The Washington State Attorney General has sued the state’s two largest providers of dialysis services for allegedly imposed illegal noncompete requirements on some staff at their dialysis centers, reducing treatment options for patients and stymying competition. 

DaVita Inc. and its subsidiaries operate 51 dialysis centers across Washington. Their largest competitor, Fresenius Medical Care Holdings Inc., and its subsidiaries run 29 dialysis centers in the state. Both operate dialysis centers in the Tri-Cities. 

According to the state’s complaint, the companies have illegally required part-time medical directors at their centers to agree to noncompete provisions, preventing them from taking on part-time work at a competing center in the same geographic region. The noncompete agreements also make it difficult for other dialysis centers not associated with the two companies to operate, limiting treatment options. 

“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,” said Attorney General Nick Brown in a statement. “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.” 

A state law passed in 2019 restricts the instances where employers can impose noncompete agreements on their employees. State justice officials allege DaVita and Fresenius knew about the law and in some cases, deliberately ignored it to further cement their market dominance. 

In a statement provided to Reuters, 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." 

A Fresenius spokesperson told Becker’s ASC Review in a statement that it also holds “longstanding partnerships with physicians and physician practices across the United States” and that its “contracting with these groups who serve as medical directors in our facilities complies with the law. Medical directors are critical to our provision of high-quality care to our patients and we value our relationships with them.”