PHILIP R. MARTINEZ, District Judge.
On February 23, 2010, at the close of evidence in Relator Rebecca Gonzalez's (Relator) case-in-chief, the Court granted in part and denied in part Defendant Fresenius Medical Care North America, et al.'s (Fresenius Defendants)
Initially, the Court provides a general summary of the complex set of facts in this case, and will supplement this summary with additional facts as necessary in the subsequent sections. Rebecca Gonzalez, a former Fresenius employee, brought the instant qui tam action
The alleged violations of state and federal regulations resulting from the use of the medical assistants, and the allegedly illegal referral scheme that resulted, as well as an alleged conspiracy to defraud, formed the basis of Relator's FCA theories against Fresenius.
Fresenius denied that the medical assistants' activities violated applicable regulations, and argued that, in any case, its Medicare claims were not false because Fresenius submitted claims to Medicare for payment for services which were actually provided, and alleged non-compliance with state and federal regulations would not render their claims false for purposes of the FCA. See generally, Fresenius's Answer to Fourth Am. Compl. For his part, Chavez denied the allegation that he made false claims to Medicare through his practice, and asserted that he was indeed present during all patient visits for which he billed. See generally, Chavez's Answer to Fourth Am. Compl.; id. at 5. Chavez further argued that Devora and Orozco performed their work for him in accordance with law, and that his arrangement with Fresenius, therefore, did not violate anti-kickback laws. Id. Finally, both Fresenius and Chavez denied that they conspired to defraud the Government in violation of the FCA. Fresenius's Answer to Fourth Am. Compl. 87; Chavez's Answer to Fourth Am. Compl. 37.
Relator also alleged that Fresenius retaliated against her for engaging in "protected activities" under the False Claims Act by creating a hostile work environment wherein she was harassed, threatened, and discriminated against, and eventually forced to resign. Retaliation Compl. 10-12. Under the same set of facts, Relator alleged that Fresenius and Ramirez are liable for intentional infliction of emotional distress. Id. at 12.
On September 26, 2006, Relator filed a sealed complaint alleging violations of the False Claims Act against Fresenius and Chavez on behalf of the United States of America (the United States, or the Government). On November 21, 2007, the Government informed the Court that it had elected not to intervene in the action. Docket No. 20, Cause No. 06-CV-336-PRM. On December 19, 2007, the Court unsealed the case pursuant to Relator's motion. Docket No. 25, Cause No. 06-CV-336-PRM. Meanwhile, on July 10, 2007, Relator filed a sealed complaint against Fresenius, Chavez, and Larry Ramirez
The Fresenius Defendants and Chavez each filed motions to dismiss. Docket Nos. 26, 36. On September 2, 2008, 2008 WL 4277150, the Court dismissed Relator's common law claims of payment by mistake and unjust enrichment for lack of standing, and Relator's retaliation claims against Ramirez. "Order Granting in Part and Denying in Part Defendants' Motions to Dismiss," Docket No. 64. The parties continued to conduct extensive discovery and filed a number of discovery-related motions, which the Court referred to a United States Magistrate Judge for disposition.
