DaVita Settlements: Kickbacks, Drug Wastage, and Class Actions

Since 2012, DaVita Inc. has paid well over a billion dollars to resolve DaVita settlements involving Medicare and Medicaid fraud, illegal kickbacks to physicians, securities fraud, antitrust concerns tied to acquisitions, patient data privacy, and 401(k) plan management. The Denver-based dialysis provider has also faced a criminal antitrust prosecution that ended in acquittal and a related civil class action that remains active. Each matter is summarized below with the amount, the parties, and what the allegations were.

$495 Million Drug Wastage Settlement (2015)

The largest single DaVita payout came from a whistleblower lawsuit brought by nephrologist Dr. Alon Vainer and nurse Daniel Barbir, both former employees. They alleged that between 2003 and 2012, DaVita deliberately generated waste of two drugs, Zemplar (a vitamin D treatment) and Venofer (an iron supplement), and then billed Medicare and Medicaid for the discarded medication.¹

Both drugs came in single-use vials. According to the government, DaVita used internal “dosing grids” and protocols that maximized the amount of medication left over after treatment, ordered larger vials than patients needed, administered part of the dose, discarded the rest, and billed the government for the full vial.²

In June 2015 DaVita agreed to pay $450 million to the federal government with no formal determination of liability. Including fees, the total reached up to $495 million.³ Under the False Claims Act’s qui tam provisions, Vainer and Barbir stood to receive up to $135 million as their share.² It was DaVita’s third whistleblower settlement since 2012, taking cumulative payouts in such cases past $1 billion.

$400 Million Physician Kickback Settlement (2014)

A separate case, brought by former DaVita financial analyst David Barbetta, alleged that the company ran a years-long scheme paying hidden kickbacks to nephrologists in exchange for patient referrals. United States ex rel. Barbetta v. DaVita, Inc. was filed in the U.S. District Court for the District of Colorado.⁴

The government alleged that between 2005 and 2014, DaVita identified physician groups with large populations of kidney disease patients and offered them equity stakes in DaVita-owned dialysis centers at below fair-market value. Financial projections were allegedly manipulated using a technique internally called “HIPPER compression” to lower valuations. Physicians who took the deals were locked into non-compete and non-disparagement agreements that effectively guaranteed patient referrals to DaVita.⁴⁵

The total came to roughly $400 million:

$350 million to resolve the federal False Claims Act allegations.
$39 million in civil forfeiture tied to two specific Denver joint venture transactions.
$11.5 million to settle related state Medicaid claims.⁵

DaVita also entered a five-year Corporate Integrity Agreement with the HHS Office of Inspector General. The agreement required an independent monitor over financial arrangements with physicians, an executive clawback program, mandatory anti-kickback training, and notice to joint venture partners and medical directors that they were free to refer patients elsewhere.⁶ DaVita was also required to unwind 11 joint venture transactions covering 26 dialysis clinics.⁷ Barbetta’s specific whistleblower share was not publicly determined at the time the settlement was announced.⁴

$55 Million Epogen Billing Settlement (2012)

An earlier settlement announced in July 2012 resolved allegations of billing fraud involving the anemia drug Epogen. Whistleblower Ivey Woodard, a former Amgen employee, alleged that DaVita billed for drug “overfill” that was not medically necessary and double-billed for leftover Epogen in reused vials. DaVita paid $55 million, and Woodard received $16.5 million as her whistleblower share.⁸

$34.5 Million Kickback Settlement (2024)

In July 2024, DaVita agreed to pay approximately $34.5 million to resolve another round of False Claims Act allegations involving illegal kickbacks. The case was brought by Dennis Kogod, the former chief operating officer of DaVita Kidney Care, who stood to receive $6.37 million.⁹

The Department of Justice alleged three distinct schemes:

DaVita’s former pharmacy subsidiary, DaVita Rx, served as a prescription fulfillment provider for a competitor. In return, DaVita acquired some of the competitor’s European dialysis clinics and agreed to purchase dialysis products at inflated prices to secure the competitor’s agreement to refer Medicare patients’ prescriptions to DaVita Rx.
DaVita managed vascular access centers owned by physicians in a position to refer patients to DaVita’s dialysis clinics and allegedly paid them through uncollected management fees.
DaVita allegedly paid $50,000 to a large nephrology practice for a “right of refusal” to staff medical director positions at new clinics near the practice, even when the practice declined to staff them, in order to induce referrals.⁹

DaVita denied liability and said the settlement was reached to “close this chapter,” noting that the business units and personnel involved were no longer with the company.⁹

$135 Million Securities Class Action

Investors who bought DaVita stock between February 2015 and October 2017 filed a securities class action in the District of Colorado (Case No. 17-cv-00304). Shareholders alleged that DaVita violated federal securities laws by making misleading statements about a scheme to steer dialysis patients away from Medicare and Medicaid and toward higher-reimbursing commercial insurance plans. The alleged mechanism involved DaVita donating to the American Kidney Fund, which then used those funds to pay patients’ private insurance premiums.¹⁰

The case settled for $135 million in cash. The court granted final approval in 2021, and the initial distribution of settlement payments to class members was made on June 2, 2022.¹¹

The patient-steering allegations also drew separate government scrutiny. In January 2017, the U.S. Attorney for the District of Massachusetts issued subpoenas to DaVita, Fresenius Medical Care, and the American Kidney Fund about their relationship to the charity’s premium assistance program.¹²

Criminal No-Poach Acquittal And Pending Civil Case

Not every DaVita case ended in a payout. In a rare criminal antitrust prosecution, the Department of Justice charged DaVita and former CEO Kent Thiry with conspiring to suppress competition for senior-level employees through “no-poach” agreements. The indictment in United States v. DaVita, Inc., No. 1:21-cr-229 (D. Colo.), alleged that between 2012 and 2017, DaVita made agreements with three companies (Surgical Care Affiliates and two unnamed companies in San Francisco and Los Angeles) not to recruit each other’s senior employees.¹³

On April 15, 2022, a federal jury found both DaVita and Thiry not guilty on all counts. The acquittal was a blow to the DOJ’s Antitrust Division, which was testing whether no-poach agreements between employers could be prosecuted as criminal conspiracies rather than handled through civil enforcement.¹⁴

The acquittal did not end DaVita’s exposure. Former employees filed a class action in federal court in Chicago (In re Outpatient Medical Center Employee Antitrust Litigation, N.D. Ill.) alleging that DaVita, Surgical Care Affiliates, Tenet Healthcare, and others conspired to suppress employee wages and mobility. In September 2022, U.S. District Judge Andrea Wood rejected the defendants’ motion to dismiss.¹⁵¹⁶

FTC Antitrust Consent Orders

DaVita has also settled with the Federal Trade Commission over acquisitions the agency saw as anticompetitive. These resolutions required divestitures rather than cash payments.

Gambro acquisition (2005): DaVita’s $3.1 billion purchase of rival Gambro Healthcare required the sale of 69 dialysis clinics and the end of two management services contracts across 35 markets.¹⁷
DSI acquisition (2011): DaVita’s $689 million acquisition of CDSI I Holding Company (DSI) drew FTC charges that the deal would harm competition in 22 markets. DaVita sold 29 outpatient dialysis clinics to resolve the concerns.¹⁸
University of Utah acquisition (2021): DaVita’s purchase of all 18 dialysis clinics owned by the University of Utah required divestiture of three clinics, a bar on enforcing non-compete agreements with certain nephrologists, and a two-year ban on soliciting patients of the divested clinics. DaVita also had to obtain prior FTC approval before acquiring any new dialysis clinic in Utah.¹⁹

$3.8 Million Data Privacy Settlement (2024)

