Late last year we reported that DaVita Rx, a pharmacy unit of DaVita, Inc., (DaVita) one of the leading providers of dialysis services in the United States, agreed to pay a total of $63.7 million to resolve False Claims Act (FCA) allegations (“False Claims Settlement Costs DaVita Rx $63.7 Million”). Today, another one of its divisions, this time a medical care unit, has agreed to pay $270 million to resolve its False Claims Act liability for providing inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments.

HealthCare Partners Holdings (HealthCare Partners), acquired by DaVita in 2012, contracted with insurers to provide medical services to Medicare Advantage patients. Following its purchase of the company, DaVita voluntarily disclosed to the government various practices engaged in by HealthCare Partners that led to the submission of incorrect diagnosis codes to CMS which is turn led to the receipt of inflated payments to both DaVita and HealthCare Partners.  One example of such practices cited by the Department of Justice in a statement on the settlement noted, “HealthCare Partners disseminated improper medical coding guidance instructing its physicians to use an improper diagnosis code for a particular spinal condition that yielded increased reimbursement from CMS. “

The settlement also resolved allegations made by a whistleblower who alleged that HealthCare Partners poured through its patients’ medical records for diagnoses its providers may have failed to record and then submitting the “missed” diagnosis codes to Medicare for additional reimbursements. In addition, the whistleblower alleged that HealthCare Partners ignored inaccurate billing codes during these “one-way” chart reviews that may have required refunds to Medicare.

“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will pursue those who undermine the integrity of the Medicare program and the data it relies upon. This also illustrates that the Department encourages and incentivizes health care organizations to make voluntary disclosures to the government when they identify false claims.”

“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said United States Attorney Nick Hanna. “This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review – all for the purpose of boosting the bottom line. We will continue to pursue and hold accountable any entity that seeks to illegally increase revenue at the expense of the Medicare Advantage so that the program may continue to remain viable for all who need it.”

The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries. Questions may be directed to any of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid

Amy Butler, FisherBroyles Partner
Amy Butler