United States ex rel. Fesenmaier v. Cameron-Ehlen Grp.
| Decision Date | 12 January 2021 |
| Docket Number | Case No. 13-cv-3003 (WMW/DTS) |
| Parties | United States of America, ex rel. Kipp Fesenmaier, Plaintiffs, v. The Cameron-Ehlen Group, Inc., and Paul Ehlen, Defendants. |
| Court | U.S. District Court — District of Minnesota |
This matter is before the Court on the parties' cross-motions for summary judgment and to exclude expert testimony. (Dkts. 624, 630, 639, 641.) In addition, the parties cross-appeal the magistrate judge's July 10, 2020 Order, which granted in part the parties' cross-motions for sanctions and denied Plaintiffs' motion to compel discovery. (Dkts. 699, 701.) For the reasons addressed below, the parties' motions for summary judgment are denied, the parties' motions to exclude expert testimony are granted in part and denied in part, and the magistrate judge's July 10, 2020 Order is affirmed in part and reversed in part.
Defendant The Cameron-Ehlen Group, Inc., doing business as Precision Lens (Precision Lens), is a distributor of intraocular lenses (IOLs) and other products related to ophthalmic surgeries. Defendant Paul Ehlen is the founder and majority owner of Precision Lens. Precision Lens provides ophthalmic supplies and equipment to ophthalmologists and facilities for use in ophthalmology procedures, including cataract surgeries. Relator Kipp Fesenmaier worked for Sightpath Medical, Inc. (Sightpath), a corporate partner of Precision Lens, for approximately 15 years, including several years as a vice president of Sightpath.
Fesenmaier filed a qui tam complaint in November 2013 against Precision Lens and Ehlen.1 Plaintiff United States of America filed an intervenor complaint against Precision Lens and Ehlen in February 2018. The intervenor complaint alleges that Precision Lens and Ehlen offered unlawful kickbacks and that, as a result of those kickbacks, false and fraudulent claims for payment were made to federal health care programs, including Medicare, in violation of the False Claims Act (FCA), 31 U.S.C. § 3729(a)(1), (a)(2).2
The parties now cross-move for summary judgment and to exclude expert testimony. Specifically, Plaintiffs move for partial summary judgment as to a subset of their FCA claims and to exclude the testimony of three of Defendants' proposed experts. Defendants move for summary judgment as to all of Plaintiffs' FCA claims and to exclude the expert testimony of two of Plaintiffs' proposed experts. The parties also cross-appeal the magistrate judge's July 10, 2020 Order, which granted in part the parties' cross-motions for sanctions and denied Plaintiffs' motion to compel discovery.
Plaintiffs move for partial summary judgment as to a subset of the alleged false claims at issue in this case, arguing that the undisputed facts establish FCA violations as to Medicare claims resulting from kickbacks Defendants provided to 18 physicians. Defendants move for summary judgment as to all of Plaintiffs' claims, arguing that Plaintiffs cannot prove falsity or causation—essential elements of their FCA claims.
Summary judgment is proper when, viewing the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor, there is "no genuine dispute as to any material fact" and the moving party is "entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Windstream Corp. v. Da Gragnano, 757 F.3d 798, 802-03 (8th Cir. 2014). A genuine dispute as to a material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To defeat a motion for summary judgment, the opposing party must cite with particularity those aspects of the record that support any assertion that a fact is genuinely disputed. Fed. R. Civ. P. 56(c)(1)(A); accord Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
Plaintiffs move for partial summary judgment, arguing that the undisputed facts establish FCA violations as to Medicare claims resulting from kickbacks that Defendants provided to 18 physicians. Because Plaintiffs bear the burden of proving their claims, theyare entitled to summary judgment only if they establish every essential element of those claims based on undisputed facts in the record.
The FCA imposes liability on anyone who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" to the United States. United States ex rel. Strubbe v. Crawford Cnty. Mem'l Hosp., 915 F.3d 1158, 1163 (8th Cir. 2019) (quoting 31 U.S.C. § 3729(a)(1)(A)). "The FCA attaches liability, not to the underlying fraudulent activity, but to the claim for payment." Id. (quoting Olson v. Fairview Health Servs. of Minn., 831 F.3d 1063, 1070 (8th Cir. 2016)). The elements of an FCA claim are (1) the defendant presented a claim for payment to the United States, (2) the claim was false or fraudulent, and (3) the defendant knew the claim was false or fraudulent. Olson, 831 F.3d at 1070; see also 31 U.S.C. § 3729(a)(1)(A).
