DaVita HealthCare Partners is settling a whistleblower suit filed in Atlanta, ending a legal battle between DaVita’s Kidney Care division and two former employees that began in 2007.

“We can confirm that we have reached an agreement in principle regarding the Vainer litigation in Atlanta, the specific terms of which are still being finalized,” a DaVita spokesperson told NN&I.

The case was filed under the federal False Claims Act in 2007 on behalf of Dr. Alon J. Vainer, a board-certified nephrologist who was medical director for several of DaVita’s dialysis clinics, and Daniel Barbir, a registered nurse who worked as a Cumming clinic director. The suit was amended in 2011.

The two former employees claimed that, for years, DaVita intentionally created waste when administering Zemplar and Venofer, and submitted claims for such waste for reimbursement, in violation of the False Claims Act.

Allegations of perjury
DaVita was 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. had 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 said he was 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.

“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,” DaVita had said in response to the sanctions. “We are confident that any additional discovery will not support plaintiffs’ allegations, and we are confident defending this case on the merits.”

The recent settlement was revealed in a motion asking U.S. District Senior Judge Charles Pannell to stay the litigation, including pending rulings on whether to sanction DaVita and strip the company of its attorney-client privileges, according to the Daily Report.  On April 16, whistleblower lawyers Lin Wood and Marlan Wilbanks withdrew the motions to sanction the dialysis provider.

Wood told the Daily Report that he credited federal prosecutors, including the acting U.S. attorney in Atlanta, as instrumental in DaVita’s decision to resolve the case. The U.S. Justice Department and The Centers for Medicare & Medicaid Services investigated the plaintiffs’ claims, and publicly announced that they declined to pursue the claims earlier this year. But in 2012, the DOJ filed court papers that expressed interest in the case and reserved its right to intervene.