The Department of Justice and dialysis provider DaVita Healthcare Partners recently finalized a $450 million agreement settling claims that the company intentionally inflated Medicare billings.  The parties had filed a joint motion to stay the case, United States ex rel. et al. v. DaVita Inc., No. 07-02509 (N.D. Ga. Apr. 16, 2015), in April in order to focus on reaching a settlement.

Relators Alon Vainer and Daniel Barbir filed a qui tam action in the United States District Court for the Northern District of Georgia on October 11, 2007, alleging that DaVita violated the False Claims Act by submitting claims to Medicare for reimbursement for unnecessarily wasted drugs.  Vanier, a doctor, and Barbir, a nurse, previously worked for DaVita.  The company is the largest provider of dialysis services in the United States, serving approximately 125,000 patients across 42 states.  According to Relators, DaVita’s companywide dose management system, Snappy, was programmed to intentionally maximize billings for Zemplar and Venofer, two drugs commonly administered to dialysis patients.

Discovery was reopened in the case following the court’s August 12, 2014 order granting sanctions.  Relators alleged the defendants manipulated evidence and tampered with witness testimony to conceal the truth about Snappy’s operations.  Although defendants argued that the inaccurate testimony was the result of a bad memory, the court was not persuaded, finding the “‘forgetfulness’ and changed testimony from so many witnesses [was] highly suspect.”  After discovery was reopened, Relators asked for additional sanctions, arguing counsel for DaVita had also engaged in discovery abuses.  The court had conducted an in camera review of communications between DaVita’s attorneys and witnesses but had not issued a ruling prior to the motion to stay the case.

Under the terms of the settlement agreement, DaVita expressly denied the allegations made by the Relators and the United States.  The Relators’ share of the settlement has not been determined.