May 4 (Reuters) - DaVita HealthCare Partners Inc, one of the largest U.S. kidney dialysis providers, said it agreed to pay $450 million to settle a whistleblower lawsuit accusing it of deliberately wasting medicines in order to receive higher Medicare payments.
The lawsuit alleged that DaVita, whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc, used larger-than-necessary medicine vials or unnecessarily spread medicine dosages across multiple treatments, knowing that Medicare would pay for what it considered “unavoidable” waste.
An agreement in principle to settle was disclosed in an April 16 filing with the U.S. federal court in Atlanta.
DaVita made the terms public on Monday, when it reported a first-quarter loss that reflected a $298 million after-tax charge for the settlement. The Denver-based company set aside $495 million for the accord, including $45 million for legal fees and costs.
“Although we believe strongly in the merits of our case, we decided it was in our stakeholders’ best interests to resolve it,” DaVita Chief Legal Officer Kim Rivera said in a statement. “The potential mandatory penalties for being found in the wrong in even a small percentage of instances were simply too large.”
The named plaintiffs were Alon Vainer, a nephrologist who has worked in dialysis clinics in Georgia, and Daniel Barbir, a registered nurse from that state.
Their lawsuit brought under the federal False Claims Act began in October 2007. It was unsealed in July 2011 after the U.S. Department of Justice decided not to join it, often a sign it believes the case is not strong enough.
In separate emails, L. Lin Wood and Marlan Wilbanks, lawyers for the plaintiffs, said their clients were pleased, and that they believed the settlement is a record for a whistleblower case that lacked government support.
“Dr. Vainer and Nurse Barbir exhibited great courage and determination” in pursuing the case, whose result “primarily benefits the taxpayers of the United States,” Wood said.
DaVita posted a first-quarter loss of $110.6 million, or 52 cents per share, compared with a year-earlier profit of $183.3 million, or 85 cents. Excluding the settlement, profit was 86 cents per share, matching analyst forecasts according to Thomson Reuters I/B/E/S. Net revenue rose 8 percent to $3.29 billion.
Berkshire owned 17.9 percent of DaVita as of Dec. 31, Reuters data show.
DaVita shares closed down 6 cents at $82.34 in regular trading on Monday on the New York Stock Exchange. The company announced results after U.S. markets closed. (Reporting by Jonathan Stempel in New York, editing by G Crosse)