United States ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc.

Decision Date30 October 2015
Docket NumberCIVIL ACTION NO. 1:10–CV–1614–AT
Citation145 F.Supp.3d 1220
Parties United States ex rel. Chester Saldivar, Plaintiff, v. Fresenius Medical Care Holdings, Inc. d/b/a Fresenius Medical Care North America, Defendant.
CourtU.S. District Court — Northern District of Georgia

145 F.Supp.3d 1220

United States ex rel. Chester Saldivar, Plaintiff,
Fresenius Medical Care Holdings, Inc. d/b/a Fresenius Medical Care North America, Defendant.


United States District Court, N.D. Georgia, Atlanta Division.

Signed October 30, 2015

145 F.Supp.3d 1221

Neeli Ben–David, U.S. Attorney's Office, Andrea Solomon Hirsch, Herman Gerel, LLP, Atlanta, GA, Christopher V. Tisi, Melissa A. Roover, Nathan M. Peak, Jamie M. Bennett, Ashcraft & Gerel, LLP, Landover, MD, Jason Marcus, Bracker & Marcus LLC, Marietta, GA, Julie K. Bracker, Mike Bothwell, The Bothwell Law Group, P.C., Roswell, GA, Sidney Schupak, Ashcraft & Gerel, LLP, Alexandria, VA, for Plaintiff.

Edward L. Dowd, Jr., James F. Bennett, James G. Martin, Lisa S. Hoppenjans, Megan Heinsz, Dowd Bennet, LLP, St. Louis, MO, Juanita Rose Brooks, Fish & Richardson, San Diego, CA, Joseph Matthew Maguire, Jr., Parks Chesin & Walbert, P.C., Atlanta, GA, for Defendant.


Amy Totenberg, United States District Judge

This qui tam action arises out of allegations that Defendant Fresenius Medical Care Holdings, Inc. d/b/a Fresenius Medical Care North America (“Fresenius” or “FMCNA”) violated the False Claims Act (“FCA”), 31 U.S.C. § 3729, on a regular basis when it submitted requests for reimbursement for lucrative dialysis drugs that it received for free. Relator Chester Saldivar alleges that Fresenius billed Medicare for administration of overfill—a varying amount of extra medicine contained in individual vials the purpose of which is to facilitate extraction of the labeled amount on the vial. The Court previously held, that because overfill did not represent a cost incurred by Fresenius, Fresenius's overfill billing practices were impermissible under the applicable Medicare rules and regulations from 2006 through 2010. Thus, billing for overfill during this time constituted a “false claim” under the FCA.

145 F.Supp.3d 1222

However, to prevail on an FCA claim, Relator must also prove that Fresenius knowingly submitted the false claims. Under the FCA, “knowingly” “means that a person, with respect to information (i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b)(1)(A).

The parties have filed cross-motions for summary judgment addressing this additional element of Relator's FCA claim [Docs. 217, 221]. After a thorough review of the extensive record, and with the benefit of oral argument, the Court GRANTS Fresenius's motion [Doc. 221] and DENIES Relator's motion [Doc. 217]. Although the record contains some evidence that Fresenius had the necessary information at its disposal to deduce that billing for overfill was impermissible, there is no evidence that Fresenius actually knew that billing for administered overfill was impermissible, and insufficient evidence from which a reasonable jury could find Fresenius acted with deliberate ignorance or reckless disregard as to the impermissibility of billing for administered overfill.


