Lawyers representing DaVita in a whistleblower case accusing the provider of overcharging Medicare for dialysis drugs are awaiting a federal judge’s ruling on the impact of falsified testimony provided by DaVita employees on the role of the company’s internal software system’s in suggesting a prescribed amount for the drugs.

U.S. District Senior Judge Charles Pannell Jr. has sanctioned DaVita for "unacceptable" conduct that he said spoiled its required disclosure of information with false testimony—a decision that could force the company to reimburse whistleblower attorneys as much as $2 million and warrant reopening discovery in the seven-year-old case.

The judge is irate over the testimony of Richard Tetley, whom DaVita had identified as the corporate representative with the most knowledge of how its internal clinical software, called Snappy, worked in defining prescribed doses of drugs. Pannell said that Tetley first gave "unequivocal testimony" that Snappy did not recommend doses for one of three drugs at issue in the case. But a year later, the judge wrote, Tetley "admitted that his deposition testimony was false." Pannell observed that during the year of discovery when Tetley's original testimony remained uncorrected, witnesses who were deposed by the whistleblowers' lawyers, and whose testimony contradicted Tetley's, "would change their testimony to hew to Tetley's false testimony" after a break in the deposition or in an errata sheet submitted later.

"At worst, the defendants purposely manipulated the evidence and witnesses to hide the truth from the [whistleblowers] and the court," Pannell said. Attorney for the whistleblowers jumped on the ruling, saying that the dose was “hard wired” into the Snappy system to maximize the likelihood that nephrologists would prescribe the higher doses.

Defrauding Medicare, others

The case against DaVita was filed in 2007 by Dr. Alon J. Vainer, a board-certified nephrologist who was the medical director for several of DaVita's Georgia clinics, and Daniel Barbir, a registered nurse, who worked as a clinic director in Cumming, Ga. The two former DaVita employees claimed in their suit that, for years, DaVita systematically defrauded Medicare, Medicaid and civilian medical programs for the U.S. Department of Veterans Affairs and Defense Department. They claim the company boosted profits by using vials of drugs that were larger than the smaller doses actually administered to patients, thereby artificially increasing the cost of the care.

The whistleblowers' lawyer, L. Lin Wood, who had requested a review of how Snappy impacted physician behavior in determining dosing, said that if the suit is successful, DaVita could be potentially liable for more than $2 billion, giving the provider a reason to encourage the IT employees to lie in court and deny that Snappy had no influence on prescribing patterns.

DaVita lawyers said the testimony has limited value because the software was outdated and the employees were trying to recall in their testimony how it functioned. “According to [the whistleblowers], DaVita engaged in a massive, intentional scheme to lie about a single technical and peripheral issue of fact about a version of software no longer in use: whether, if a physician ordered for his or her patient the DaVita iron protocol from 2004-2010, the “Snappy” computer system module used by nurses in outpatient dialysis clinics to enter medication orders displayed a “suggested” maintenance dose of Venofer (e.g., 25, 50, 75, or 100 mg), which easily could be changed by the Snappy user, in addition to a range of doses (25-100 mg), or displayed only the range,” DaVita lawyers wrote. “The factual issue itself is a complete red herring because, regardless of whether or how Snappy suggested a dose, the suggested doses all fell within the dosing range ordered by the treating physician and recognized as appropriate by the medical profession and the supposed victim federal agency, the Centers for Medicare and Medicaid Services (CMS)," defense attorneys said. They acknowledge that one of DaVita's witnesses "testified inaccurately” and “that error was replicated in other witnesses' testimony … before DaVita discovered and corrected this from the witness and inaccuracy."

DaVita added, “We respect the court’s decision and the process.  We are disappointed in our inability to clarify for the court the circumstances around the mistaken testimony regarding an obsolete version of computer code and the impact this mistake has had on the discovery in this case. “We are confident that any additional discovery will not support plaintiffs' allegations, and we are confident defending this case on the merits.”

To read DaVita’s response to the whistleblower’s motion for sanctions, click here.

To read Richard Tetley’s declaration, click here.