Washington Attorney General Nick Brown on Tuesday filed a lawsuit accusing the state's two largest for-profit dialysis providers of imposing illegal noncompete agreements on medical directors, blocking competition and reducing care options for kidney failure patients.
Brown filed the complaint in Thurston County Superior Court against DaVita Inc. (DVA), Fresenius Medical Care Holdings Inc. (FMS) and their subsidiaries.
DaVita operates 51 dialysis centers across Washington, while Fresenius runs 29 facilities.
How Noncompete Agreements Block Dialysis Competition
Roughly 9,000 Washington residents with end-stage renal disease rely on dialysis to filter waste and fluid from their blood. Patients typically visit treatment centers three times a week for several hours.
Medicare regulations require these clinics to hire kidney specialists, known as nephrologists, as part-time medical directors. For years, both companies unlawfully forced medical directors to sign noncompete agreements barring them from taking part-time roles at rival centers in the same geographic area.
The companies even extended these restrictions to entire nephrology practices, blocking a medical director's colleagues from working for competitors.
These agreements prevent rival providers from opening new clinics or offering convenient in-home dialysis, preserving regional monopolies where only one provider operates.
"These giant, for-profit companies require doctors to sign noncompete agreements that violate Washington state law. They're doing that to corner the market and dictate to doctors where they can and can't work, but that leaves people with fewer options for care," Brown said.
"Our office is dedicated to protecting free and open competition so that Washingtonians can work where they want and people can get the treatment that they need," Brown commented.
Alleged Violations Of Washington Noncompetition Laws
Washington law has long protected open competition under the state Constitution and the Consumer Protection Act.
In 2019, the Legislature passed the Noncompetition Covenants Act to strictly limit noncompete agreements, including contracts for independent contractors earning below a specific income threshold.
The Attorney General's Office alleges that DaVita and Fresenius knew about the law and deliberately ignored it to cement their market dominance.
Prosecutors ask the court to invalidate the unenforceable agreements and impose penalties for each violation.
Price Action: Fresenius Medical Care shares were down 2.00% at $21.77, and DaVita shares were down 3.57% at $176.94 at the time of publication on Thursday, according to market data.
