DaVita Inc. Agrees to Pay $55 Million to Settle False Claims Act Allegations

Last week, DaVita Inc., the largest operator of dialysis clinics in the United States, agreed to pay $55 million to settle False Claims Act allegations brought against the company.  The allegations surrounded DaVita’s anemia drug, Epogen.

Kidney dialysis patients are usually anemic.  DaVita uses Epogen to boost its dialysis patients’ red blood cell counts.  The lawsuit, filed in Texas in 2002, accused DaVita of double-billing Medicare for Epogen left over in vials and reused.  The lawsuit also alleged that DaVita used more Epogen on its patients than was medically necessary.

Epogen’s high cost and dangers have strongly influenced the change in government payment for kidney care.  Up until the changes were implemented, the government payment system rewarded dialysis companies like DaVita by reimbursing them for the amounts of drugs they used.  This type of system, which was in place for the time period covered by the lawsuit, encouraged companies to simply use more drugs rather than taking into account the medical necessity of using—or not using—them.  DaVita’s alleged misconduct appears to stem directly from this payment system.

The whistleblower in this case, Ivey Woodard, is a former employee of Amgen: the maker of Epogen.  Ms. Woodard may be receiving 30% of the settlement recoveries as her share of the settlement.  In qui-tam cases like Ms. Woodard’s, the government can elect whether or not to join in the case.  Unlike many qui-tam cases that reach such successful settlements though, the government did not choose to intervene in this case and help litigate it.  As a result the process was likely much more involved for Ms. Woodard and her attorneys.  Tycko & Zavareei applauds Ms. Woodard and her attorneys for staying strong despite all obstacles and seeing her case through to the end.  As a result of her actions, the government will be recovering nearly $40 million from DaVita.

For more information on this case or other qui-tam lawsuits, contact Tycko & Zavareei, LLP today.

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