A whistleblower lawsuit filed against kidney dialysis company DaVita Healthcare Partners recently settled for $389 million. DaVita agreed to settle investigations into transactions it made with doctors over the last ten years.
Former DaVita employee, David Barbetta, who was a senior financial analyst in the company’s mergers and acquisitions department, filed the suit. Barbetta filed the whistleblower lawsuit on behalf of the federal government in 2009, in return for a substantial percentage of the settlement.
DaVita treats over 170,000 Americans at its thousands of outpatient dialysis clinics throughout the U.S. DaVita is being accused of paying doctors in exchange for referring patients to its clinics, a practice known as “kickbacks,” which is illegal. The Federal government created anti-kickback laws to ensure that patients were given the best possible care from their healthcare providers, who make their referral decisions based on the best interest of the patient and not based off of financial motives.
According to investigators, DaVita has been paying doctors for referrals since 2005. The company’s kickback scheme involved physicians who treated many dialysis patients, and determining whether those physicians could be incentivized. For example, DaVita targeted one physicians group to receive kickbacks because the doctors were “young and in debt.”
After identifying target physicians, DaVita would offer lucrative referral deals in exchange for sending their patients to DaVita’s clinics. The company would pay doctors to perform various tasks and had them sign non-compete agreements, which prohibited the physicians from sending their patients to any of DaVita’s competitors. These schemes took place throughout the country.
DaVita Ignored Ethics Complaints
Barbetta, the whistleblower, was a key witness in the governmental investigations. The ex-DaVita employee gave prosecutors e-mails, sales spreadsheets, and insider knowledge of DaVita’s illegal schemes. While Barbetta was an employee at DaVita, he worked as a senior financial analyst from 2007-2009. During that time, he complained on numerous occasions to upper management about the kickbacks, and warned about the ethics of the schemes. His complaints were ignored or received with scorn from his superiors.
In an internal e-mail, executives explained how the “deals” with physicians were orchestrated to funnel cash in exchange for referrals. In 2009, Barbetta found another job and quit DaVita, sick of the company’s unethical practices.
DaVita’s marketing and sales tactics tout the company as a high-quality, fair, and compassionate resource for dialysis patients. Barbetta was unhappy with having to constantly see these messages, not to mention having to work at a deceitful company every day, experiencing the shady business practices behind the public’s view. He decided to file a whistleblower lawsuit because, although everyone knew what was going on, no one else was willing to do anything about it.
As part of the settlement, DaVita is required to have an independent monitor review its practices and report to the government. This is actually extremely unusual, and is one of the first times such a corporate integrity agreement has required an independent monitor.
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