DaVita Settles Federal Claim

DaVita recently settled a whistle-blower lawsuit from 2002 regarding its anemia management practices with a $55 million payment but no admission of wrongdoing by the company.

According to Zacks Financials, an online investment news website, Denver-based DaVita has adequate funds for the settlement, with cash and cash equivalents totaling $449 million as of March 31, 2012. The stock remained unaffected after the announcement, Zacks reported. However, the financial website did note that in October 2011 two law firms had begun investigating DaVita because of alleged over-billing of Medicare by the company, and if such charges were found to be valid they could weigh on the company’s financials.

In DaVita’s announcement of the settlement the company stated that “DaVita and its affiliated physicians did nothing wrong and stand by their anemia management practices, which were always consistent with their mission of providing the best possible care for each individual patient. As a result, the agreement contains no finding of wrongdoing or admission of liability by DaVita or its affiliated physicians.”

To explain why the company decided to settle with the individual who sued, DaVita said that “agreements such as this one are sometimes in the best interest of shareholders.”

The government investigated allegations raised by a sole individual in Texas regarding the company’s Epogen practices over a 10-year period. During that time, DaVita stated “the government never intervened or filed any claims against DaVita. However, the individual was able to pursue the claims on his own.”

In the fall of 2011 Amgen said it had set aside $780 million for potential settlements in whistle-blower lawsuits and investigations of its marketing practices for Epogen and its other anemia medications, according to October 2011 coverage in the Denver Post, which follows DaVita news in depth.

The Medicare ESRD prospective payment system—which pays a bundled sum for all services given to a patient rather than reimbursement for individual drug doses, for example—began January 1, 2011. This new system has reduced profits attached to individual orders of Epogen and other drugs.

“Critics of the Medicare payment system argued for years that paying dialysis providers for every unit of Epogen used encouraged overuse of the drug,” the Denver Post reported.

August 2012 (Vol. 4, Number 8)