A whistle-blower will receive $14.3 million as his share of a $55 million settlement with DaVita Inc., a kidney-care company based in Denver, in a False Claims Act suit filed in U.S. District Court in the Eastern District of Texas.
The $55 million settlement on behalf of the United States is one of the largest-ever recoveries in a suit filed under the qui tam (whistle-blower) provisions of the False Claims Act in which the government did not intervene, say Mitchell Toups (pictured) and Michael Caddell, lawyers who represented plaintiff Ivey Woodard in the litigation.
In July, DaVita announced it had reached an agreement in principle to settle United States of America, ex rel. Ivey Woodard v. DaVita, Inc. It announced that it expected to pay about $55 million, plus attorney fees, as part of the settlement, according to a release on the company’s website.
On Dec. 17, U.S. District Judge Marcia A. Crone of the Eastern District of Texas signed a Final Order of Dismissal. She dismissed the suit with prejudice because the parties and the federal government have agreed to a final settlement. Toups, a partner in Weller, Green, Toups & Terrell of Beaumont, says the settlement document is not part of the record and declines comment on the terms of the settlement.
Toups says Woodard initially filed the qui tam suit in 2002, but after the government decided it would not intervene, Woodard proceeded independently.
In his Fourth Amended Complaint filed on Dec. 1, 2010, Woodard alleged DaVita violated the False Claims Act by overbilling the government for use of Epogen, a drug used to combat anemia in patients on dialysis, and accepting kickbacks in the form of overfill, discounts and rebates, training and free services. Woodard was employed by the pharmaceutical company that manufactures Epogen.
DaVita denied the allegations and on Dec. 21, 2010, filed a motion to dismiss Woodard’s Fourth Amended Complaint.
When asked to comment on the settlement, Skip Thurman, senior director of communications at DaVita, provided this written statement:
“All claims have been settled arising out of this litigation filed in 2002. The final agreement contains no finding of wrongdoing or admission. Agreements such as this one are sometimes in the best interest of shareholders.”
Defense attorney Grant Harvey, a partner in Gibbs & Bruns in Houston, did not immediately return a telephone message seeking comment.
“We were pleased with the recovery,” says Caddell, a partner in Caddell & Chapman in Houston, who represented Woodard along with Toups and his brother and partner, Steven Toups.
Mitchell Toups says it’s unusual for a False Claims Act suit to proceed without the government as a party.
“My experience is and knowledge that about 90 percent of all cases the government refuses to intervene in are dismissed because it’s very expensive,” he says.
Toups says Woodard filed the suit in 2002 under seal. He says the government investigated it for several years but ultimately decided not to intervene. After Woodard decided to proceed, Toups says he asked Caddell and his firm to join the plaintiff’s team.
Both Toups and Caddell say they cannot discuss their fees.
Toups notes that, even though the government didn’t intervene, it benefits.
“The government is getting $40 million plus back in their coffers as a result of our work, not the government’s work,” he says.
Caddell says Woodard is now working as a nurse practitioner in Tennessee.
Michael Lockhart, assistant U.S. attorney in the Eastern District of Texas, declines comment.
— Brenda Sapino Jeffreys