DaVita Healthcare Partners, a dialysis services provider, agreed last month to pay $350 million to the Department of Justice to resolve claims that it violated the False Claims Act.

According to the allegations, from 2005 to 2014, DaVita paid kickbacks to physicians or physician groups to induce the referral of patients to its dialysis clinics. “This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers,” said U.S. Attorney John Walsh. 

DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers. 

The settlement resolves allegations brought in a lawsuit filed under the whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The suit was filed by David Barbetta, a former senior financial analyst in DaVita’s mergers and acquisitions department. Barbetta’s share of the recovery has yet to be determined.

As part of the settlement, DaVita has also agreed to a civil forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions.   Additionally, DaVita has entered into a corporate integrity agreement with the Department of Health and Human Services, which requires it to unwind some of its business arrangements and restructure others.

The agreement also includes the appointment of an independent compliance monitor to prospectively review DaVita’s arrangements with health care providers for compliance with the Anti-Kickback Statute.

In a prepared statement, Daniel Levinson, Inspector General for the U.S. Department of Health and Human Services, said the case is a warning to all that companies that seek to boost profits by paying physician kickbacks for patient referrals. “Expect significant settlements and our continued investigation of such wasteful business arrangements,” he said.    

Since January 2009, the Justice Department has recovered more than $22.4 billion through FCA cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.