Recently, DaVita Inc. (DVA - Analyst Report) revealed that it received intimation from the United States Attorney's Office for St. Louis regarding lack of any action against the company following the completion of a joint civil and criminal investigation. The company will not have to face any charges, make any payments or change any policy as an outcome of the investigation.
The St. Louis Attorney's Office had commenced the investigation against DaVita in March 2005, regarding various matters such as financial relationships with physicians, joint ventures, and administration and billing of Amgen Inc.’s (AMGN) Epogen, which is used for increasing the red blood cell count in chronic kidney disease patients on dialysis.
Consequently, the Attorney’s Office had issued a subpoena and requested innumerable documents from the company. DaVita provided complete cooperation to the government and submitted all necessary documents. The company maintained that it respected the government’s right to investigate into issues related to regulatory compliance. However, DaVita also upheld that it has a history of compliance.
The absence of any action against the company indicates that the Attorney’s Office did not find any irregularity during the investigation. This is positive news for DaVita, which agreed to pay $55 million to settle a lawsuit accusing it of overusing Epogen in July this year.
However, while announcing the settlement, the company maintained its stand that the charge was baseless and physicians employed by it were not guilty. Nevertheless, DaVita agreed to the settlement as it considered that to be the most beneficial option for its shareholders.
DaVita, which competes with HealthSouth Corporation (HLS), currently retains a Zacks #2 Rank, implying a short-term Buy rating. We maintain a long-term Neutral recommendation on the stock.