On June 5, 2009, Relator submitted her Fourth Amended Complaint. Docket No. 180. Therein, Relator alleged, in short, that the manner in which Fresenius and Chavez provided dialysis services to their patients—by using two "unlicensed, un[-]credentialed" assistants—rendered their subsequent claims for reimbursement to Medicare "false" or "fraudulent" for purposes of the FCA under seven distinct theories or causes of action. On June 17, 2009 and June 19, 2009, respectively, the Fresenius Defendants and Chavez filed substantively identical motions to dismiss portions of the Fourth Amended Complaint (Docket Nos. 188, 201), which the Court granted in their entirety on January 21, 2010, 2010 WL 1645969 (Docket No. 408). In granting the motions to dismiss, the Court dismissed two causes of action and imposed a six-year statute of limitations. Docket No. 408. Thus, the following causes of action remained viable at the start of trial for the FCA case against Fresenius and Chavez:
The following causes of action remained viable at the start of trial for the retaliation case:
On February 1, 2010, a jury having been empaneled, the case proceeded to trial, and Relator presented evidence in support of her claims over the course of three weeks via live testimony, deposition testimony, and voluminous documentary evidence. At the close of Relator's case-inchief, the Fresenius Defendants and Chavez each filed written motions for judgment as a matter of law on all remaining counts of the FCA and retaliation cases. Docket Nos. 430, 431. After due consideration, the Court granted in part and denied in part the motions for judgment as a matter of law orally on the record, finding the Defendants were entitled to judgment as a matter of law on the following claims:
The Court also concluded that, because Fresenius obtained judgment as a matter of law as to Count 1 of the FCA Complaint (knowingly presenting fraudulent or false claims), Fresenius's and Chavez's liability on Count 2 of the FCA Complaint (knowingly making a false record or statement in presentation of false claims) and Count 7 of the FCA Complaint (conspiring to submit false claims) would necessarily be limited to false records or statements made in support of Chavez's claims to Medicare, and conspiracy to submit false claims by Chavez. In other words, to the extent Relator alleged that Fresenius and Chavez made false records or statements in support of allegedly false claims to Medicare by Fresenius, or that Fresenius and Chavez conspired to submit false claims on behalf of Fresenius, those allegations could not be submitted to the jury. Only false claims by Chavez could support liability for Chavez and Fresenius under the (a)(2) (false records or statements) and (a) (3) (conspiracy) prongs of the FCA.
Federal Rule of Civil Procedure 50(a) provides the standard for a motion for judgment as a matter of law:
FED. R. Civ. P. 50(a).
"There is no legally sufficient evidentiary basis when `the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict.'" Wallace v. Methodist Hosp. System, 271 F.3d 212, 219 (5th Cir.2001), citing Rubinstein v. Adm'rs of the Tulane Educ. Fund, 218 F.3d 392, 401 (5th Cir.2000) (internal quotations omitted). "[T]here must be more than a mere scintilla of evidence in the record to render the grant of [judgment as a matter of law] inappropriate." Id. "A court should grant a Rule 50(a) motion not only when the non-movant presents no evidence, but also when there is not a sufficient `conflict in substantial evidence to create a jury question.'" Travis v. Bd. of Regents of the Univ. of Tex. Sys., 122 F.3d 259, 263 (5th Cir.1997), citing Foreman v. Babcock & Wilcox Co., 117 F.3d 800, 804 (5th Cir.1997).
In evaluating a Rule 50(a) motion, "the court is to view the entire trial record in the light most favorable to the nonmovant, drawing all factual inferences in favor of . . . the non-moving party, and leaving credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts to the jury." Conkling v. Turner, 18 F.3d 1285, 1300 (5th Cir.1994), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The `decision to grant a directed verdict. . . is not a matter of discretion, but a conclusion of law based upon a finding that there is insufficient evidence to create a fact question for the jury.'" Id. at 1300-1301, citing In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967, 972 (5th Cir. 1986).
Section 3730 of Title 31 of the United States Code provides a cause of action for retaliation by a "whistleblower" under the False Claims Act:
31 U.S.C. 3730(h) (West 2008).
In this case, Relator alleged in two separate counts that Fresenius retaliated against her by (1) threatening, harassing,
"The legislative history makes clear that a whistleblower must show the employer had knowledge the employee engaged in `protected activity.'" Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir.1994) (internal quotations omitted), citing S. Rep. No. 345, 99th Cong., 2d Sess. 35 (1985), reprinted in 1986 U.S.C.C.A.N. 5266, 5300. It is insufficient for the relator to show that the employer knew that the whistleblower had concerns about compliance with the law; she must show that the employer was on notice of the distinct possibility of qui tam litigation. Id. at 952; see also Sealed Appellant I v. Sealed Appellee I, 156 Fed. Appx. 630 (5th Cir.2005); United States ex rel. Gray v. Lockheed Martin Corp., No. 05-4201, 2010 WL 672017, at *4 (E.D.La. Feb. 19, 2010).
Relator failed to present any evidence establishing that anyone at Fresenius knew of her activities or status as a FCA relator. None of the Fresenius employees who allegedly retaliated against Relator were called to testify regarding their knowledge of her activities and intentions, most conspicuously Defendant Larry Ramirez and regional manager Eric Broberg, both singled out in Relator's retaliation complaint. No Fresenius employee who did take the stand testified regarding his or her knowledge of Relator's activities. Relator's testimony did not reveal that she told anyone at Fresenius about her activities related to investigating the fraud, consulting an attorney, or filing the lawsuit. She merely suggested, in an indirect fashion, that she believed that everyone knew.
Relator appeared to rely on evidence that the FCA complaint was "unsealed" on a particular date to establish knowledge on the part of Fresenius. See Gonzalez Test., Retaliation Compl. 4. However, the fact that the complaint was unsealed does not in and of itself establish knowledge on the part of the relevant actors at Fresenius, and therefore cannot support the retaliation claims.
The only other evidence that might be construed as supporting the knowledge element of a retaliation claim was a letter written by Relator and directed to "Larry" (presumably Larry Ramirez), dated July 3, 2007. Relator's Ex. 480. The letter states that Relator "will not lie to the Medicare auditors" and "would have to tell them that the medical records were false," and that, in short, she would not continue to work where deceiving Medicare auditors was a condition of employment. Id. Yet Relator never called Ramirez to testify at all in her case-in-chief, much less regarding the subject of whether or when he received and read the letter. Relator testified that she did not receive a response to the letter from Ramirez, but only from Human Resources. Gonzalez Test. In addition, according to Relator's testimony, the allegedly harassing and threatening conduct that formed the basis of her legal claim occurred prior to the date of the letter. The letter was intended to inform
Furthermore, the constructive discharge count in Relator's retaliation complaint rested on the allegation that she was "ordered... to aid Fresenius in the concealment of the fraudulent billing scheme." Retaliation Compl. 11; see also Relator's Ex. 480. However, Relator admitted during cross examination that she was not asked by anyone at Fresenius to falsify documents or lie to Medicare auditors, and that she was not truthful about this issue in her July 3, 2007 letter. Gonzalez Test. Given this admission and the lack of proof concerning Fresenius's knowledge of protected activities prior to the allegedly retaliatory conduct, Relator's claims of retaliation must fail as a matter of law.
To reach the jury on her claim for intentional infliction of emotional distress under Texas law, Relator must present substantial evidence that Fresenius and Ramirez: (1) acted intentionally or recklessly; (2) their conduct was extreme and outrageous; (3) their actions caused Relator emotional distress; and (4) the emotional distress was severe. See Kroger Texas Ltd. P'ship v. Suberu, 216 S.W.3d 788, 796 (Tex.2006). At trial, Relator failed to present legally sufficient evidence on the second and fourth elements, therefore her claim of intentional infliction of emotional distress should not be presented to a jury.
"Meritorious claims for intentional infliction of emotional distress are relatively rare precisely because most human conduct, even that which causes injury to others, cannot be fairly characterized as extreme and outrageous." Id. Whether conduct qualifies as "extreme and outrageous" is a question of law. Bradford v. Vento, 48 S.W.3d 749, 758 (Tex.2001). To be "extreme and outrageous," conduct must be "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 611 (Tex.1999). "Texas courts[] have adopted a strict approach to intentional infliction of emotional distress claims arising in the workplace," reasoning that "to properly manage its business, an employer must be able to supervise, review, criticize, demote, transfer, and discipline employees." Id. at 612.
Viewing the trial record in the light most favorable to the Relator, she produced evidence, which a jury would be entitled to believe,
This conduct, as a matter of law, is far from "extreme and outrageous," particularly in the employment context. Allegations involving similar or more egregious facts have been found not to rise to the level of "extreme and outrageous" conduct by Texas courts. For example, in Brewerton v. Dalrymple, the court found the defendants' conduct was not extreme and outrageous where defendants made negative comments that were reflected in plaintiffs file, repeatedly recommended that the plaintiff should not be allowed to continue on tenure track, restricted his speech regarding the contents of his tenure folder, and allegedly assigned him an excessive case load. 997 S.W.2d 212, 216 (Tex.1999). In City of Houston v. Fletcher, the plaintiff was, among other things, subjected to daily, humiliating verbal confrontations with her supervisor, loudly berated in front of co-workers, prohibited from taking phone calls though her daughter was sick at home, demoted, and made to perform menial tasks rather than her ordinary job duties. 166 S.W.3d 479, 492 (Tex.App.-Eastland 2005) (pet. denied). The court found this did not constitute "extreme and outrageous" conduct as a matter of law. Id. at 492-93. Fresenius and Ramirez's conduct, as represented by the evidence at trial, did not rise to the level of "extreme and outrageous," a critical element of the claim of IIED. Thus, the IIED claim cannot reach a jury and the Fresenius Defendants are entitled to judgment as a matter of law.
Furthermore, there was no evidence whatsoever that Relator suffered severe emotional distress. "Emotional distress includes all highly unpleasant mental reactions such as embarrassment, fright, horror, grief, shame, humiliation, and worry," while severe emotional distress is "distress that is so severe that no reasonable person could be expected to endure it." GTE Southwest, Inc. v. Bruce, 998 S.W.2d at 618. Relator testified that the environment was "horrible" and that she did not want to return to work under the conditions that existed. She did not come forward with evidence of emotional or physical distress of any kind following her alleged mistreatment at work. Relator did not show, as a matter of law, that she experienced severe emotional distress.
Relator failed to present legally sufficient evidence to make out a claim for intentional infliction of emotional distress. Her evidence on two critical elements of the claim, (1) extreme and outrageous conduct, and (2) severe emotional distress, was inadequate as a matter of law. Therefore the Fresenius Defendants are entitled to judgment as a matter of law on Relator's claim of IIED.
Before addressing the legal sufficiency of the evidence presented at trial on the False Claims Act counts of this case, the Court must first set forth its reasons for applying the version of the False Claims Act in effect when this action was filed rather than the amended version currently in force.
FERA § 4(f).
Section 4(f)(1), in citing "subparagraph (B) of section 3729(a)(1)," makes reference to the amendments to former subsection (a)(2). Therefore, it is clear from the first sentence of § 4(f) that the FERA amendments that affect former subsections (a)(1) and (a)(3) went into effect on May 20, 2009, the "date of enactment," and apply to "conduct on or after" that date. In this case, Relator filed the complaint in September, 2006, and the action is focused on conduct of defendants from well before the enactment of FERA. Thus the only question is whether FERA § 4(f)(1) makes the amendments to former subsection (a)(2) retroactively applicable to this action.
The answer lies in the important distinction between "cases" and "claims" in the context of the False Claims Act. Section 4(f)(1) of FERA states that the amended version of (a)(2), now found at § 3729(a)(1)(B), applies to all claims under the FCA pending on or after June 7, 2008. The term "claim" is defined in both the pre- and post-FERA versions of the FCA. Before FERA, § 3729(c) defined "claim" was as follows:
31 U.S.C. § 3729(c) (West 2008).
FERA amended and re-designated that section of the FCA, and "claim" is now statutorily defined as "any request or demand, whether under a contract or otherwise, for money or property ... [that] is presented to an officer, employee, or agent of the United States ...." § 3729(b)(2) (2009). Both definitions of "claim" refer not to cases or causes of action under the FCA, but rather to claims for money or property made to the Government. "Case" is not defined in the FCA. However, Congress did choose to use the word "case," rather than "claim" in § 4(f)(2) (another amendment shall "apply to cases pending on the date of enactment"), indicating that Congress was aware of the distinction and would have used the word "case" in (f)(1) had it intended the amendments to (a)(2) to apply retroactively to pending FCA civil actions rather than pending claims for money or property.
Because "claims" is a particularly-defined term of art under the False Claims
The majority of district courts to have ruled on the issue of the retroactive application of the FERA amendments have come to the same conclusion.
