DaVita Suffers $383.5M Loss in Federal Court

Dialysis provider plans to appeal ‘unjust’ jury verdict on negligence, fraud claims

A federal jury delivered verdicts against DaVita in cases challenging the dialysis company’s use of a recalled product in its treatments. / MICHAEL RIVERA

A group of lawsuits against Denver’s dialysis giant culminated in a nine-figure verdict late last month.

A federal jury hit dialysis provider DaVita with a $383.5 million verdict in a case involving the deaths of three patients. On top of their compensatory damages, the estates of Irma Menchaca, Gary Saldana and Deborah Hardin were each awarded $125 million in punitive damages for their claims of negligence and fraud by concealment. DaVita plans to appeal the verdict.

The claims originated from DaVita’s previous use of a product in its dialysis treatments called GranuFlo, which the Food and Drug Administration recalled, citing an increase of cardiac arrests in dialysis patients. The plaintiffs alleged that the kidney care company knew the clinical risks associated with using GranuFlo, but it avoided telling the physicians at its clinics that they would be using it and about the potential negative side effects it presented to patients.

After the Colorado federal district court jury returned its verdict June 27 in favor of the plaintiffs, DaVita issued a statement saying it “strongly disagreed.”

“We will pursue any and all avenues of appeal to overcome this unjust verdict and believe [it] is unlikely to stand,” DaVita said in response to the decision. One of those avenues might be contesting the size of the punitive damages awards, which the company noted are more than 44 times the compensatory damages.

When patients without properly functioning kidneys undergo dialysis, their blood circulates with a substance called dialysate, which allows the blood to effectively absorb electrolytes. One kind of electrolyte — bicarbonate — helps regulate the blood’s pH levels, and nephrologists who administer dialysis have to account for bicarbonate levels when prescribing their treatments.

In March 2012, the FDA issued a Class-1 recall for GranuFlo, saying the product can cause bicarbonate levels in patients to spike when used in dialysis treatments because it contains a high level of acetate, which also affects bicarbonate levels. The resulting imbalance in patients’ blood pH levels could lead to metabolic alkalosis, a condition that if left untreated could lead to cardiac arrest.

Hagens Berman Sobol Shapiro, a Phoenix-based law firm that represented the plaintiffs, filed several wrongful death lawsuits in 2013 blaming DaVita’s use of GranuFlo. In June 2015, Judge R. Brooke Jackson declined to certify a class of the plaintiffs, reasoning that there were too many disparate individual issues among the proposed class members, who would number as many as 300,000 patients treated with GranuFlo at DaVita clinics.

Hagens Berman then filed a handful of individual suits, eventually settling a group of cases with DaVita. Shortly after that, the firm filed a new grouping of individual actions with plaintiffs Menchaca, Hardin and Saldana, which Judge Jackson consolidated into the case decided June 27.

According to the complaint, DaVita began using GranuFlo in its dialysis centers because unlike other acid concentrates, it came in a powder form, saving the company millions in shipping costs. The plaintiffs alleged that since 2004, DaVita knew that GranuFlo, which was manufactured by Fresenius, contained acetate that would raise the bicarbonate levels in patients’ blood. The lawsuit also claimed that DaVita was aware of Fresenius’s own 2011 study showing that using GranuFlo in dialysis increased the incidence of cardiac arrest by six to eight times.

The plaintiffs argued that DaVita intentionally kept its treating physicians and patients in the dark that they were using GranuFlo in their treatments. Before the decedents in this case died, the company had signed contracts committing it not only to using the product, but also to installing equipment required to mix the powder at its clinics.

It would be difficult for DaVita to sell its physicians and patients on a product change that presented no clinical benefits, yet carried risks and would require physicians to prescribe their dialysis procedures differently. It would be particularly true for the physicians that round at multiple clinics, even at different companies with different protocols and acid concentrates in use. But DaVita, the plaintiffs argued, had already invested too much in GranuFlo at that point to risk its rejection at the clinic level, according to Molly Booker, of counsel with Hagens Berman in Phoenix, who represented the plaintiffs in trial.

“They didn’t want to seek physician approval, as the manufacturer expected, because it would have potentially nullified the cost savings they were expecting and cost them extra money in penalties under the contracts,” Booker said in an email. “They simply wanted to save the money off the product change.”

Arguing a dialysis-related wrongful death case to a jury can be an uphill battle in a couple of ways, Booker said.

“It’s very challenging to, in seven days, get a lay jury up to speed on a very complicated medical treatment,” Booker said. She added that her trial team “kept it simple” and benefited from expert witnesses who could clearly explain dialysis procedures and the responsibilities of those who provide them.

Establishing causation was another major hurdle, Booker said. It takes careful work to prove causation in wrongful death cases where patients had many underlying health issues that also could have contributed to their deaths. Dialysis patients almost always have preexisting conditions that lower their life expectancy, such as diabetes, high blood pressure and structural heart damage. The plaintiffs’ team had to convince the jury that it’s certain that GranuFlo contributed to the patients’ deaths when they were already on dialysis and hence already sick.

DaVita argued that even the plaintiffs’ expert witnesses testified that GranuFlo was a safe product when used correctly, and they never said it was used incorrectly on the dates of the patients’ deaths, according to DaVita’s motion for judgment as a matter of law. Physicians who testified they were aware of the Granuflo use and its additional acetate levels testified that they didn’t prescribe differently with that information, DaVita said.

Booker said the jury’s verdict issued a “very important statement” to the dialysis industry.

“And that statement is, ‘We will not tolerate you acting negligently and fraudulently at the expense of vulnerable patients … and we want to deter DaVita, and others in the industry, from this behavior in the future.’ ”

In its response to the verdict, DaVita maintained that GranuFlo was FDA-approved and that its “alleged negative clinical side effects have been debunked.” The company also said that there was “substantial evidence” in trial that GranuFlo was safe and effective, and that neither the company nor Fresenius hid information that it was unsafe.

— Doug Chartier

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