Whistle-blowers say dialysis firm bilked Medicare

Company denies allegations, notes U.S. attorney declined to join case

A case brought by two Georgia whistle-blowers asserts that one of the country’s top dialysis providers bilked Medicare of hundreds of millions of dollars by billing for medicine the company’s clinics often threw away.

The lawsuit contends DaVita Inc. fraudulently boosted profits by intentionally using over-sized vials of the vitamin D supplement Zemplar and the iron drug Venofer, then discarding the unused portions. The company knew Medicare would pay for the unused drugs if the company deemed them to be necessary waste, the suit said. The suit was also filed against Gambro Healthcare Inc., which sold its dialysis clinics to DaVita in 2005.

Lawyers for the two whistle-blowers — Atlanta kidney doctor Alan Vainer and Cummings nurse Daniel Barbir — estimate the companies fraudulently over-billed taxpayers by as much as $800 million from 2003 through 2010. The suit could result in one of the largest Medicaid fraud judgments in recent history if the whistle-blowers prevail on all their claims.

DaVita strongly denies the allegations and notes the U.S. government, after looking at the whistle-blowers’ case, declined to intervene as a party in the litigation.

“Our clinical practices are and always have been developed in the best interest of our patients and caregivers,” company spokesman Skip Thurman said Tuesday.

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DaVita, headquartered in Denver, operates more than 1,900 outpatient dialysis clinics nationwide, serving about 150,000 patients. It is the nation’s second-largest kidney dialysis provider.

Earlier this year, the whistle-blowers won an initial round of the litigation in federal court in Atlanta. U.S. District Judge Charles Pannell Jr. denied DaVita’s motion to dismiss the lawsuit.

Barbir said he is eager for the case to get before a jury. “We’re looking forward to the day when the taxpayers will be rewarded,” said the 48-year-old nurse who now works for Emory University Hospital Midtown.

The suit was filed under the False Claims Act, which requires any damages awarded by a jury to the whistle-blowers to be tripled. If found liable, DaVita also would be required to pay a penalty for each time it submitted a fraudulent claim for unnecessarily wasted drugs, said Atlanta lawyer Marlan Wilbanks, one of the whistle-blowers’ attorneys.

“We have a basis to believe there are hundreds of thousands of false claims at issue, if not millions,” Wilbanks said.

Dialysis providers are no longer allowed to bill for individual doses. In early 2011, Medicare instituted a so-called “bundled” reimbursement system that pays for the overall care provided to a patient.

Under the False Claims Act, taxpayers would receive between 70 percent and 75 percent of any reward, with the rest going to the whistle-blowers. The U.S. share would increase up to 85 percent if the Justice Department intervenes and becomes a party in the case.

The lawsuit, which was filed in 2007, remained under seal for more than three years while the government reviewed the claims. In April 2011, U.S. Attorney Sally Yates informed the parties that the government had declined to join the case.

The Justice Department’s decision “should not be construed as a statement about the merits of the case,” Yates wrote, adding that the government retained the right to intervene at a later date.

The U.S. Attorney’s Office has been keeping tabs on the litigation. But the whistle-blowers face a steeper climb without the government at their side.

“It’s usually a pretty good indication the government doesn’t think it’s a strong case when it declines to intervene,” said Kent Alexander, the former U.S. Attorney in Atlanta who is now CARE USA’s general counsel.

Earlier this year, DaVita settled a whistle-blower lawsuit in Texas for $55 million involving allegations the company overused the anemia drug Epogen. The government had declined to intervene in that case, noted Atlanta lawyer Lin Wood, who also represents the whistle-blowers.

“We feel very confident about our case,” Wood said. “These people were committing fraud and they knew it. … They were wasting like crazy for years and years.”

Barbir was the nurse at a Gambro dialysis clinic in Cumming in 2004 when he said he noticed there was a big push by the company to increase its pharmaceutical revenue.

“I thought, ‘Wait a second. What’s going on here?,’” Barbir said. “I thought, ‘Hmm. Waste. Why do I have to waste? Why do I have to throw so much stuff away?’”

When he brought up the issue with management, he was told to follow orders or lose his job, said Barbir, who resigned from DaVita in 2006.

Barbir later went to Vainer, 52, an independent contractor who served as the medical director of the Cumming clinic. Vainer said he eventually checked the company’s computer system, which tracked the amount of discarded drugs, and was astounded by what he saw.

“Nothing made sense,” he said. “I saw a huge amount of waste.”

Dialysis drugs are administered by drawing a measured amount from a vial into a syringe, then injecting that syringe into a patient’s IV port.

The lawsuit alleges that the protocol for Zemplar allowed for only 2 mg vials of the vitamin D supplement to be used when the prescribed dose was 2 mg or less. But if the prescribed dose was 6 mg, for example, a 10 mg vial — not three 2 mg vials — was to be used, with 4 mg being wasted, the suit said.

In court filings, DaVita said it had disclosed its dosing administration practices for Zemplar to the government and the government had no objection to it.

With regard to the iron drug Venofer, for example, it came in only 100 mg vials until 2011 when its manufacturer began making it available in 50 mg vials.

The lawsuit alleges that, for some patients who required 200 mg of Venofer per month, for example, DaVita’s protocol called for the drug to be administered twice a week in 25 mg doses. This meant each time a 25 mg dose was injected, the company billed Medicare for a 100 mg vial, with 75 mg being wasted, the suit said.

The suit said if DaVita followed certain sterilization safeguards, the unused medication in the Venofer vials could be used for other patients. The company followed such procedures when using the far more expensive drug Epogen during much of the same time, the suit said.

In a statement, DaVita acknowledged that such a practice — called re-entry — was allowed as an option to health-care providers by the government between 2002 and 2008. But since 2008, the Centers for Disease Control and Prevention and the Center for Medicare and Medicaid Services have banned it. The agencies have warned that any potential cost savings from allowing multiple syringe draws from a single vial are outweighed by the possible risk of infection.

DaVita said the whistle-blowers “in effect are asserting that they know better than the government and insist that DaVita had to engage in a practice that the government never required and now prohibits.”

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