United States v. Senseonics Holdings, Inc.

• Decision Date: 03 March 2023
• Docket Number: SA-20-CV-00657-FB
• Parties: UNITED STATES OF AMERICA AND THE STATE OF TEXAS, EX REL. CHRISTOPHER A. CAREW Plaintiffs, v. SENSEONICS HOLDINGS, INC., A DELAWARE CORPORATION; AND SENSEONICS, INC., A DELAWARE CORPORATION, Defendants.
• Court: U.S. District Court — Western District of Texas

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UNITED STATES OF AMERICA AND THE STATE OF TEXAS, EX REL. CHRISTOPHER A. CAREW Plaintiffs,
v.
SENSEONICS HOLDINGS, INC., A DELAWARE CORPORATION; AND SENSEONICS, INC., A DELAWARE CORPORATION, Defendants.

No. SA-20-CV-00657-FB

United States District Court, W.D. Texas, San Antonio Division

March 3, 2023

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Honorable Fred Biery United States District Judge

This Report and Recommendation concerns Defendants' Motion to Dismiss the Amended Complaint [#31]. This case was referred to the undersigned for all pretrial proceedings pursuant to Western District of Texas Local Rule CV-72 and Appendix C on January 5, 2023 [#41]. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, it is recommended that Defendants' motion be granted.

I. Background

This case arises under the False Claims Act, 31 U.S.C. § 3729, et seq., and the Texas Medicaid Fraud Prevention Law, Tex. Hum. Res. Code § 36.001, et seq. Relator Christopher A. Carew, on behalf of the United States of America and the State of Texas,^[1] brings this action

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against his former employer, Defendants Senseonics, Inc., and its parent company, Senseonics Holdings, Inc. (collectively “Senseonics”), alleging that Senseonics paid kickbacks to physicians and patients for using their glucose-monitoring product, the Eversense Continuous Glucose Monitoring (CGM) System, in violation of federal and state law.

The False Claims Act imposes civil liability and treble damages on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to the United States government. 31 U.S.C. § 3729(a)(1)(A). It also subjects a person to liability who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” Id. at § 3729(a)(1)(B). Anyone who “conspires to commit a violation” of either of these subparagraphs is also liable for a statutory violation under the Act. Id. at § 3729(a)(1)(C).

Congress has, by statute, deemed all claims to federal payors that result from violations of the Anti-Kickback Statute to be false claims under the False Claims Act. 42 U.S.C. § 1320a-7b(g). The Anti-Kickback Statute is a criminal statute prohibiting the knowing and willful offering, solicitation, or receipt of any remuneration “to induce the referral of an individual for items or services that may be paid for by a federal health care program.” United States ex rel. Nunnally v. W. Calcasieu Cameron Hosp., 519 Fed. App'x 890, 892-93 (5th Cir. 2013); 42 U.S.C. § 1320a-7b(b)(2).

The Texas Medicaid Fraud Prevention Act (hereinafter “TMFPA”) similarly imposes penalties on a person who

knowingly makes or causes to be made a false statement or misrepresentation of a material fact to permit a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized

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Tex. Hum. Res. Code § 36.002(1). The TMFPA also penalizes a person who “knowingly conceals or fails to disclose information that permits a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized.” Id. § 36.002(2).

Relator's Original Complaint asserted causes of action under the False Claims Act (based on the Anti-Kickback Statute) and the TMFPA. Senseonics moved to dismiss the Complaint pursuant to Rules 9 and 12 of the Federal Rules of Civil Procedure, arguing Relator's pleadings failed to allege that actual false claims were submitted to a federal payor, among other discrete arguments for dismissal. The District Court granted the motion and ordered Relator to replead. (Order [#27].) Relator's First Amended Complaint is the live pleading currently before the Court.

According to the First Amended Complaint, from January to October 2019, Relator was employed as a Territory Manager for Senseonics in South Texas, where he managed the sales of Senseonics' products to endocrinologists and other physicians. (Am. Compl. [#28], at ¶¶ 3-5.) One of these products was the Eversense CGM System, which is composed of a sensor implanted under the skin, a removeable transmitter, and a software application for monitoring blood glucose levels. (Id. at ¶ 5.) The technology was designed to supplement traditional “fingerstick” measurements of glucose levels. (Id.) Every 90 days, a patient must visit his or her medical provider to have the implanted sensor removed and a new sensor inserted. (Id.)

Relator alleges that during his time working for Senseonics, he became concerned about various marketing and patient-solicitation practices he personally observed and became aware of through internal company communications. (Id. at ¶ 9.) Relator alleges that Senseonics had a practice of paying remuneration to physicians in the form of speaking fees, travel, meals, and

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procedure-reimbursement arrangements, in return for the physicians acting as key referral sources for prescriptions involving the Eversense CGM System. (Id. at ¶¶ 9-10.) Additionally, Relator alleges that Senseonics solicited patients under the auspices of marketing survey reimbursements and device trade-in payments, as well as paid for certain patient procedures, in order to create an “annuity” for health care providers. (Id.) Finally, Relator asserts that Senseonics directed sales personnel to handle protected health information (PHI) of patients on behalf of physician practices in order to secure sales of the Eversense CGM System. (Id.)

Based on these factual allegations, Relator's Amended Complaint asserts four claims for relief:

1) Presentation of false or fraudulent claims for reimbursement to federal health care programs, such as TRICARE, Veterans Affairs health benefit programs, and Medicare, knowing the claims were ineligible for payment (because they resulted from illegal kickbacks), in violation of 31 U.S.C. § 3729(a)(1)(A);

2) Use of false records or statements material to false or fraudulent claims for payment submitted to federal health care programs, including false certifications of compliance with the Anti-Kickback Statute, in violation of 31 U.S.C. § 3729(a)(1)(B);

3) Conspiracy with other individuals and agents to defraud the United States by causing federal health care programs to pay for false claims in violation of 31 U.S.C. § 3629(a)(1)(C);

4) Commitment of unlawful acts in violation of Section 36.002 of the Texas Human Resources Code.

(Id. at ¶¶ 116-35.)

Senseonics has again moved to dismiss all of these claims pursuant to Rules 9 and 12 of the Federal Rules of Civil Procedure. Senseonics argues that Relator still fails to plead his claims with plausibility or particularity and the Amended Complaint suffers from the same defects as the Original Complaint. Relator has filed a response [#37], to which Senseonics filed a reply [#38]. The State of Texas has also filed a “statement of interest” regarding the motion,

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addressing the legal standard that should be applied in evaluating the state-law claims [#39], in which it incorporates a previous statement of interest filed in response to Senseonics' original motion to dismiss [#20].^[2] The motion is ripe for review.

II. Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Although a complaint “does not need detailed factual allegations,” the “allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550...