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

• Decision Date: 17 September 2013
• Docket Number: Civil Action No. 1:10–CV–1614–AT.
• Citation: 972 F.Supp.2d 1339
• Parties: UNITED STATES ex rel. Chester SALDIVAR, Plaintiffs, v. FRESENIUS MEDICAL CARE HOLDINGS, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

972 F.Supp.2d 1339

UNITED STATES ex rel. Chester SALDIVAR, Plaintiffs,

v.FRESENIUS MEDICAL CARE HOLDINGS, INC., Defendant.

Civil Action No. 1:10–CV–1614–AT.

United States District Court,

N.D. Georgia,

Atlanta Division.

Sept. 17, 2013.

Jamie M. Bennett, Melissa A. Roover, Nathan M. Peak, Sidney Schupak (Ashcraft & Gerel, LLP); Andrea Solomon Hirsch (Herman Gerel, LLP), for Plaintiffs.

James F. Bennett, Lisa S. Hoopenjans, Megan Heinsz, (Dowd Bennett LLP); Joseph Matthew Maguire, Jr. (Parks Chesin & Walbert, P.C.), for Defendant.

Neeli Ben–David, Mina Rhee (U.S. Attorney's Office–ATL), for United States.

ORDER

AMY TOTENBERG, District Judge.

Plaintiff Chester Saldivar (“Relator”) brings this case as a qui tam relator on behalf of the United States government. Relator alleges that his former employer, Defendant Fresenius Medical Care Holdings, Inc. (“Fresenius”) violated the False Claims Act by fraudulently billing the Centers for Medicare & Medicaid Services (“CMS” or “Medicare”) for medications it received for free. This matter is before the Court on the parties' cross-motions for summary judgment [Docs. 93, 100].¹

I. Standard for Summary Judgment

The Court must grant summary judgment if the record shows “that there is no genuine issue 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 issue 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 issue is material if resolving the factual issue might change the suit's outcome under the governing law. Id. The Court should grant the motion only if no rational fact finder could return a verdict in favor of the non-moving 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 Products, 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. Grp. 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. Factual Background

Keeping in mind that when deciding a motion for summary judgment, the Court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion, the Court provides the following statement of facts. See Optimum Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d 1231, 1241 (11th Cir.2007) (observing that, in connection with summary judgment, the court must review all facts and inferences in the light most favorable to the non-moving party). This statement does not represent actual findings of fact. In re Celotex Corp., 487 F.3d 1320, 1328 (11th Cir.2007). Instead, the Court has provided the statement simply to place the Court's legal analysis in the context of this particular case or controversy.²

Fresenius is the owner and operator of outpatient renal dialysis facilities across the country. (Def. Mot. Summ. J., Ex. A (“Castle Decl.”) ¶ 5, Doc. 100–4.) ³ Fresenius's patients suffer from chronic renal failure that has advanced to End Stage Renal Disease (“ESRD”). ( Id. ¶ 6.) ESRD patients often require hemodialysis, which uses artificial methods to clean and filter the blood. ( Id.) For many ESRD patients, the treatment plan includes the administration of the intravenous drugs epoetin alfa (patented and branded as Epogen® (“Epogen”) by the pharmaceutical company Amgen) and paricalcitrol (patented and branded as Zemplar® (“Zemplar”) by the pharmaceutical company Abbott). ( Id. ¶¶ 13, 16, 18.) These medications are administered by injecting them through syringes inserted into plastic blood lines (tubing) that are connected to patients' vascular access points. ( Id. ¶ 8.)

Manufacturers of Epogen and Zemplar distribute the drugs in individual vials. Consistent with industry standards and federal regulations, the manufacturers include in each vial a surplus volume of each drug, referred to as “overfill.” ( Id. ¶¶ 22–23.) For example, a 5–unit vial of Zemplar may, in fact, contain 6 units of the drug. ( See id.) This overfill ensures that the nurses administering the drug will be able to extract at least the labeled amount from the container. ( Id. ¶ 22.) The amount of overfill is determined by the manufacturer and can vary. ( Id.)

When Fresenius purchases Epogen or Zemplar from the manufacturer, it purchases the drugs for a contracted price based on the number of “packs”, “cases”, or “vials” it receives. ( See Ex. HH (“McGorty Decl.”) ¶ 14, Doc. 103–5; Id. Ex. 5, Doc. 103–5 at 100 and 103–6 at 1–7.) For example, a “pack” of Epogen consists of 10 vials at different units, and a “case” consists of 10 “packs”. ( Id. ¶ 14a.) According to Fresenius, it never purchases Epogen or Zemplar based on the actual amount of drugs in each vial. ( See id. ¶¶ 14a, 14b.) Thus, even though the labeled amount on each vial might read, for example, 5 units, Fresenius claims that it contracts to purchase the entire contents of the vials, including the 5 units and any additional overfill. ( Id.)

During the times at issue in this case, Fresenius used overfill in Epogen and Zemplar vials to fill additional or larger doses that were then administered to patients. (Castle Decl. ¶ 24, Doc. 100–4.) According to Fresenius's Senior Vice President and Deputy General Counsel for Litigation, Ronald L. Castle, Fresenius “has openly, routinely, and regularly directed its professional facility staff (nurses) to utilize as much of the overfill as possible.” ( Id.) The practice of using overfill eliminated wastage and allowed for a more efficient utilization of the expensive drug. ( Id. ¶¶ 24–26.) Relator does not challenge Fresenius's use of overfill and in fact, admits that overfill use “is and always has been legal.” ( E.g., Relator Resp. Def. SUMF ¶¶ 16, 18–30, Doc. 120.) See also75 Fed.Reg. 73170, 73467 (Nov. 29, 2010) (“Our policy is not intended to allow, prohibit, or otherwise regulate the amount of overfill that manufacturers include in a container, or how that overfill is used in clinical practice.”).

Castle admits, however, that Fresenius not only used overfill but also that Fresenius has billed Medicare for the use of overfill. “[Fresenius] has openly invoiced and received reimbursement from the Medicare program at the per 1000–units (Epogen®) or per-microgram (Zemplar®) rates established by CMS for the Medicare program without regard to whether some or all of the medication actually administered to particular patients can literally be attributable to the ‘overfill’ portion of the medication in the vial.” ( Id. ¶ 24.) Relator challenges this overfill billing practice as a violation of the False Claims Act because, according to Relator, Fresenius does not purchase the overfill and thus cannot be reimbursed for its use.

III. Procedural Background

Relator sued Fresenius in this Court on January 24, 2011,⁴ alleging several claims:

• Count 1: Violation of the FCA for submitting false or fraudulent claims with respect to Zemplar overfill reimbursement and making false records or statements material to such claims

• Count 2: Violation of the FCA by concealing or improperly avoiding or decreasing its own obligation to reimburse the Government for Zemplar overfill reimbursement as described in Count 1

• Count 3: Violation of the FCA by submitting false or fraudulent claims with respect to Epogen overfill reimbursement and making false records or statements material to such claims

• Count 4: Violation of the FCA by concealing or improperly avoiding or decreasing its own obligation to reimburse the Government for Epogen overfill reimbursement as described in Count 3

• Counts 5–22: Violation of various state-law False Claims Act equivalents

Fresenius filed a Motion to Dismiss on July 6, 2011. (Mot. Dismiss, Doc. 42.) ⁵ Fresenius argued that the False Claims Act's “public disclosure” bar precludes Relator from bringing these claims. Fresenius also argued that Relator had failed to plead his fraud claims with sufficient particularity under Rule 9(b) of the Federal Rules of Civil Procedure....