Washington state accuses largest dialysis providers DaVita, Fresenius of suppressing competition

By Jonathan Stempel

Nov 10 (Reuters) - Washington state filed an antitrust lawsuit on Tuesday accusing DaVita DVA.N and Germany's Fresenius Medical Care FMEG.DE, the largest kidney dialysis providers in the US, of suppressing competition for kidney specialists, reducing treatment options for patients suffering from end-stage renal disease.

The complaint filed by Washington Attorney General Nick Brown challenged the defendants' alleged longstanding practice of requiring kidney specialists, or nephrologists, to sign noncompete agreements when they serve as medical directors overseeing and assuring the safety of dialysis centers.

Washington said this hinders the opening of competing dialysis centers by making it harder to hire medical directors, as required by Medicare regulations. Patients are harmed because the lack of competition reduces the incentive to improve quality, innovate and provide access to care, the state added.

In a statement, Denver-based DaVita said: “The Washington Attorney General’s allegations present a fundamentally distorted picture of our medical director agreements and the physicians who serve in these critical roles." It said it would vigorously defend the lawfulness of its "longstanding arrangements with independent physician practices."

Fresenius did not immediately respond to requests for comment. Washington filed its complaint in a state court in Thurston County, which includes the state capital Olympia.

In April 2024, the US Federal Trade Commission began investigating the alleged use of noncompete agreements for medical directors from January 2016 to the present, and issued civil investigative demands to DaVita and Fresenius, regulatory filings show.

Both companies have said they are cooperating.

Brown said DaVita operates 51 dialysis centers in the state, while Fresenius operates 29. He said parts of the state have only one dialysis provider, and noncompete agreements help the companies ensure monopolies.

DaVita's largest shareholder is Berkshire Hathaway BRKa.N, which owns about a 45% stake.

The complaint alleges violations of the Washington Consumer Protection Act and Washington Noncompetition Covenants Act. It seeks to void noncompete agreements for all current and former medical directors, and obtain civil fines of up to $7,500 per violation.