Gonzalez v. Fresenius Med. Care N. Am.

• Decision Date: 30 July 2012
• Docket Number: Nos. 10–50413,10–51171.,s. 10–50413
• Citation: 689 F.3d 470
• Parties: Rebecca GONZALEZ, Plaintiff–Appellant, v. FRESENIUS MEDICAL CARE NORTH AMERICA; Alfonso Chavez, M.D., Defendants–Appellees. Rebecca Gonzalez, Plaintiff–Appellant, v. Fresenius Medical Care North America; Alfonso Chavez, M.D.; Larry Ramirez; Bio–Medical Applications of Texas, Inc.; Fresenius Medical Care Holdings, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

689 F.3d 470

Rebecca GONZALEZ, Plaintiff–Appellant,

v.FRESENIUS MEDICAL CARE NORTH AMERICA; Alfonso Chavez, M.D., Defendants–Appellees.

Rebecca Gonzalez, Plaintiff–Appellant,

v.Fresenius Medical Care North America; Alfonso Chavez, M.D.; Larry Ramirez; Bio–Medical Applications of Texas, Inc.; Fresenius Medical Care Holdings, Inc., Defendants–Appellees.

Nos. 10–50413, 10–51171.

United States Court of Appeals, Fifth Circuit.

July 30, 2012.

Thomas E. Stanton (argued), Law Office of Thomas E. Stanton, El Paso, TX, for Plaintiff–Appellant.

James F. Bennett (argued), Jennifer Lynn Aspinall, Megan Susan Heinsz, Dowd Bennett, L.L.P., Saint Louis, MO, James O. Darnell, El Paso, TX, Christopher Stephen Johns (argued), Johns Marrs Ellis & Hodge, L.L.P., Austin, TX, for Defendants–Appellees.

Charles Wylie Scarborough (argued), U.S. Dept. of Justice, Civ. Div., Appellate Staff, Washington, DC, for United States of America, Amicus Curiae.

Appeals from the United States District Court for the Western District of Texas.

Before GARZA, DENNIS and HIGGINSON, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Plaintiff–Appellant Rebecca Gonzalez (“Relator”) brought a qui tam action under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., against Defendants–Appellees Fresenius Medical Care North America, Fresenius Medical Care Holdings, Inc., Bio–Medical Applications of Texas, Inc. (collectively, “Fresenius”), and Alfonso Chavez, M.D. Relator also brought retaliation claims against Fresenius and her former supervisor Larry Ramirez. The district court granted in part and denied in part the defendants' motions for judgment as a matter of law, and the jury returned a verdict in favor of the defendants on the remaining claims. The district court then awarded Fresenius $15,360 in attorney's fees from Relator's counsel under 28 U.S.C. § 1927. Relator now appeals the district court's judgment with respect to her FCA and retaliation claims. Relator's counsel also appeals the award of attorneys' fees. We affirm the judgment of the district court in all instances.

I

Fresenius is a provider of dialysis services to patients with end stage renal disease (ESRD).¹ Chavez is a nephrologist² serving as the medical director and attending physician at two of Fresenius's clinics. Relator's Fourth Amended Complaint alleged that while she was employed by Fresenius, Fresenius and Chavez submitted false claims to Medicare in violation of the FCA. Specifically, Relator alleged that Ramiro Devora and Arturo Orozco (“assistants”), two non-physicians who worked for Chavez, performed tasks and made patient-care decisions at Fresenius clinics in violation of state and federal regulations, and that Chavez billed Medicare for his assistants' work. Relator also contended that, in return for Fresenius overlooking his illegal use of assistants, Chavez referred patients from his private practice to Fresenius in violation of federal anti-kickback laws. After filing her qui tam action, Relator filed a separate complaint against Fresenius and Ramirez alleging that, in retaliation for her qui tam action, she was harassed, threatened, and eventually forced to resign.

The district court consolidated Relator's qui tam and retaliation actions, and Fresenius and Chavez filed motions to dismiss portions of Relator's complaints. The court granted the motions, leaving the following causes of action from the FCA Complaint viable at the start of trial: Count 1 (knowingly presenting fraudulent or false claims in violation of the FCA, § 3729(a)(1)); Count 2 (knowingly making a false record or statement in presentation of false claims in violation of the FCA, § 3729(a)(2)); Count 3 (presenting false claims for Medicare reimbursement for services rendered in violation of the Stark Law, 42 U.S.C. § 1395nn); Count 6 (presenting false claims for Medicare reimbursement for services rendered in violation of the Anti–Kickback Act, 42 U.S.C. § 1320a–7b(b)); and Count 7 (conspiring to submit false claims in violation of the FCA, § 3729(a)(3)). The following causes of action from the Retaliation Complaint were viable at the start of trial: Count 1 (retaliation in violation of the FCA, § 3730(h)), as against Fresenius; Count 2 (retaliatory constructive discharge in violation of the FCA, § 3730(h)), as against Fresenius; and Count 3 (intentional infliction of emotional distress) as against Fresenius and Ramirez. Relator, Fresenius, and Chavez all filed motions for summary judgment, which the court carried through trial.

At the close of Relator's case-in-chief, Fresenius and Chavez moved for judgment as a matter of law. The district court granted the motions in part and denied them in part, holding the defendants were entitled to judgment as a matter of law on Counts 1, 3, and 6 of the FCA Complaint, and Counts 1, 2, and 3 of the Retaliation Complaint. The court also concluded that, because Fresenius obtained judgment as a matter of law as to Count 1 of the FCA Complaint (knowingly presenting false claims, § 3729(a)(1)), only false claims by Chavez could form the basis for either Chavez's or Fresenius's liability under § 3729(a)(2) (false records or statements) or § 3729(a)(3) (conspiracy). The district court then submitted the following claims to the jury: Count 1 of the FCA Complaint (knowingly presenting false claims) as against Chavez only; Count 2 of the FCA Complaint (false records or statements) as against Chavez and Fresenius; and Count 7 of the FCA Complaint (conspiring to submit false claims) as against Chavez and Fresenius. The jury returned a verdict in favor of the defendants on all three counts.

Following the entry of judgment, all of the defendants moved for attorney's fees. Fresenius and Ramirez requested fees arising from their defense of Relator's retaliation claim, and Chavez requested fees for the entire lawsuit. The court awarded Fresenius $15,360 in attorney's fees from Relator's counsel under § 1927, finding that counsel unreasonably and vexatiously multiplied proceedings with respect to the retaliation suit. Relator timely appealed the district court's judgment in the FCA/retaliation case, and Relator's counsel separately appealed the award of attorney's fees. We consolidated the two appeals.

II

Relator first contends that the district court erred in granting Fresenius judgment as a matter of law on Count 1 of the FCA Complaint (knowingly presenting false claims, § 3729(a)(1)). She bases her argument on two separate legal theories: (1) that Fresenius falsely certified compliance with applicable statutes and regulations and (2) that Fresenius assisted in the presentation of claims that were “grounded in fraud.”³ We review the district court's grant of judgment as a matter of law de novo, applying the same legal standards as the district court. Price v. Marathon Cheese Corp., 119 F.3d 330, 333 (5th Cir.1997). Judgment as a matter of law is appropriate after “a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.” Fed.R.Civ.P. 50(a). “In evaluating such a motion, the court must consider all of the evidence in the light most favorable to the nonmovant, drawing all factual inferences in favor of the non-moving party, and leaving credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts to the jury.” Price, 119 F.3d at 333.

The False Claims Act is designed to permit “suits by private parties on behalf of the United States against anyone submitting a false claim to the Government.” Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 941, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997). The FCA imposes liability on an individual who:

(1) knowingly presents, or causes to be presented, to an officer or employee of the United States ... a false or fraudulent claim for payment or approval;

(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; [or]

(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid.

31 U.S.C. § 3729(a)(1)-(3) (2008).⁴ In determining whether liability attaches under the FCA, this court asks “(1) whether there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to pay out money or to forfeit moneys due (i.e., that involved a claim).” United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 467 (5th Cir.2009) (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.2008)) (internal quotation marks omitted).

“[C]laims for services rendered in violation of a statute do not necessarily constitute false or fraudulent claims under the FCA.” United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir.1997). However, under a false certification theory, a defendant may be liable where “the government has conditioned payment of a claim upon a claimant's certification of compliance with, for example, a statute or regulation” and the claimant “falsely certifies compliance with that statute or regulation.” Id. Relator alleged that Fresenius submitted claims based on a referral scheme that violated the Anti–Kickback Act, the Stark Law, and a host of federal and state regulations that govern dialysis facilities. According to Relator, Fresenius falsely certified compliance with these statutes and regulations in its annual cost reports.⁵

On the record before us, Fresenius's cost reports would present a difficult basis for FCA liability. Evidence adduced at trial showed that, although the cost reports were a condition of Medicare participation and failure to submit accurate cost reports would trigger Medicare's remedial scheme, the...