DaVita Inc. (NYSE:DVA) Investor Files Lawsuit Against Directors Over Alleged Breaches Of Fiduciary Duties

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Company Name(s): 
Case Name: 
DaVita Shareholder Derivative Lawsuit 08/10/2012
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 

Aug. 10, 2012 (Shareholders Foundation) -- A current investor in shares of DaVita Inc. (NYSE:DVA) filed a lawsuit against certain directors of DaVita Inc. over alleged wrongdoing that cost DaVita a $78 million legal settlement.

In 2002 whistleblower lawsuit was filed by a former employee against DaVita over its Epogen practices over a 10year period
On July 3, 2012, the Company announced the settlement of a Qui Tam Action, in connection with which the Company will pay $55million plus attorneys’ fees, resulting in a second quarter 2012 charge of $78 million.
In addition, so the lawsuit, federal authorities in Colorado have launched a grand jury investigation into DaVita’s billing practices, as well as alleged illegal kickbacks provided to referring physicians, in connection with which certain current and former directors and executive officers of the Company have received subpoenas to testify before the grand jury. Furthermore, so the plaintiff, numerous other investigations of the Company’s business practices are pending as well, including by the U.S. Attorney’s Office for the Eastern District of Missouri, the U.S. Attorney’s Office for the Eastern District of New York, and the Office of Inspector General of the Department of Health and Human Services (“OIG”) in Dallas, Texas.

The plaintiff alleges that in violation of their fiduciary obligations to DaVita Inc., certain defendants each knowingly played a role in causing or otherwise allowing the Company to engage in the unlawful conduct as DaVita, with the knowledge and approval of the certain Defendants, allegedly has been systematically engaging in a fraudulent scheme to waste, overuse and overprescribe certain medications known as Epogen in order to receive the maximum reimbursements from the federal government, thereby bilking taxpayers out of millions of dollars. The plaintiff says that these practices violated numerous state and federal laws and ultimately cost or will cost the company $78 million.

On August 10, 2012, NYSE:DVA shares closed at $96.68 per share.