Eric Havian, the lawyer with the whistle-blower firm Phillips & Cohen who represented Barbetta, attributes the rise in kickback-based lawsuits to a 2010 clarification by Congress that anti-kickback violations are violations of the False Claims Act. He also pegged the increase to more awareness on the part of whistle-blowers.
Barbetta and the Justice Department specifically alleged that DaVita identified physicians and practices that served large populations of patients with kidney disease in a specific geographic area, targeting doctors who were “young and in debt.” It then allegedly offered the doctors illegally favorable joint-ventures involving the clinics where they referred patients. The doctors also allegedly agreed not to compete with DaVita or send patients to DaVita's competitors.
“We have worked incredibly hard to get things right and it is our belief there was no intentional wrongdoing,” the company said in a statement regarding the case. “Patient care was never at issue, nor were billing or payment practices.” Attempts to get further comment from a DaVita spokesman on Thursday were unsuccessful.
According to the complaint, DaVita knowingly broke the law.
Gordon Schnell, a lawyer with the firm Constantine Cannon in New York who represents whistle-blowers, said the DaVita case is one of the largest kickback settlements he's seen. The anti-kickback rules, he said, are fairly black and white. “You don't want healthcare providers to be influenced by money. You want them to send their patients to the places they feel they'll get the best treatment,” he said. “I think in this day and age, with the spotlight that's been placed on kickbacks, that it's not an area where healthcare providers should be all that confused.”
Patrick Burns, co-executive director of Taxpayers Against Fraud Education Fund, a Washington-based not-for-profit organization that promotes the use of the False Claims Act to fight fraud, put it more strongly. “These were massive kickbacks, and these kickbacks are a core part of the DaVita business model,” Burns said. “These were very sophisticated people putting together million dollar kickback schemes that were openly in violation of federal and state law.”
Whistle-blowers get 15% to 25% of the amount they recover for the government, though Barbetta's share has not yet been determined. As a result, a big settlement like DaVita's “focuses people” who have access to information that could form the basis a False Claims Act suit, said Havian, Barbetta's lawyer.
That means healthcare companies will have to continue to “self-evaluate these types of structures and businesses and make sure they comply with the rules,” said Andrew Wachler, a lawyer with Wachler & Associates, a Royal Oak, Mich.-based firm that defends healthcare organizations in fraud cases. “I do think companies have to continue to be cautious,” Wachler said, “Folks are incentivized to try to frame this in a manner that creates exposure for the company because they do get a financial benefit for it.”
Follow Lisa Schencker on Twitter: @lschencker
