Dive Brief:
- The US Justice Department announced on Wednesday that DaVita Healthcare Partners has agreed to a $389-million settlement payment to resolve a criminal and civil anti-kickback investigation covering the last decade. Physicians at DaVita were accused of a "a sophisticated scheme to compensate doctors illegally for referring patients to DaVita's dialysis centers," according to US Attorney for Colorado John Walsh.
- The allegations covered a period from March 2005 to February 2014. As a result of the settlement, DaVita has agreed to independent monitoring of its physician agreements. The company said it plans to end joint ventures with physicians at 26 dialysis clinics, operated through 11 joint ventures DaVita had reached with the physicians.
- DaVita operates about 2,100 dialysis clinics and has about 300 arrangements with physicians. The company treats around 170,000 patients at its outpatient dialysis centers nationally.
Dive Insight:
According to the government case, DaVita's strategy to ensure patient referrals was a multi-step process that relied on joint business models. First, DaVita would identify what it called "winning" practices, or practices or physicians that both had a lot of patients and were in some way vulnerable. In one case, DaVita identified a practice as "winning" because it was "young and in debt." Then, according to the prosecutors, DaVita offered joint ventures that had been valued in such a way to make them look extremely attractive to the partner physicians. The company ensured patient referrals by hiring the physicians as medical directors of the joint venture and asking them to sign non-competes. Other physicians in the practice group would also be held to the standard of the non-compete agreements.
The original lawsuit was filed in 2009 by David Barbetta, a whistleblower who had been employed as DaVita's senior financial analyst in its mergers and acquisitions department. Barbetta's cut of the settlement is yet to be announced.
"Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals," said deputy assistant attorney general for the Justice Department's civil division Jonathan Olin.