DaVita Agrees to Settle Anti-Kickback Statute Allegations for $350 Million

On Wednesday, October 22, 2014, the Department of Justice issued a news release stating that Davita Healthcare Partners, Inc. (“Davita”) had agreed to pay $350 million to resolve allegations that it violated the False Claims Act by submitting claims in violation of the Federal Anti-Kickback Statute.

The Federal Anti-Kickback statute prohibits the knowing and willful solicitation, payment or receipt of any remuneration in return for a patient referral or for purchasing or otherwise arranging for an item or service, for which payment may be made under Medicare, other federal health plans, or Medicaid.

A violation of the Anti-Kickback statute is a per se violation of the False Claims Act.

The allegations, which were brought forward by a whistleblower, involved opportunities offered to physician groups with significant renal disease patient populations to partner with or obtain an interest in dialysis clinics to which the physicians would then refer patients.

Davita allegedly offered investment opportunities to physicians only when they had a significant patient population suffering from renal disease and would be expected to refer the majority of their patients to the joint venture dialysis clinic.

Davita is also accused of manipulating financial models use to value the transaction in order to allow physicians to purchase their investment interests at low cost, thus allowing extremely high returns on investment.

Davita is further accused of securing patient referrals from the physician investors through the use of medical director agreements which included noncompete clauses binding the physicians’ entire practice groups.

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