DaVita discloses new False Claims Act inquiry

DaVita Healthcare Partners' core business of delivering kidney care once again carried the company's earnings, while its newer medical group division continued to struggle. And more legal trouble could be on the horizon for the Denver-based company.

DaVita disclosed that its pharmacy services provider, DaVita Rx, received a civil investigative demand from the U.S. Attorney's Office for the Northern District of Texas. According to the document, the investigation will look into allegations that DaVita Rx has presented false payment claims to the government for prescription medications since January of 2006.

DaVita CEO Kent Thiry said on an investor call that some of the issues raised in the inquiry overlap with issues that the company has identified on its own, and recently disclosed to HHS' Office of Inspector General.

DaVita's multispecialty medical group segment continued to see a downward financial trend. The company reported a 3.5% decrease in its capitated membership over the prior year's fourth quarter. The medical group division suffered a loss of $181 million in income on $942 million in revenue in this year's fourth quarter, compared with the comparable 2014 period's $33 million in income on $882 million in revenue. For fiscal year 2015, the multispecialty medical group saw $34 million in income on $3.8 billion in revenue.

However, the company reported fourth-quarter net income of $214 million on $3.5 billion in revenue, compared with net income of $208 million on $3.3 billion in revenue during the prior-year period.

For its 2015 fiscal year, DaVita reported $828 million in net income on $13.8 billion in net revenue.

The number of DaVita's daily dialysis treatments increased 3.2% year over year during the fourth quarter. The kidney-care division posted $464 million in income on $2.6 billion in revenue, compared with the year-ago period's $443 million in income on $2.4 billion in revenue.

The company forecasts its 2016 operating income to be in the range of $1.80 billion to $1.95 billion. Additionally, it expects its operating income for the kidney-care division to be in the range of $1.63 billion to $1.73 billion, and operating income for its multispecialty medical group segment to come in between $175 million and $225 million.

The pharmacy services inquiry is the latest in a series of DaVita's legal quagmires. Last year, DaVita paid a $450 million settlement from a whistle-blower lawsuit. Dr. Alon Vainer, the whistle-blower, alleged that DaVita overbilled Medicare and Medicaid by charging the full amount for drugs that were only partly used.

In October 2014, the company paid $389 million to settle a whistle-blower's allegationsthat DaVita bribed physicians to steer patients to its dialysis centers with opportunities to profit by buying and selling stakes in clinics.

Michael Sandler

Michael Sandler does general assignment reporting as well as reporting on hospital system finances. He earned a master's degree in journalism from Columbia College in Chicago in 2012 after earning a bachelor’s degree from Cardinal Stritch University in Milwaukee. Joined Modern Healthcare in 2013.

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