I. Legal Standard ...1223

II. Overview ...1223

A. Epogen and Zemplar Use ...1224

B. Medicare Reimbursement for Epogen and Zemplar ...1227

C. The 2011 Regulation Prohibiting Overfill Billing ...1228

D. First Cross–Motions for Summary Judgment: Falsity ...1229

III. Factual Background ...1231

A. Fresenius's Belief Regarding Overfill Billing ...1231

B. OIG Reviews and Investigations and CMS's Reimbursement Calculations ...1233

1. 1997 OIG Review of Epogen Reimbursement ...1233

2. The Medicare Modernization Act of 2003, the 2004 OIG Review of Medicare Reimbursement for ESRD Drugs, and the 2005 Average Acquisition Cost Rule ... 1234

3. The ASP Methodology and its Disregard for Overfill ...1237

4. Other OIG Investigations ...1238

C. CMS Cost Reports ...1239

D. CDC and CMS Changes to the Reentry Protocol ...1239

E. Investigations and Other Qui Tam Actions ...1240

1. Ecksel and Zwick ...1240

2. NMC and the Corporate Integrity Agreement (CIA), 2000–2008 ...1241

3. Hamel ...1244

4. Gambro ...1244

5. Renal Care Group ...1245

6. Woodard ...1245

7. State Medicaid Investigations ...1245

F. MedPAC Presentations ...1246

G. SEC Filings ...1246

H. TrailBlazer ...1247

I. The 2010 Rule ...1250

J. CMS's Knowledge ...1252

K. Expert Testimony ...1253

IV. Fresenius's Motion for Summary Judgment ...1254

A. Falsity ...1254

B. Knowledge ...1255

1. Recklessness ...1257

2. Actual Knowledge ... 1267

C. Conclusion ... 1268

V. Relator's Motion for Partial Summary Judgment ...1268

VI. Conclusion ...1270

145 F.Supp.3d 1223

I. Legal Standard

The Court may grant summary judgment only if the record shows “that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual dispute is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is material if resolving the factual issue might change the suit's outcome under the governing law. Id. The motion should be granted only if no rational fact finder could return a verdict in favor of the nonmoving party. Id. at 249, 106 S.Ct. 2505.

When ruling on the motion, the Court must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in the non-moving party's favor. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The moving party need not positively disprove the opponent's case; rather, the moving party must establish the lack of evidentiary support for the non-moving party's position. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets this initial burden, in order to survive summary judgment, the non-moving party must then present competent evidence beyond the pleadings to show that there is a genuine issue for trial. Id. at 324–26, 106 S.Ct. 2548. The essential question is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52, 106 S.Ct. 2505.

The standard of review for cross-motions for summary judgment does not differ from the standard applied when only one party files a motion, but simply requires a determination of whether either of the parties deserves judgment as a matter of law on the facts that are not disputed. Am. Bankers Ins. Group v. United States, 408 F.3d 1328, 1331 (11th Cir.2005). The Court must consider each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration. Id. The Eleventh Circuit has explained that “[c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.” United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984). Cross-motions may, however, be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the controlling legal theories and material facts. Id. at 1555–56.

II. Overview1

To contextualize the instant cross-motions for summary judgment addressing Fresenius's corporate intent, the Court provides an overview of the factual and legal background of this case. The Court

145 F.Supp.3d 1224

begins first with a general description of the drugs at issue—epoten alpha, commercially sold as Epogen ®, (“Epogen ” or “EPO”), and paricalcitrol (a Vitamin D supplement), commercially sold as Zemplar® (“Zemplar”)—and Fresenius's practice of utilizing, administering and billing Medicare for overfill of these drugs. The Court then briefly describes the most relevant Medicare reimbursement rules applicable to the administration of these drugs by facilities such as Fresenius. The Court next highlights the 2011 Centers for Medicare & Medicaid Services (“CMS”) rule, which retrospectively announced that overfill had not been reimbursable under the Medicare rules since at least 2006 and prospectively, expressly prohibited billing for overfill starting January 1, 2011. The Court finally summarizes this Court's previous decision that, consistent with CMS's retrospective explanation of the Medicare landscape, overfill administration was not reimbursable from 2006 through 2010.

The Court then provides a description of the factual background in Part III, starting with a summary of the direct evidence of Fresenius's corporate knowledge, including testimony of Fresenius's executives and attorneys. The Court then dives...

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