Here, Plaintiffs' FCA claims are premised on Defendants' alleged violations of the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b). An unlawful kickback in violation of the AKS may result in a violation of the FCA if a Medicare claim submitted to the United States "includes items or services resulting from a violation of" the AKS. 42 U.S.C. § 1320a-7b(g). Four elements comprise a violation of the AKS: (1) the defendant acted knowingly and willfully; (2) the defendant offered or paid any remuneration—including a kickback, bribe, or rebate—directly or indirectly, overtly or covertly, in cash or in kind, to any person; (3) the remuneration was offered or paid to induce such person to purchase, lease, order—or arrange for or recommend purchasing, leasing, or ordering—any good, facility, service, or item, or to refer an individual to a person for the furnishing of any item or service; and (4) such good, facility, service, or itemwas one for which payment may be made in whole or in part under a federal healthcare program. See 42 U.S.C. § 1320a-7b(b)(2); see also United States v. Nerey, 877 F.3d 956, 968 (11th Cir. 2017); United States v. St. Junius, 739 F.3d 193, 210 n.18 (5th Cir. 2013).
There is no dispute that the fourth element of an AKS violation is satisfied here—namely, that the products Defendants sold to physicians are goods for which payment may be made under Medicare.3 But the parties disagree as to whether undisputed facts establish the other three elements of an AKS violation: knowledge and willfulness, remuneration, and inducement. The Court addresses each element in turn.
The "knowingly and willfully" element of an AKS violation requires a defendant to know that the conduct at issue was wrongful. United States v. Jain, 93 F.3d 436, 440-41 (8th Cir. 1996). A defendant need not have acted with the specific intent to violate the AKS. Id. In both civil and criminal contexts, "circumstantial evidence can demonstrate willfulness" and is "just as probative as direct evidence." United States v. Hirani, 824 F.3d 741, 747 (8th Cir. 2016); accord United States v. Starks, 157 F.3d 833, 839 n.8 (11th Cir. 1998) ().
Plaintiffs contend that there is no genuine dispute that Defendants knew their conduct was wrongful. The alleged AKS violations occurred between 2006 and 2015.Ehlen testified that, as of 2006, "I don't believe that I felt I could take [physicians] on trips and pay for them." He also testified that, at all times between 2005 and 2015, he understood that it was wrongful to subsidize physicians' travel and entertainment. The record reflects that, in 2007, Ehlen understood that Precision Lens was required to split travel costs with physicians or ask physicians to reimburse Precision Lens for the cost of any trip. During the relevant time period, Precision Lens maintained an account that it referred to as a "slush fund" or "secret fund" from which Precision Lens paid for travel involving physicians. And the record includes evidence that, on multiple occasions between 2002 and 2013, Precision Lens employees researched and sought legal advice about the AKS and other ethical guidelines that prohibit providing remuneration to physicians.
Defendants do not directly address the knowledge and willfulness element of an AKS violation or dispute the accuracy of the foregoing evidence. Instead, Defendants argue and cite evidence suggesting that they followed the advice they received regarding AKS compliance. But even accepting this evidence as true, the fact that Defendants may have sought and followed legal advice on certain occasions does not negate the undisputed evidence that Defendants knew, during the relevant time period, that providing remuneration to physicians was wrongful. Significantly, Defendants make no effort to refute Plaintiffs' evidence of furtive conduct, such as Defendants' express efforts to put "distance" between Precision Lens and the alleged misconduct and Defendants' use of a "slush fund" or "secret fund" to pay for physicians' travel.
For these reasons, if any violation of the AKS occurred, the undisputed evidence reflects that such conduct was committed knowingly and willfully.
To prove an AKS violation, Plaintiffs also must establish that Defendants "offer[ed] or pa[id] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person." 42 U.S.C. § 1320a-7b(b)(2). "[A] remuneration is virtually anything of value." Shoemaker v. Cardiovascular Sys., Inc., 300 F. Supp. 3d 1046, 1049 (D. Minn. 2018) (internal quotation marks omitted). Although the relevant section of...
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