The dialysis company faces a $100M fine for each of 2 antitrust counts.
DaVita, 1 of 2 dominant players in US dialysis care, and Kent Thiry, its former CEO, were indicted today on federal antitrust charges, with the indictment alleging that the company and the onetime CEO conspired with competitors not to compete for certain employees.
The indictment alleges there were 2 separate conspiracies. The first count charges DaVita and Thiry with conspiring with Surgical Care Affiliates (SCA) and its affiliates, who were charged in January, and the second alleges that DaVita conspired with a different, unnamed health care entity. The indictment alleges the conspiracy with SCA from February 2012 until July 2017; the second conspiracy began in April 2017 and continued until as late as June 2019, according to a statement from the Department of Justice.
Both DaVita and Thiry were charged with 2 counts of violating the Sherman Antitrust Act.
“Those who conspire to deprive workers of free-market opportunities and mobility are committing serious crimes that we will prosecute to the full extent of the law,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “We are grateful for our partnership with the FBI and our shared commitment to rooting out illegal collusion targeting labor markets.”
Assistant Director in Charge Steven M. D’Antuono, of the FBI’s Washington Field Office, added, “These charges show a disturbing pattern of behavior among health care company executives to conspire to limit the opportunities of workers.”
The defendants are scheduled to appear July 20 before US Magistrate Judge Kristen L. Mix of the US District Court in Colorado. DaVita faces a maximum fine of $100 million per count, while Thiry faces a maximum penalty of 10 years in prison and a $1 million fine per count, according to the statement.
Karen Crummy, a spokeswoman for Thiry, issued a statement refuting the charges.
“These allegations are false and rely on a radical legal theory about senior executive recruitment without precedent in U.S. history. The government took steps to ignore – and even hide – key evidence. The facts bear it out decisively: No antitrust violations occurred, these companies hired DaVita executives for years, and the companies are not competitors.”
DaVita and Fresenius Medical Center North America dominate both US and North American kidney care; DaVita’s 2020 US market share was estimated at 37% while Fresenius’ was pegged at 35%, whereas smaller providers are in the single digits. In recent years, CMS has tried to create new payment models and shift more dialysis to home-based care, but the agency has met resistance to some changes. DaVita's most recent annual report for 2020 reported annual revenue of $11.5 billion.
Dialysis is a growing and lucrative business because the number of people who need treatment is increasing, due to an aging population and rising obesity rates. Patients may need dialysis due to end-stage renal disease brought on by diabetes or perhaps due to an acute injury to the kidney during an accident or surgery. In dialysis, an machine does the work that the kidneys would do to clean the blood of toxins, excess salts, and water; it must be done several time a week for the person to stay alive until a transplant occurs, if the person is healthy enough to receive one.
More patients are experiencing kidney failure due to COVID-19.