Robbins Arroyo LLP: DaVita Inc. (DVA) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against DaVita Inc. (NYSE: DVA) in the U.S. District Court for the District of Colorado. The complaint is brought on behalf of all purchasers of DaVita securities between August 5, 2015 and October 21, 2016, for alleged violations of the Securities Exchange Act of 1934 by DaVita’s officers and directors. DaVita provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease (“ESRD”).
DaVita Accused of Engaging in Scheme to Take Advantage of Its Patients
According to the complaint, Medicare and Medicaid pay DaVita reimbursement rates of $300 or less for one session of dialysis rendered to ESRD patients, but DaVita bills commercial insurers more than $4,000 for the same services rendered to Medicaid and Medicare-eligible patients. In order to convince patients currently enrolled in Medicare and Medicaid to obtain private insurance, DaVita informed them that the American Kidney Fund (“AKF”) would cover their monthly health insurance premiums. The complaint further alleges that DaVita officials failed to disclose that: (1) the company and its senior executives purposefully steered patients into unnecessary insurance plans in order to maximize profits; (2) the company was using AKF as a vehicle to facilitate these improper practices; (3) as a result, DaVita’s revenues and profits were illegally obtained; and (4) DaVita lacked effective internal controls over financial reporting.
On August 18, 2016, the Centers for Medicare and Medicaid Services sent letters to all Medicare-enrolled dialysis centers, including DaVita, for information regarding alleged steering of Medicare and Medicaid beneficiaries into other plans in order to earn higher reimbursement rates. On October 23, 2016, the St. Louis Post published an article that accused DaVita directly of steering clients to private insurers and utilizing its own money to pay for health insurance premiums through the AKF. On this news, DaVita’s stock price fell $2.86 per share, or 4.69%, to close at $58.10 per share on October 24, 2016. Then, on January 6, 2017, The Wall Street Journal reported that investigators from the U.S. Department of Justice were probing an arrangement under which kidney-care companies support charitable efforts to help patients pay health insurance premiums, and that the U.S. Attorney’s Office for the District of Massachusetts had subpoenaed DaVita and the AKF seeking information relating to its charitable premium assistance.
DaVita Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.