Rival Claims DaVita Monopolizes Dialysis

MANHATTAN (CN) - In a federal antitrust complaint, a competitor claims that Davita, the second-largest provider of dialysis in the United States, is monopolizing the industry through "exclusive, long-term, illegal, or predatory contracts" with doctors, drug companies and managed-care companies.

IHS Dialysis, which operates in New York City and Massachusetts, claims that Davita has monopolized, or tried to monopolize, the market for dialysis since 2007.

IHS claims Davita has done this by "(a) entering into exclusive, long-term, illegal, or predatory contracts or agreements with nephrologists and other referral sources or other these [sic] referrals to lock-up a significant number of patient referrals on a long-term basis; (b) entering into exclusive, long-term, illegal or predatory contracts or agreements with managed care companies to lock-up a significant numbers of covered lives on a long-term basis; (c) entering into exclusive, long-term, illegal or predatory agreements with pharmaceutical companies to give them needed pharmaceutical products at extremely favorable, and, in some cases, predatory pricing that is not available to HIS Dialysis or other competing outpatient dialysis services providers; ... and (e) engaging in inappropriate and predatory business conduct designed to prevent the potential new entrants to gain any foothold in the market."

IHS claims DaVita violated antitrust laws by preventing it from establishing dialysis clinics in the Bronx, Manhattan, Queens and Westchester, N.Y., and in Quincy, South Shore and south Boston, Mass.

IHS, based in Boca Raton, Florida, claims that "there are ... significant barriers to entry in these markets, the most significant of which is locating a nephrologist with an established referral base to serve as the facility's medical director."

According to the complaint, "In order to achieve or maintain their market, or in some cases, monopoly power in various local outpatient dialysis services markets throughout the country - including the markets in which IHS competes or currently is in the process of planning for or opening facilities - DaVita has entered into exclusive, long-term, illegal, or predatory contracts or agreements with nephrologists and other referral sources ... to lock-up a significant number of patient referrals on a long-term basis."

IHS claims DaVita has entered into similar predatory contracts with managed care companies, which "typically provide coverage for the first 33 months of a ... patient's course of outpatient dialysis treatment at rates significantly higher than those provided by the Medicare and Medicaid program," leaving IHS with no foothold in the market.

IHS claims that pharmaceutical companies make with DaVita "at extremely favorable and, in some cases, predatory pricing that is not available to IHS or other competing outpatient dialysis service providers."

And it claims that finding places from which to operate its dialysis clinics is difficult because "DaVita has inappropriately and without legitimate business justification warehoused space and licenses so as to prevent other potential competitors from entering the local market."

HIS claims that DaVita, whose profits exceeded $7.63 billion in 2010, is being investigated for antitrust violations and "is currently the subject of three pending federal law enforcement agency investigations into inappropriate and potentially illegal practices in connection with their physician contracting practices."

IHS wants Davita enjoined from its allegedly predatory practices.

It is represented by Roy Breitenbach, with Garfunkel Wild, of Great Neck.

Follow @@kkoeninger44

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit