Exhibit 10.38

DAVITA INC.

SEVERANCE PLAN

DaVita Inc., a Delaware corporation (the “Company”), hereby adopts the DaVita
Inc. Severance Plan (this “Plan”) for the benefit of certain Teammates of the
Company and its subsidiaries.

This Plan is intended to secure the continued services and ensure the continued
dedication of the Teammates (as defined in Section 1(c)) by providing to such
Teammates certain protections in the event of a Qualifying Termination (as
defined in Section 1(d)).

This Plan is intended to qualify as a Teammate welfare benefit plan as described
in section 3(1) of the Teammate Retirement Income Security Act of 1974, as
amended (“ERISA”).

1. Definitions. As used in this Plan, the following terms shall have the
respective meanings set forth below:

(a) “Code” means the Internal Revenue Code of 1986, as amended.

(b) “Company” means DaVita Inc., a Delaware corporation.

(c) “Teammate” means any person who is employed by the Company in an position of
Vice President or Director.

(d) “Qualifying Termination” means the involuntary termination of a Teammate’s
employment by the Company under circumstances for which the payment of severance
payments and benefits under this Plan is approved by the Senior Vice President
of People Services and the Assistant General Counsel – Labor of the Company;
provided, however, that a Teammate will not incur a Qualifying Termination and
will not receive severance payments and benefits under this Plan if (i) the
Teammate’s employment is terminated by the Company for any action which the
Company, in its sole discretion, determines is for material cause, including,
but not limited to, failure to perform job responsibilities, violation of the
Company’s policies and procedures, an act of fraud or dishonesty affecting or
involving the Company, or a breach of a material provision of the Teammate’s
employment agreement or other similar agreement with the Company, or (ii) a
Teammate in the position of Director is terminated during the first year of the
Teammate’s employment with the Company.

(e) “Termination Date” with respect to a Teammate means the date on which the
Teammate incurs a “separation from service” within the meaning of
Section 409A(a)(2)(A) of the Code.

(f) by reason of a Qualifying Termination.

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2. Payments and Benefits Upon Qualifying Termination. If a Teammate shall incur
a Qualifying Termination, and the Teammate (or the Teammate’s executor or other
legal representative in the case of the Teammate’s death or disability following
such termination) executes and does not revoke a waiver and release agreement
substantially in the form of Exhibit A hereto (the “Waiver and Release”) and a
noncompetition, nonsolicitation, confidentiality and cooperation agreement
substantially in the form of Exhibit B hereto (the “Noncompetition Agreement”)
within 28 days following the Termination Date, the Company shall provide to the
Teammate, as compensation for services rendered to the Company, and in
consideration of the covenants set forth in the Waiver and Release and
Noncompetition Agreement, the payments and benefits described in this Section 2.
Notwithstanding the foregoing provisions of this Section 2, if, as a result of a
Teammate’s termination of employment on the Termination Date, a Teammate is
entitled to severance payments and benefits from the Company or any of its
subsidiaries which are not payable pursuant to this Plan, but are payable
pursuant to an employment agreement or other compensation arrangement entered
into between such Teammate and the Company or any of its subsidiaries (“Other
Severance Payments and Benefits”), the payments and benefits to be received by
the Teammate pursuant to this Section 2 shall be reduced by the amount of the
Other Severance Payments and Benefits, if any, received by the Teammate.

(a) The Company shall continue to pay to the Teammate (or the Teammate’s
beneficiary or estate, as the case may be), commencing within 14 days following
the date of execution of the Waiver and Release and Noncompetition Agreement,
the Teammate’s base salary for the applicable period set forth below based on
the Teammate’s job classification and period of service:

 

Job Classification

 

Period of Service

 

Salary Continuation Period

Vice President   Less than one year   6 months Vice President   One year or more
  12 months Director   Less than 3 months   0-3 months Director   3 to 24 months
  3 months Director   More than 24 months   6 months

The applicable salary continuation period set forth above may be extended in the
sole discretion of the Chief Executive Officer or Chief Operating Officer of the
Company.

(b) The Company shall provide outplacement assistance to the Teammate, the
nature of which will be at the Company’s discretion, and which shall, in no
event be provided after the last day of the second calendar year following the
calendar year in which the termination date occurs.

(c) The Teammate’s stock options, restricted stock units, other stock-based
awards, and other long-term incentives shall be treated in accordance with the
terms of any agreements that Teammate has previously entered into with the
Company concerning these benefits.

3. Plan 409A of the Code. This Plan is intended to meet the requirements of
Section 409A of the Code, and shall be interpreted and construed consistent with
that intent.

