American Renal Associates Holdings Inc. announced Feb. 1 that it had agreed to pay $4 million to settle a class action lawsuit filed 2 years ago by shareholders about what they labelled “false and/or misleading statements” released by ARA about the provider’s financial health, as well as failing to disclose facts about company business practices.

“ARA is pleased to have reached an agreement in principle with the plaintiffs, and the company believes the settlement is in the best interests of our shareholders,” according to an ARA prepared statement. “The company looks forward to bringing this matter to a close so that we can continue to focus on delivering high-quality dialysis services and building further on the success of our differentiated physician-driven partnership model.”

The proposed settlement releases all claims against the company and the other named defendants without any liability or wrongdoing attributed to them, the company noted.

The complaint centered around ARA’s participation in the American Kidney Fund’s Health Insurance Premium Program (HIPP), which collected funds from dialysis providers to help patients pay health insurance premiums. While HIPP had been in operation for more than 10 years and had government approval, insurance companies began complaining that health care providers, including dialysis companies, were pushing patients into more lucrative Affordable Care Act exchange plans and bypassing Medicare and Medicaid plans.

“… [unbeknownst] to investors, ARA was actively steering vulnerable patients from Medicare and Medicaid into the private market by use of a self-funded charity, for the sole purpose of collecting larger reimbursements,” according to the shareholder’s complaint. “Far from being a faint possibility, ARA’s business and billing practices created a material risk that ARA would be found to have violated anti-kickback laws.”

ARA said it expects that substantially all of the settlement will be funded by insurance proceeds. –by Mark E. Neumann

United States District Court for the District of Massachusetts, Esposito, et al. v. American Renal Associates Holdings Inc., et al., No. 16-cv-11797 (the “Esposito Action”).