Whistle-blowers are less likely to win paydays in False Claims Act cases when the federal government declines to join, but the $450 million DaVita Kidney Care settlement this week reflects growing success among plaintiffs who choose to carry on alone.
Under the False Claims Act, whistle-blowers can file complaints on behalf of the government, and it's up to the Justice Department to decide whether to intervene as a case progresses. The DaVita settlement appears to be the largest ever in a case in which the government said no.
In the past, it was usually assumed the case was doomed if the government chose not to get involved, said Marc Raspanti, a partner with Pietragallo Gordon Alfano Bosick & Raspanti in Philadelphia who represents whistle-blowers and is former government prosecutor.
That's no longer the case, Raspanti said. Whistle-blowers and their attorneys are increasingly willing to move forward with cases if they're good ones, he said, even after the government takes a pass.
“The trend has been steadily growing that these cases are moving forward without the government, and the recoveries are increasing,” Raspanti said. “I think there is no end in sight to that phenomenon.”
The whistle-blowers in the DaVita case, Dr. Alon Vainer and Daniel Barbir, first filed suit against DaVita in 2007. Vainer was a medical director at DaVita and Gambro dialysis clinics, and Barbir was a former clinic director for Gambro and DaVita. (DaVita acquired Gambro in 2004.)
Vainer and Barbir alleged that DaVita dialysis clinics routinely overbilled Medicare and Medicaid between 2003 and 2010. The company's clinicians, they said, would use partial vials of the drugs Zemplar, Venofer and Epogen and then dispose of the rest but bill the government programs for the full volume of the vials. The company changed its practice after the CMS revised its payment policy on so-called wastage, they alleged.
The government officially declined to get involved in the case in 2011, and Vainer and Barbir filed an amended complaint to continue pursuing the case on their own.
DaVita Kidney Care is the largest division of Denver-based DaVita HealthCare Partners. In a statement issued this week, DaVita Chief Legal Officer Kim Rivera said: "Although we believe strongly in the merits of our case, we decided it was in our stakeholders' best interests to resolve it. The potential mandatory penalties for being found in the wrong in even a small percentage of instances were simply too large."
Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit partly funded by whistle-blowers and the law firms representing them, said it's also becoming more common in False Claims Act cases for the government to intervene only toward the very end of a case.
That can be a double-edged sword for a whistle-blower. The government can help the parties work through some of the more difficult issues, Raspanti said. On the other hand, it can mean less financial reward for the whistle-blowers.
In cases where the government intervenes, whistle-blowers—referred to as relators—are entitled to 15% to 25% of whatever money the government is able to recover. In cases where the government doesn't intervene, whistle-blowers are entitled to 25% to 30%.
It's not yet clear exactly how much money the whistle-blowers in the DaVita case will get for their efforts. But Burns—whose organization closely tracks False Claims Act cases—said the DaVita settlement is the largest he's aware of generated by a case in which the government didn't intervene. He believes Vainer and Barbir will get the full 30%. “In this case, I think there's no question the whistle-blower and many attorneys deserve that 30%, top tier-number,” he said.
In addition to the $450 million, DaVita has also set aside $45 million in attorneys' fees and other costs.
