On October 30, 2015, the United States District Court for the Northern District of Georgia granted Fresenius Medical Care Holdings, Inc.’s (Fresenius’s) motion for summary judgment in United States ex rel. Saldivar v. Fresenius Medical Care Holdings, Inc., No. 1:10-CV-1614-AT. The district court, in a 108-page decision, found that the undisputed evidence showed that no reasonable jury could find that that Fresenius acted “knowingly.” Thus, the relator could not prevail on his claims.
The relator had alleged that Fresenius violated the False Claims Act (FCA) by billing Medicare for the overfill in medication vials, which is included to facilitate the extraction of the amount labeled on the vial. While the district court did find that billing for the overfill was impermissible, it determined that the relator could not prove that Fresenius either knew it was impermissible, or “acted with deliberate ignorance or reckless disregard as to the impermissibility of billing for administered overfill.”
The district court analyzed whether Fresenius knew that “the overfill was not reimbursable under the Medicare rules and regulations.” The court discussed actual knowledge, finding that the relator presented no evidence that Fresenius actually knew it should not have sought Medicare reimbursement for overfill. The court also held that the evidence presented by the relator would not support a finding that Fresenius recklessly disregarded the statutory or regulatory requirements because Fresenius’s interpretation of the statutory and regulatory scheme was reasonable. In reaching its decision, the court pointed to the following facts:
- During the relevant time, the law was silent on the issue of billing for overfill;
- Fresenius relied on counsel in determining that Medicare would reimburse overfill;
- Fresenius and its counsel made this decision partly based on the belief that many companies had billed overfill for years, and the government knew about it but took no action;
- Fresenius had disclosed its overfill billing to the government on multiple occasions in previous years, but the government never warned Fresenius that such billing was impermissible;
- Fresenius was very serious in its efforts to comply with Medicare rules and regulations; and
- The relator had no evidence to counter any of the above.
The district court rejected the relator’s argument that Fresenius had the necessary pieces to conclude that overfill billing was impermissible, finding that the relator nonetheless could not establish that Fresenius was reckless.
The court’s decision in this case shows the importance of thoughtful decision-making and appropriate disclosures in the face of a frequently cloudy regulatory scheme. While relators will continue to stretch facts to try to prove knowledge or intent, a number of recent decisions, including this one and others on which we previously reported (Issues of Fact Must Really Be Genuine: Another District Court Ends a Relator’s FCA Suit on Scienter Grounds, Omnicare Decision Demonstrates that Relators Cannot Rely on Ambiguous Evidence of Intent to Survive Summary Judgment, and Should Exercise Caution and Recent Decisions Serve as Reminder that Scienter is a Fertile Ground for Pre-Trial Disposition), demonstrate that a pattern of commitment to compliance, and good faith disclosure of relevant facts to the government, can help preserve the argument that even conduct later determined to be contrary to regulation was conducted in good faith and without any knowledge or reckless disregard of potentially false claims.