Did DaVita Admit to Fraud When It Sued Whistleblower?

Did DaVita Admit to Fraud When It Sued Whistleblower?

February 15th, 2013 // 4:43 pm @ jmpickett

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File this under ‘What were they thinking?’ Since a fair number of whistleblower cases pop up in the pharmaceutical industry, a recent development concerning a whistleblower and DaVita, the second-largest independent provider of dialysis services in the US, might be of interest. Consider the following…

Along with a nurse, a nephrologist and former medical director named Alon Vainer filed a whistleblower lawsuit in 2007 alleging DaVita deliberately wasted medicine in order to gain hundreds of millions of dollars in extra payments from Medicare. They claim DaVita used unnecessarily large vials of different meds because Medicare would pay for unused portions of each vial if these were deemed unavoidable waste (back story with link to lawsuit).

So how has DaVita responded? Besides denying the allegations, the dialysis provider filed its own lawsuit against Vainer. Now, consider the accusations: DaVita charged Vainer breached his contract, caused damages by not alerting DaVita to violations of the law and filed invoices falsely claiming he complied with his agreement, which he could not have done if he did not alert DaVita to any violations of the law.

Yes, you read that correctly. It would apppear that DaVita officials are suing the whistleblower for not bringing their own purported fraud to their attention. Consequently, the DaVita team appears to somehow acknowledge that the fraud took place after all, even though they have denied this all along. This prompted an interesting response from the judge hearing the combined cases…

“The possible violations of law are the very same types of violations Vainer has alleged against DaVita in the underlying qui tam (whistleblower) complaint,” writes US District Court Judge Charles Pannell. “In essence, then, the defendants are seeking breach of contract damages for the plaintiff’s having not reported the alleged violations for which the defendants are themselves being sued.

“While the defendants have couched their counterclaim in contract terms, this claim is nonetheless the type of counterclaim barred in (False Claims Act) qui tam actions. In order to prove that Vainer breached the contract by not informing the defendants about violations of applicable law, the defendants would have to first prove that such violations actually occurred. If these violations occurred, then the defendants would be liable for them.”

The judge explains that an element of the DaVita (DVA) lawsuit against Vainer – specifically, the breach of contract – is dependent on its liability in the underlying whistleblower lawsuit. To cite an expression: Go figure. But Pannell is not done, because he then writes that the DaVita maneuvering would have public policy implications for the False Claims Act if the dialysis provider were to prevail.

“While the parties have not identified and the court cannot find through its own research binding case law that addresses the scenario before the court, the court agrees with the plaintiffs and the United States that such an outcome would have a chilling effect on the FCA’s goal of encouraging whistleblowing on perpetrators of fraud against the federal government… The court concludes that the defendants’ counterclaim amounts to a claim for indemnification or contribution.”