Monday, December 3, 2012

Pharmaceutical Giant Accused of Robbing Taxpayers, But Stands Firmly in Denying Wrongdoing

This could be a case of Medicare fraud -- the largest ever. Or it might be an acceptable way of doing business. That will be up to the courts to decide. People are getting rich under the current modus operandi; different people will be rich if the accused company loses a whistleblower lawsuit under the U.S. False Claims Act.

It sounds like the plot of a movie or TV series. Actually, it was an Anderson Cooper story on CNN. It's still too soon to tell how the Denver-based company will respond to this crisis. But so far, it seems to be as up-front as it can be given the sensitive legalities.

DaVita is Italian for "giving life," and is English for a Fortune 500 company that is a "leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end stage renal disease." ( It is a $7 billion company with almost 2,000 clinics in the U.S.

CEO Kent Thiry makes an estimated $15 million a year, according to the Wall Street Journal, which makes him the highest paid CEO in Colorado. DaVita recently moved into a brand new $101 million office tower, complete with fountains, gardens, and a suspended ski gondola inside for private meetings. There's no knocking a company for being successful. But in this case, more than two-thirds of DaVita's revenue comes from Medicare and Medicaid payments -- in other words, from taxpayers. That in itself can lead to greater scrutiny.

Dr. Alon Vainer, a medical director at dialysis clinics in Georgia, and a nurse, Daniel Barbir, alleged they saw expensive medicine, and lots of it, being tossed into the trash. The two men say the clinic workers were being told to do it. The alleged waste was being carried out on a massive scale and, the nurse and the doctor said, they knew why almost immediately. They claim it was a way for their company to defraud the government, overbill Medicare and Medicaid, and make a fortune. "We're talking in the hundreds of millions, easily," Vainer said. (
Vainer alleges that DaVita instructed its nurses to administer a 100-milligram dose of the iron drug Venofor. If a patient required this dose once a week, nurses would ordinarily administer the 100 milligrams, waste nothing, and charge Medicare for 100 milligrams.
"But what DaVita did, instead of charge (for) one vial, they give 50 milligrams of this vial (and) put the residual into the trash." he said. With another vial, he said, the company would give 25 milligrams to a patient and put the rest in the trash, then repeat it with yet another vial, when one vial could have been given without waste.
"The more vials DaVita used, the more the company was able to bill the government, the men say. Vainer and Barbir claim they tried to call attention to the massive waste and tried to get it stopped. But instead, they say, they were basically told to stop causing trouble and to continue following the company's protocols."
Barbir eventually quit his job and left the clinic rather than continue where he believed fraud was taking place. Vainer claims the company punished him for speaking up. "Of course, once they found out, they did not renew my medical directorship or my practice," Vainer claimed. "We are a three-physician practice, and it was a significant loss of revenue."
"Today, both men have filed a whistleblower lawsuit under the U.S. False Claims Act on behalf of the U.S. government, charging DaVita with massive Medicare fraud. They stand to make millions if DaVita is found guilty."

It would be easy for DaVita to hide behind "We can't comment on pending litigation," but through its attorney, DaVita seems transparent under the circumstances.

"DaVita's CEO wouldn't talk, but the company's attorney Kim Rivera did. When asked about the plaintiffs' allegation that DaVita had come up with so-called schemes to throw away drugs and maximize profits, Rivera said: 'Well that's just wrong. If you look at the facts of the case, first of all, the doctors make the dosing decisions.... When you look at what the practices were -- decisions being made by doctors, based on what was in the best interest of their patients. And they took into account a variety of things.
"'You can't just look at one issue. You have to look at things like infection control, what the patient's going to do, how the patient's going to do with particular doses. And so, during that entire time what we did, what the doctors did, was appropriate."
On the other hand, claims CNN, other companies, including DaVita's main competitor, used smaller vials and smaller combinations at times, limiting what was thrown away. "DaVita reiterated its decisions to throw away medicine were for 'sound clinical reasons' and 'never to increase wastage.'"
Plaintiffs' attorneys Lin Wood and Marlan Wilbanks claim DaVita made as much as $800 million over-billing the government. They say DaVita's defense won't hold up in court, calling it "just dishonesty."
DaVita vows to fight the case, even though earlier this year, while denying it did anything wrong, DaVita settled a similar case in Texas for $55 million. One of DaVita's defenses to CNN was that the federal government itself declined to charge the company with wrongdoing, even after reviewing the fraud allegations.
Therein lies another problem, according to Pat Burns of Taxpayers Against Fraud. "The way it's set up right now, if the fraud is not caught, then taxpayers foot the bill," Burns said. "If the fraud is caught, stockholders foot the bill." He said executives aren't charged with wrongdoing and continue with business as usual.
Burns claimed the short-staffed U.S. Department of Justice often declines to join lawsuits, instead allowing private citizens like Vainer and Barbir to hire private lawyers and essentially prosecute for the government.
News releases from DaVita would seem to support Burns' viewpoint. On October 2, DaVita issued a release that said, "...the United States Attorney's Office (USAO) for St. Louis recently informed the company that the USAO completed its investigation and is not taking any action against the company. In March 2005, the St. Louis USAO initiated its inquiry with a subpoena and subsequent document requests in connection with a joint civil and criminal investigation.... The USAO closed its investigation without filing any charges, without demanding any payments and without seeking any changes in company policies." (;postID=5026537227450233373)
Another release on October 25 said DaVita "...has been advised that it will be receiving a request for documents, which could include an administrative subpoena from the Office of Inspector General for the U.S. Department of Health and Human Services. The request is in connection with an inquiry by the United States Attorney's office for the Eastern District of New York regarding payment for infusion drugs covered by the New York Medicaid composite payment system for dialysis....
"The Company has worked hard to create and sustain a culture of compliance at DaVita, as well as the policies and systems to support that culture.... We intend to work cooperatively in response to this inquiry and look forward to resolving the matter." (
Vainer and Barbir's whistleblower lawsuit is scheduled to be tried late in 2013.
Innocent or guilty, DaVita gives the impression it has nothing to hide. Compared to many other companies accused of wrongdoing that I've blogged about, DaVita came across as open and cooperative in the CNN report.

1 comment:

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