DaVita’s pharmacy benefit business has agreed to pay $63.7 million in a settlement with the federal Department of Justice, the Office of Inspector General of HHS and the U.S. Attorney General of Texas over allegations that it billed federal health care programs for kidney drugs that were never used and for offering financial inducements to patients to accept manufacturer’s copay cards and claim they were unable to help pay for the drugs themselves.
The settlement, which included paying former DaVita Rx LLC employees-turned-whistleblowers Patsy Gallian and Monique Jones approximately $2.1 million, resolves allegations that DaVita Rx billed Medicare, Medicaid and the Department of Defense’s Tricare program for prescription medications that were never shipped; that were shipped but subsequently returned; and that did not show proof of delivery, refill requests or patient consent, according to the DOJ. In addition, “DaVita Rx allegedly accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries, routinely wrote off unpaid beneficiary debt and extended discounts to beneficiaries who paid for their medications by credit card,” the DOJ said in a prepared summary of the suit.
In the settlement, the DOJ acknowledged that DaVita Rx initially found a disparity in its own Medicare receipts for drugs prescribed but not delivered to patients and later voluntarily refunded $22.2 million to the health care programs. However, the two DaVita Rx employees later filed suit in the U.S. District Court for the Northern District of Texas. The DOJ, the federal Office of Inspector General, and the Attorney General for Texas later joined the suit.
In a prepared statement, DaVita said, “We take full ownership and continue to embrace transparency and rigorous compliance. DaVita is proud that its team discovered and self-disclosed these issues to the federal government in 2015 and 2016 and cooperated with the government in resolving them.”
Gallian and Jones filed the lawsuit under the qui tam, or whistleblower, provisions of the False Claims Act, which permits private parties to sue on behalf of the government when they discover evidence that defendants have submitted false claims for government funds and can receive a share of any settlement.
“Providers should not make patient care decisions based upon improper financial incentives or encourage their patients to do the same,” U.S. Attorney Erin Nealy Cox for the Northern District of Texas, said in response to the settlement. “The U.S. Attorney’s Office has and will continue to work cooperatively with providers that bring such issues to light to redress the losses the federal health care system has incurred.”