DENVER — Colorado will receive $3 million as part of a settlement with DaVita Healthcare Partners Inc. over allegations the company offered kickbacks to doctors to suggest DaVita dialysis centers.
The $3 million is part of a $389 million settlement DaVita agreed to pay to settle a criminal and civil anti-kickback investigation with the U.S. Justice Department announced in October, said DaVita spokesman Skip Thurman.
The Colorado Attorney General’s Office announced the $3 million settlement, part of $22 million five states will receive from the federal case, on Monday.
Thurman said it is the “final administrative step” in the agreement.
Last year DaVita officials said they do not believe there was any intentional wrongdoing.
According to Carolyn Tyler, spokeswoman for the Colorado Attorney Generals’ Office, DaVita entered into a number of transactions with physicians and/or physician groups in which the company would buy or sell shares in dialysis clinics at prices that were manipulated to make the transactions financially attractive for the physicians and generate patient referrals to its dialysis centers.
Some of the dialysis centers were located in Arvada, Boulder Lakewood, Longmont and Thornton. Other states including California, Florida, Kentucky, and Ohio were included in the settlement.
DaVita, the dialysis giant based in Denver, has been the focus of anti-kickback investigations for over a year now.
“This represents a significant recovery for Colorado’s Medicaid program,” Suthers said in a statement.
Tyler said an investigation by the Medicaid Fraud Control Unit found DaVita would include “unrealistic” financial models that undervalued dialysis clinics. These models were used as a basis to sell the clinic to a doctor to create joint ventures.
The end result was to funnel money to physicians, who were told to send patients to DaVita dialysis centers, Tyler said.
“Patients would almost always follow their physician’s recommendation and receive treatment at the DaVita clinic,” Tyler said.
The settlement resolves allegations regarding the company’s arrangements with physicians and physician groups from March 2005 to last February, the U.S. attorney’s office said.
A key witness in the investigation, David Barbetta, who worked as a senior financial analyst in the company’s mergers and acquisitions division from 2007 to 2009, came forward and gave investigators internal emails and spreadsheets, which were used as evidence in the government’s investigation.
Barbetta told the Denver Post he tried to warn the company’s leadership, but he was ignored or scolded.