DaVita agreed to a $3.8 million class action settlement over allegations that it improperly shared patient data with Facebook, Google, and other third parties through tracking pixels and analytics tools on its websites, patient portals, and mobile apps. The lawsuit alleged that the company disclosed personal and medical information (including actions taken on portals, content viewed, and data typed into forms) without patient consent.²⁰

The settlement covered approximately 605,000 current or former DaVita patients who visited the company’s digital platforms between November 2017 and September 2023. Eligible class members who filed claims by the December 4, 2024 deadline could receive a pro-rated cash payment from the fund and one year of a data monitoring service called Privacy Shield.²¹

$2 Million ERISA Settlement (2024)

The DaVita ERISA case is Teodosio, et al. v. DaVita, Inc., et al. (Case No. 1:22-cv-00712, D. Colo.). Former employees alleged that DaVita and its 401(k) plan fiduciaries breached their duties under ERISA by failing to properly monitor the plan’s recordkeeping fees and investment options. The court dismissed the investment-option claims in July 2023 but allowed the recordkeeping-fee claims to proceed.²²

The parties agreed to a $2 million settlement fund. All participants or beneficiaries of the DaVita Retirement Savings Plan during the class period (March 23, 2016 through July 1, 2024) are automatically included, and no claim form is required. Payments are calculated by a third-party administrator using plan records. Active plan participants have funds deposited into their accounts, and former participants receive checks. Former participants owed $2.50 or less are not eligible for a distribution.²²

A fairness hearing was held on December 4, 2024, and court records show the case was terminated on December 6, 2024.²³ Settlement documentation had warned that distribution could take “possibly several years” if appeals were filed. The $2 million fund will be reduced by taxes, court-approved costs, and attorneys’ fees (up to one-third) before the remainder is divided among class members.²²

1
Justice.gov. DaVita To Pay $450 Million To Resolve Allegations That It Sought Reimbursement For Unnecessary Drug Wastage
2
Evans Law. DaVita Healthcare Partners To Pay Almost Half A Billion Dollars In Medicare Fraud Settlement
3
Healthcare Dive. DaVita Settles Whistleblower Case For $495M
4
Justice.gov. DaVita To Pay $350 Million To Resolve Allegations Of Illegal Kickbacks
5
Phillips & Cohen. Whistleblower Behind DaVita’s Record $400 Million Settlement
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SEC.gov. DaVita HealthCare Partners Corporate Integrity Agreement
7
Kidney News. DaVita Settlement and Corporate Integrity Agreement
8
Whistleblower LLC. DaVita Settles Drug Case
9
Healio. DaVita Reaches Settlement With Government On Whistleblower Charges About Alleged Kickbacks
10
Bloomberg Law. DaVita Investors Get Final Court Nod For $135 Million Deal
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DaVita Securities Litigation. DaVita Securities Litigation Settlement
12
New York Times. American Kidney Fund, Fresenius, DaVita Subpoena
13
Dechert LLP. Full Defense Verdict In Rare Criminal Antitrust Prosecution
14
Ballard Spahr. DaVita And Its Former CEO Found Not Guilty In Criminal Conspiracy Case
15
Reuters. DaVita Loses Bid To Dismiss Class No-Poach Claims
16
Lieff Cabraser. Plaintiff Employees’ Claims Move Forward In DaVita No-Poach Labor Antitrust MDL
17
FTC.gov. DaVita Inc. – Case 0510051
18
FTC.gov. DaVita Inc. – Case 1110103
19
Federal Register. In The Matter Of DaVita Inc. And Total Renal Care Inc.
20
ClassAction.org. $3.8M DaVita Settlement Resolves Class Action Lawsuit Over Alleged Data Sharing Violations
21
Top Class Actions. $3.8M DaVita Data Privacy Class Action Settlement
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DaVita ERISA Settlement. DaVita ERISA Settlement FAQs
23
CourtListener. Teodosio v. DaVita, Inc.