DaVita Will Pay $389 Million to Settle Kickback Charges

DaVita HealthCare Partners will pay $389 million in a settlement of federal investigations into the dialysis company’s relationships with physicians. The Denver-based company has agreed to a “framework for a global resolution” of 2010 and 2011 investigations by the U.S. attorney for the District of Colorado, it said in a Form 8-K filed with the Securities and Exchange Commission Feb. 11. A federal grand jury investigation is probing allegations DaVita paid kickbacks to doctors to guarantee an ongoing stream of dialysis patients. The settlement remains subject to negotiation of specific terms, which the company believes will be finalized in the coming months, it said. In addition to a payment of about $389 million, the settlement will require the company to enter into a corporate integrity agreement, appoint an independent compliance monitor, and impose certain other business restrictions related to a subset of the company’s joint venture agreements. “We have agreed to unwind a limited subset of joint ventures that were created through partial divestiture to nephrologists, and agreed not to enter into this type of partial divestiture joint venture with nephrologists in the future,” the company said in the Form 8-K. In August 2011, DaVita learned from the U.S. attorney it was the focus of an investigation concerning its physician relationships, the company said. According to the Denver Post, DaVita CEO Kent Thiry said that federal attorneys had “taken the position that some or all of our joint ventures do not comply with the anti-kickback statute.” As of Dec. 31, DaVita provided dialysis services to about 168,000 patients at 2,147 outpatient dialysis centers throughout the world. Despite the $389 million settlement, DaVita still projects it will make robust profits. The company expects to generate $1.73 billion to $1.86 billion in operating cash this year. DaVita reported $212 million in net income for the fourth quarter of 2013 and $633 million for the year, both up over 2012. Takeaway: DaVita will pay $389 million and unwind joint ventures to settle charges the agreements violate the anti-kickback law.