DaVita And Former CEO Kent Thiry Indicted On Collusion Charges By Federal Grand Jury

Adrian Perez
Rich Pedroncelli/AP Photo
In this photo taken Monday, Sept. 24, 2018, Adrian Perez undergoes dialysis at a DaVita Kidney Care clinic in Sacramento, Calif.

Updated 9:28 p.m.

A massive Denver-based dialysis provider and its former CEO were indicted Thursday on charges that they colluded with a competitor and agreed not to recruit each other’s top executives.

The indictment names both Davita Inc. and former CEO Kent Thiry, along with competitor Surgical Care Affiliates and a related entity. Davita and Thiry are charged with “participation in two separate conspiracies to suppress competition for the services of certain employees,” according to a release from the U.S. Department of Justice.

“These charges show a disturbing pattern of behavior among health care company executives to conspire to limit the opportunities of workers,” said Steven M. D’Antuono, assistant director in charge of the FBI’s Washington Field Office. “The FBI is dedicated to working with our partners to hold those accountable who would engage in labor market collusion to the detriment of their employees.”

The indictment charges that two schemes that are the subject of the indictment began in 2012 and lasted until 2019. Thiry and the companies all denied wrongdoing and vowed to fight the charges.

Both of the companies and Thiry pushed back against the charges

Both companies described the government’s charges as a novel and unwarranted exercise of antitrust law.   

In a statement, Davita said charges against the company are “unjust and unwarranted” and called the government’s case an unprecedented and untested application of the antitrust laws to alleged discussions involving a former executive that occurred many years ago.”

Davita said it will vigorously defend the company against what it called an  “unjustified action,” adding that the evidence will demonstrate “the government has chosen to unjustly attack our reputation.”

Through a spokesperson, Thiry also denied the charges.

“These allegations are false and rely on a radical legal theory about senior executive recruitment without precedent in U.S. history,” said Karen Crummy, spokesperson for Thiry. “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.”

In January, Surgical Care Affiliates, also called SCA, issued a similar denial.

“The position taken by the government in this matter represents a novel application of the antitrust laws as they relate to employee recruitment, for which there is no precedent or foundation,” the company said.

In a motion to dismiss filed in the north Texas case, attorneys argue that a criminal case like this has never previously been brought by the government.

“This prosecution marks the first time in history that the government has tried to prosecute anyone criminally for allegedly entering into an agreement not to solicit another company’s Employees,” according to the brief. “That is not because Congress recently passed a new statute criminalizing nonsolicitation agreements. Instead, the criminal prohibition the government invokes to bring this novel prosecution is the notoriously imprecise Section 1 of the Sherman Act, which has been on the books for over a century.”

The history of Davita in Denver

Davita moved its headquarters from El Segundo, Cal. to Denver in 2009. The company is a major presence in the Union Station area of Lower Downtown, and Thiry has become a prominent player in local and state politics.

Davita has 55,000 U.S. employees and works in 10 other nations, providing dialysis services to hundreds of thousands of patients. But this is not the company’s first brush with the law.

The company paid nearly $1 billion in civil penalties starting in 2012 to settle whistleblower complaints related to overcharging Medicare or paying kickbacks to kidney doctors. The company did not acknowledge wrongdoing in those cases.

Thiry has spent millions of dollars in Colorado on a variety of ballot issues over the years. He was instrumental in the passage of amendments Y and Z in 2018,  which set up independent commissions to redraw political lines in the once-in-a-decade redistricting process. Thiry also helped spearhead a successful ballot measure to create a presidential primary election in Colorado and open up primaries to unaffiliated voters. Separately, he has donated tens of thousands of dollars to Denver school board candidates over the years.

He was also working on efforts to provide loans for small businesses from both the public and private sector to help small businesses recover from the pandemic.

The flamboyant former CEO known for his elaborate corporate conventions was also featured in a scathing 2017 report on HBO’s Last Week Tonight.

The other company involved, Surgical Care Affiliates LLC, was first indicted in January in north Texas. They have 10,000 employees who connect patients to local health care options.

The basis for the charges

DaVita and Thiry are charged with two counts of violating the Sherman Act, according to the indictment, which cites specific examples of acts the grand jury said formed the basis for the charges.

For example, according to the indictment, on Oct. 20, 2014, Thiry emailed an executive at Surgical Affiliates just to let them know that he would not recruit from their business.

“Someone called me to suggest they reach out to your senior biz dev guy for our corresponding spot,” the grand jury said Thiry wrote in the email. “I explained I do not do proactive recruiting into your ranks.”

Just more than a year later, an SCA executive let a recruiter know that they were not to approach Davita employees about potential jobs.

“Note that [Company A, another competitor of SCA] and Davita are off limits to SCA,” the email said, according to the indictment.

But in a friend of the court brief filed in the north Texas case, the U.S. Chamber of Commerce argues that the allegations do not constitute criminal conduct.

“Businesses, employees, and consumers alike need certainty to structure their conduct and affairs,” the chamber argued. “Part of this certainty is knowing what conduct can lead to criminal prosecution. Allowing the [Department of Justice] to retroactively criminalize behavior strikes at the heart of the ordered liberty guaranteed to all Americans.”

A superseding indictment was issued in the Texas case on July 8.  

Davita and Thiry are scheduled for an initial court appearance on July 20 before Colorado U.S. Magistrate Judge Kristen L. Mix. 

If convicted, DaVita faces a maximum penalty of a $100 million fine per count. Thiry faces a maximum penalty of 10 years in prison and a $1 million fine per count.

Bente Birkeland contributed to this report.