DaVita Settles Whistleblower Case for $495 Million

May 11, 2015

After nearly four years of litigation, DaVita Healthcare Partners agreed Monday to pay up to $495 million to resolve a whistleblower lawsuit accusing the kidney dialysis provider of wasting drugs in exchange for sizable Medicare and Medicaid reimbursements.

The plaintiffs, former DaVita employees Alon Vainer and Daniel Barbir, alleged in a 2011 amended complaint that DaVita knowingly disposed of viable drugs because the federal government will pay for waste it considers “unavoidable.”

In particular, Vainer and Barbir cited DaVita’s inefficient use and waste of AbbVie’s Zemplar (paricalcitol) and Luitpold Pharmaceuticals’ Venofer (iron sucrose), saying the firm used larger-than-necessary vials to administer the medications or spread dosages across multiple treatments without justification.

The settlement marks the Denver-based company’s third qui tam False Claims Act suit since 2012.
DaVita will pay the U.S. government $450 million and reserve $45 million to cover other fees, according to terms of the settlement. The two whistleblowers stand to collect up to $135 million together as part of the deal.

DaVita initially announced plans to settle United States of America Ex Rel et al v. DaVita, Inc. et al during an April 16 filing with the U.S. district court in Atlanta.

L. Lin Wood, an attorney with Wood, Hernacki & Evans in Atlanta who represented the plaintiffs, said that the case is the largest FCA settlement ever in which the government didn’t intervene.

“Historically, as a rule of thumb, most FCA cases are not pursued by private litigants,” Wood explains. “So we are on the cutting edge of a new paradigm here.”

Now that the parties have reached a final settlement, it is expected that U.S. Senior Judge Charles Pannell Jr. will dismiss the case with prejudice during a final hearing, which has yet to be scheduled.

DaVita did not respond to a request for comment by press time. — Jessica Grinspan