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Nationwide Pharmacy to Pay $63.7 Million to Settle Alleged Medicare Fraud

The government’s efforts at combating healthcare fraud often serve to maintain the very integrity of programs such as Medicare, Medicaid, etc. A breach in Medicare was corrected last week when the Justice Department announced that DaVita Rx – a nationwide pharmacy based in Coppell, Texas – has agreed to pay $63.7 million to resolve claims related to improper billing practices and unlawful financial inducements to healthcare program beneficiaries. The Texas based pharmacy specializes in serving patients with severe kidney disease. DaVita is alleged to have billed federal healthcare programs for prescription medications that were not shipped, that were shipped and later returned and that were shipped without the proper documentation. DaVita is also alleged to have paid financial inducements to Federal healthcare program beneficiaries. This is a violation of the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The nature of the kickback allegations are that DaVita accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries. DaVita is also said to have written off unpaid beneficiary debt and extended discounts to beneficiaries who paid for their medications using their credit card. The allegations came about as a result of self-disclosures by DaVita Rx and a whistleblower lawsuit.

“Improper billing practices and unlawful financial inducements to health program beneficiaries can drive up our nation’s health care costs,” said Civil Division Acting Assistant Attorney General Chad Readler. “The settlement announced today reflects not only our commitment to protect the integrity of the healthcare system, but also our willingness to work with providers who review their own practices and make appropriate self-disclosures.” According to the government, DaVita has already repaid approximately $22.2 million to federal healthcare programs following its self-disclosure and is slated to pay an additional $38.3 million as part of the settlement agreement. Additionally, $3.2 million has been allocated to cover Medicare program claims by states who may chose to participate in the settlement. “Providers should not make patient care decisions based upon improper financial incentives or encourage their patients to do the same,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “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 healthcare system has incurred.”

The settlement came about as the result of a suit that was filed by two former DaVita Rx employees, Patsy Gallian and Monique Jones, under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the federal government and to share in any recovery. The whistleblowers in this case will receive approximately $2.1 million from the federal recovery. The settlement of this case illustrates the government’s ongoing efforts at combating healthcare fraud. One tool it uses is the False Claims Act and the whistleblower provisions of that act. The Department of Health and Human Services offers several programs for health care providers to self-report potential fraud.