 

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Notwithstanding any other provision of this Plan, to the extent that the right
to any payment (including the provision of benefits) to a Teammate hereunder
provides for the “deferral of compensation” within the meaning of
Section 409A(d)(1) of the Code, the payment shall be made (or provided) in
accordance with the following:

If the Teammate is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code on the date of the Teammate’s Termination
Date, then no such payment shall be made during the period beginning on the
Termination Date and ending on the date that is six months following the
Termination Date or, if earlier, on the date of the Teammate’s death, if the
earlier making of such payment would result in tax penalties being imposed on
the Teammate under Section 409A of the Code. The amount of any payment that
would otherwise be made during this period shall instead be made on the first
business day following the date that is six months following the Termination
Date or, if earlier, the date of the Teammate’s death. Each payment and benefit
hereunder shall constitute a “separately identified” amount within the meaning
of Treasury Regulation §1.409A-2(b)(2).

4. Plan Administration; Claims Procedure.

(a) This Plan shall be interpreted and administered by the Company, or if the
Company has delegated its authority to interpret and administer this Plan, by
the person or persons appointed by the Company from time to time to interpret
and administer this Plan (the “Plan Administrator”), who shall have complete
authority, in his or her sole discretion subject to the express provisions of
this Plan, to make all determinations necessary or advisable for the
administration of this Plan. All questions arising in connection with the
interpretation of this Plan or its administration shall be submitted to and
determined by the Plan Administrator in a fair and equitable manner in
accordance with the procedure for claims and appeals described in Section 4(b).

(b) Any Teammate whose employment has been terminated who believes that he or
she is entitled to receive benefits under this Plan, including benefits other
than those initially determined by the Plan Administrator to be payable, may
file a claim in writing with the Plan Administrator, specifying the reasons for
such claim. The Plan Administrator shall, within 90 days after receipt of such
written claim (unless special circumstances require an extension of time, but in
no event more than 180 days after such receipt), send a written notification to
the Teammate as to the disposition of such claim. Such notification shall be
written in a manner calculated to be understood by the claimant and in the event
that such claim is denied in whole or in part, shall (i) state the specific
reasons for the denial, (ii) make specific reference to the pertinent Plan
provisions on which the denial is based, (iii) provide a description of any
additional material or information necessary for the Teammate to perfect the
claim and an explanation of why such material or information is necessary, and
(iv) set forth the procedure by which the Teammate may appeal the denial of such
claim. The Teammate (or his or her duly authorized representative) may request a
review of the denial of any such claim or portion thereof by making application
in writing to the Plan Administrator within 60 days after receipt of such
denial. Such Teammate (or his or her duly authorized representative) may, upon
written

 

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request to the Plan Administrator, review any documents pertinent to such claim,
and submit in writing issues and comments in support of such claim. Within 60
days after receipt of a written appeal (unless special circumstances require an
extension of time, but in no event more than 120 days after such receipt), the
Plan Administrator shall notify the Teammate of the final decision with respect
to such claim. Such decision shall be written in a manner calculated to be
understood by the claimant and shall state the specific reasons for such
decision and make specific references to the pertinent Plan provision on which
the decision is based.

(c) The Plan Administrator may from time to time delegate any of his or her
duties hereunder to such person or persons as the Plan Administrator may
designate. The Plan Administrator is empowered, on behalf of this Plan, to
engage accountants, legal counsel and such other persons as the Plan
Administrator deems necessary or advisable for the performance of his or her
duties under this Plan. The functions of any such persons engaged by the Plan
Administrator shall be limited to the specified services and duties for which
they are engaged, and such persons shall have no other duties, obligations or
responsibilities under this Plan. Such persons shall exercise no discretionary
authority or discretionary control respecting the administration of this Plan.
All reasonable fees and expenses of such persons shall be borne by the Company.

5. Withholding Taxes. The Company will withhold from all payments due under this
Plan to each Teammate (or the Teammate’s beneficiary or estate) all taxes which,
by applicable federal, state, local or other law, the Company is required to
withhold therefrom.

6. Amendment. The Company shall have the right, in its sole discretion, pursuant
to action by the Chief Executive Officer of the Company, to amend this Plan in
any respect; provided, however, that no amendment may reduce any severance
payments or benefits due hereunder with respect to a Teammate who previously
incurred a Qualifying Termination and who has not forfeited such payments and
benefits pursuant to the Noncompetition Agreement. In the event that this Plan
is determined to be a “deferred compensation plan” subject to Section 409A of
the Code, the Committee shall, as necessary, adopt such conforming amendments as
are necessary to comply with Section 409A of the Code without reducing the
payments and benefits due to the Teammates hereunder.

7. Effect of Plan. Any amount payable pursuant to this Plan shall be reduced by
any other amount of severance relating to salary continuation or any other
continuation of medical coverage to be received by the Teammate upon termination
of employment of the Teammate under any severance plan, policy or arrangement of
the Company. Subject to the foregoing and to the provisions of Sections 2 and 8
hereof, the rights of, and benefits payable to, a Teammate pursuant to this Plan
are in addition to any rights of, or benefits payable to, a Teammate under any
other Teammate benefit plan or compensation program of the Company. All rights
of a Teammate under any such plan or program shall be determined in accordance
with the provisions of such plan or program.

 

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8. Offset; Mitigation.

