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Kidney Dialysis Provider Settles Allegations of Deliberately Wasting Medicine

Toviaz-Off-Label-PromotionDr. Alon Vainer’s discovery of alleged waste at a DaVita clinic has led to a $495 million settlement. DaVita, which specializes in treating patients with kidney problems through dialysis, agreed to settle the False Claims Act suit this month. The complaint alleged that DaVita defrauded the government of hundreds of millions of dollars by intentionally wasting medicine in order to increase reimbursement payments from Medicaid and Medicare.

A brief conversation between Dr. Vainer, the medical director of several DaVita clinics, and clinic nurse Daniel Barbir, the director of a DaVita clinic in Cumming, Georgia, sparked both men’s suspicions that the clinic’s standard procedures were deeply flawed. While inquiring into the standard clinic procedures, Dr. Vainer learned that unused medicine was being thrown into the trash after only partial use. When the two men sat down together to discuss the details of the clinic’s procedures, it became apparent that the alleged fraud was occurring on a massive scale, resulting in the deliberate wasting of two types of dialysis medications paid for by United States taxpayers.

The complaint alleged that the dosing protocol grids created by DaVita forced nurses to systematically waste medicine. Until 2011, certain drugs were reimbursed by Medicare for their usage along with the “necessary waste” which accompanied that usage. For drugs such as Zemplar and Venofer, providers received payment for their necessary waste. The suit alleged that DaVita took advantage of this waste reimbursement, structuring dosing grids to maximize waste. For example, if a patient required a 6 microgram dose of Zemplar, the nurse had two options on how to administer. The nurse could administer three separate 2 microgram vials of Zemplar, or, the nurse could administer the dose from a single 10 microgram vial. DaVita protocol required the use of the 10 microgram vial, with the remaining 4 micrograms discarded. DaVita’s protocol with the iron drug Venofer also led to widespread waste. The dosing grids for Venofer required nurses to give patients frequent 25 milligram doses, instead of large, one time, monthly doses. Venofer is only available in 100 milligram vials so every 25 milligram dosage resulted in 75 milligrams of waste. The lawsuit claimed that DaVita’s policy on the use of these two drugs caused the overbilling of Medicare. The practice at the Georgia clinic was used in all of DaVita’s roughly 2,000 clinics for the treatment of tens of thousands of patients from 2003 through 2010.

The waste in these practices becomes more obvious when contrasted with DaVita’s protocol for Epogen, as Medicare did not compensate for waste created in Eprogen’s usage. The DaVita dosing grids for Epogen ensured that no medicine was wasted in its use. The suit claims that further evidence came in January of 2011, when Medicare changed its payment policy and ended reimbursement for wasted drugs. As soon as this new policy was put in place, DaVita’s dosing grids changed, resulting in dramatic reductions in the amounts of Zemplar and Venofer wasted.

DaVita continues to deny that they engaged in any fraud. In a press statement, Kim Rivera, the chief legal officer of DaVita, claimed that settlement was only the result of risk analysis. Ms. Rivera argued that doctors were responsible for making dosing decisions, and when considering the benefits of infection control and smaller doses, the doctor’s decisions on how to administer Zemplar and Venofer were in the patient’s best interests.

DaVita demonstrates how even medically defensible decisions can still constitute fraud under the False Claims Act. The financial incentives created by Medicare may influence treatment decisions, sometimes against the interests of the patient and the government. The two whistleblowers in this case initially attempted to create change internally, to no avail. The whistleblowers then, through their attorneys, brought forward the False Claims Act suit. The government conducted a two year investigation and declined to intervene in the case. The whistleblower’s attorneys moved forward with the case and settled for $495 million, surpassing the previous declined case record of $430 million, which was pursued by Thomas M. Greene. Under the False Claims Act, whistleblowers such as Dr. Vainer and Mr. Barbir are entitled to as much as 30 percent of the settlement.