federal law by paying kickbacks to medical providers.

DaVita Inc., agreed to pay $34,487,390 to resolve allegations that it violated the federal False Claims Act by paying kickbacks to get referrals to DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients. The Department of Justice also provided information on the company paying kickbacks to doctors specializing in kidney and vascular medicine to get them to refer patients to DaVita’s dialysis centers.

The federal anti-kickback statute prohibits any money or thing of value to induce referrals of patients or items or services covered by Medicare, Medicaid or other federally funded programs. The offer of remuneration or payment covered by the statute can be direct or indirect.

“Improper financial arrangements between Medicare providers can distort the healthcare marketplace,” Brian M. Boynton, principal deputy assistant attorney general and head of the Justice Department’s Civil Division, said in a statement. “We will hold accountable healthcare providers that seek to generate business by paying unlawful remuneration.”

The settlement includes a $6.3 million financial payment for Dennis Kogod, a former chief operating officer of DaVita Kidney Care. The False Claims Act provides whistleblowers or private parties to receive a portion of any recovered money.

The Department of Justice alleges DaVita paid a competitor to induce referrals to DaVita Rx to be a prescription fulfillment provider for the competitor’s Medicare patient’s prescriptions. DaVita paid to acquire some European dialysis clinics and agreed to extend a prior agreement to buy dialysis products from the competitor, according to information from the Department of Justice. The department claims DaVita wouldn’t have paid the amount it did in the transactions without the competitor’s agreement to, in return, refer its Medicare patient’s prescriptions to DaVita Rx.

The federal government also alleges DaVita improperly paid a large nephrology practice to get referrals to its dialysis clinics. In 2006 and 2012, an agreement between the medical practice and DaVita also paid the practice $50,000 “for any newly established dialysis clinics within a specified radius in which it did not contract with the practice to serve as its medical director,” according to court documents.

“Illegal kickback payments corrupt the market for health care services and cause harm and financial loss to Medicare and other federally funded health care programs,” Linda Hanley, special agent with the Department of Health and Human Services Office of Inspector General, said in a statement. “Our ongoing enforcement efforts aim to safeguard the integrity of taxpayer-funded health care programs, like Medicare and Medicaid, while curbing schemes that unduly influence patients' and doctors' health care options.”