(a) If the Company is obligated by law or contract to pay severance pay, notice
pay or other similar benefits, or if the Company is obligated by law to provide
advance notice of separation (“Notice Period”), then any payments hereunder
shall be reduced by the amount of any such severance pay, notice pay or other
similar benefits, as applicable, and by the amount of any severance pay, notice
pay or other similar benefits received during any Notice Period.

(b) Any amount payable pursuant to this Plan shall also be reduced by any amount
of compensation received by the Teammate from another employer (as a Teammate,
consultant, or independent contractor) during the applicable salary continuation
period set forth in Section 2(a) hereof. Teammate may not defer compensation
with his new employer or client or take any other action in an effort to avoid
the dollar-for-dollar reduction required by this Plan, and that if Teammate does
take such action, the benefits under this Plan may be reduced by the Plan
Administrator in its sole discretion.

(c) A Teammate who is entitled to receive severance payments and benefits
hereunder shall be obligated to seek other employment and to take all other
reasonable actions so as to mitigate the amounts payable and the benefits to be
provided to such Teammate under any of the provisions of this Plan.

9. Unfunded Plan. This Plan shall not be funded. No Teammate entitled to
benefits hereunder shall have any right to, or interest in, any specific assets
of the Company, but a Teammate shall have only the rights of a general creditor
of the Company to receive benefits on the terms and subject to the conditions
provided in this Plan.

10. Payments to Minors, Incompetents and Beneficiaries. Any benefit payable to
or for the benefit of a minor, an incompetent person or other person incapable
of giving a receipt therefor shall be deemed paid when paid to such person’s
guardian or to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the Company, the
Plan Administrator and all other parties with respect thereto. If a Teammate
shall die while any amounts would be payable to the Teammate under this Plan had
the Teammate continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to such person
or persons appointed in writing by the Teammate to receive such amounts or, if
no person is so appointed, to the estate of the Teammate.

11. Non-Assignability. None of the payments, benefits or rights of any Teammate
shall be subject to any claim of any creditor, and, in particular, to the
fullest extent permitted by law, all such payments, benefits and rights shall be
free from attachment, garnishment, trustee’s process or any other legal or
equitable process available to any creditor of such Teammate. Except as
otherwise provided herein or by law, no right or interest of any Teammate under
this Plan shall be assignable or transferable, in whole or in part, either
directly

 

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or by operation of law or otherwise, including without limitation by execution,
levy, garnishment, attachment or pledge; no attempted assignment or transfer
thereof shall be effective; and no right or interest of any Teammate under this
Plan shall be subject to any obligation or liability of such Teammate.

12. No Rights to Continued Employment. Neither the adoption of this Plan, nor
any amendment hereof, nor the creation of any fund, trust or account, nor the
payment of any benefits, shall be construed as giving any Teammate the right to
be retained in the service of the Company, and all Teammates shall remain
subject to discharge to the same extent as if this Plan had not been adopted.

13. Successors; Binding Agreement. This Plan shall inure to the benefit of and
be binding upon the beneficiaries, heirs, executors, administrators, successors
and assigns of the parties, including each Teammate, present and future, and any
successor to the Company or one of its subsidiaries. This Plan shall not be
terminated by any merger or consolidation of the Company whereby the Company is
or is not the surviving or resulting corporation or as a result of any transfer
of all or substantially all of the assets of the Company. In the event of any
such merger, consolidation or transfer of assets, the provisions of this Plan
shall be binding upon the surviving or resulting corporation or the person or
entity to which such assets are transferred. The Company agrees that
concurrently with any merger, consolidation or transfer of assets referred to in
this Section 16, it will cause any surviving or resulting corporation or
transferee unconditionally to assume all of the obligations of the Company
hereunder.

14. Headings. The headings and captions herein are provided for reference and
convenience only, shall not be considered part of this Plan and shall not be
employed in the construction of this Plan.

15. Notices. Any notice or other communication required or permitted pursuant to
the terms hereof shall have been duly given when delivered or mailed by United
States mail, first class, postage prepaid, addressed to the intended recipient
at his, her or its last known address.

16. Effective Date and Term. This Plan shall be effective as of the date hereof
and shall end on the date on which this Plan is terminated by the Company;
provided that this Plan and the obligations of the Company hereunder shall not
terminate with respect any severance payments or benefits due hereunder with
respect to a Teammate who previously incurred a Qualifying Termination and who
has not forfeited such payments and benefits pursuant to the Noncompetition
Agreement until such obligations have been fully satisfied by the Company.

17. Employment with, and Action by, Subsidiaries. For purposes of this Plan,
employment with the Company or actions taken by the Company with respect to the
Teammate shall include employment with or actions taken by any corporation or
other entity in which the Company has a direct or indirect ownership interest of
50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in the
election of directors.

 

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18. Governing Law; Validity. This Plan shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware (without
regard to principles of conflicts of laws) to the extent not preempted by ERISA
or other Federal law, which shall otherwise control. If any provision of this
Plan shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof, and this Plan shall be construed
and enforced as if such provision had not been included.