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Nationwide Pharmacy DaVita Rx to Pay $63.7 Million to Settle Healthcare Fraud Allegations Relating to Improper Billing Practices of Federal Healthcare Programs

DaVita Rx LLC, a nationwide pharmacy specialized in serving patients with severe kidney disease has agreed to resolve allegations that the company defrauded the Government through improper overbilling of the Medicare and Medicaid healthcare programs for medications that were never shipped, billing for medications that did not comply with documentation requirements, and failing to reverse claims and reimburse Government for uncollected medications. Based in Coppell, Texas, DaVita Rx is a nationwide full-service provider of specialty pharmacy medications, including medications for dialysis centers, to over 2000 dialysis centers among 46 states.

DaVita Rx has agreed to pay $63.7 Million to settle the allegations arising out of its self-disclosures and the whistleblower or qui tam lawsuit filed by two former employees. Furthermore, the allegations resolved by the settlement also include that DaVita Rx paid financial inducements to Federal Healthcare Program beneficiaries in violation of the Anti-Kickback Statute, by writing off unpaid beneficiary debt and extending discount to beneficiaries who paid for their medications by credit card.

The alleged wrongdoing was brought to the Government’s attention by two former employees, Patsy Gallian and Monique Jones, who filed a qui tam lawsuit filed in 2016 under the provisions of the False Claims Act. In that case, the two whistleblowers alleged in their complaint that DaVita Rx defrauded the Medicare and Medicaid programs, and thus violated the False Claims Act. The alleged frauds include billing for drugs without having signed prescriptions, billing for medications that are never shipped, shipping and charging for medications that were never picked up by patients and never returning the charges to government, improperly billing for medications that were shipped to dialysis centers and permitting discrepancies to exist in the system that caused incorrect reimbursement amounts and duplicate claims. The former employees who brought the lawsuit claim that the company’s improper billing practices dated back to 2006.

Out of $63.7 million settlement payout, DaVita Rx repaid $ 22.2 million to federal healthcare programs and will pay an additional $38.3 million to United States. As part of the settlement agreement, $3.2 million will be allocated to cover Medicaid claims by states involved in the settlement. Pursuant to the whistleblower reward provisions of the federal False Claims Act, the two relators, who are the former employees of the company that blew the whistle on the fraud, will receive approximately $2.1 million from the federal recovery as their reward for their role in exposing the healthcare fraud scheme.

© 2020 by Tycko & Zavareei LLPNational Law Review, Volume VII, Number 354


About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...