The Court is mindful that Fresenius has argued that retroactive application of the FERA amendments in this case would violate the ex post facto clause of the United States Constitution. Fresenius's Supplemental Briefing (Docket No. 402) 5-6; see also Sanders, 667 F.Supp.2d at 752-58 (finding, in an alternative holding, that retroactive application of FERA would violate the ex post facto clause). To the extent retroactive application raises constitutional concerns, the foregoing interpretation of FERA § 4(f)(1) has the additional benefit of avoiding the constitutional question. See Clark v. Martinez, 543 U.S. 371, 381-82, 125 S.Ct. 716, 160 L.Ed.2d 734 (2005) (explaining that the canon of constitutional avoidance "is a tool for choosing between competing plausible interpretations of a statutory text, resting on the reasonable presumption that Congress did not intend the alternative which raises serious constitutional doubts").
Relator alleged and attempted to prove at trial that Fresenius and Chavez each knowingly presented false claims for reimbursement to Medicare in violation of subsection (a)(1) of the FCA under a number of different theories, as outlined below. See generally Fourth Am. Compl. Relator also alleged that Fresenius and Chavez each made or used false records or statements to get these false claims paid (a violation of subsection (a)(2)), and that they conspired to defraud the Government
With regard to (a)(1), Relator alleged under one theory (and two counts under the FCA) that Chavez and Fresenius engaged in an illegal referral scheme that violated both the Anti-Kickback Act and the Stark Law, which in turn rendered each and every one of their claims for reimbursement to Medicare during the relevant time periods "false or fraudulent" under a "false certification" theory.
The "false certification" theory of FCA liability, relied upon by Relator throughout this action, was explained by the Fifth Circuit in a leading case in this way: when "the government has conditioned payment of a claim upon a claimant's certification of compliance with, for example, a statute or regulation, a claimant submits a false or fraudulent claim when he or she falsely certifies compliance with that statute or regulation." United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir.1997). Relator claimed that Fresenius and Chavez certified compliance with the referral statutes expressly on their claim forms and cost reports, and, in the alternative, impliedly by virtue of the very submission of the claims to the Government (or a fiscal intermediary) alone.
According to Relator, in addition to certifying compliance with the Anti-Kickback Act and Stark Law, Fresenius also falsely certified compliance (expressly and impliedly) with a host of federal and state regulations that govern dialysis facilities. See Fourth Am. Compl. 9-18, 59-70. Relator asserted that, as a result of this false certification of regulatory compliance,
As to Chavez, Relator alleged that a large number of Chavez's claims, billed by his wholly-owned medical practice Nephrology Associates, were false because they represented that a given patient had a certain number of "face-to-face" encounters with Chavez,
At the close of her case and in responding to the motions for judgment as a matter of law, Relator offered an alternative and novel theory under the FCA, that Fresenius's and Chavez's claims were false or fraudulent for purposes of (a)(1) due to a "fraudulent course of conduct" or because they were "grounded in fraud."
The counts of Relator's FCA complaint that relied on a theory of fraud based on the Anti-Kickback Act and Stark Law fail as a matter of law as to both Fresenius and Chavez because the defendants did not make any express certifications of compliance with those statutes, and the so-called "implied certification theory" of liability is not recognized in the Fifth Circuit.
In Thompson, the Fifth Circuit recognized that "claims for services rendered in violation of a statute do not necessarily constitute false or fraudulent claims under the FCA." Thompson, 125 F.3d at 902. Rather, a claimant submits a false claim where "he or she falsely certifies compliance" with a statute or regulation, and the government has conditioned payment upon that certification. Id. In this case, Relator did not present legally sufficient, admissible evidence that Fresenius and Chavez made any express certifications of compliance with the Anti-Kickback Act, the Stark Law, or other federal and state laws and regulations for that matter.
It is undisputed that Fresenius submitted claims to Medicare through a fiscal intermediary called Trailblazer using electronic claim forms. However, the electronic claim forms contain no certifications whatsoever. Relator's Ex. 547. Relator also introduced Fresenius's annual cost reports from the two clinics for the years 2005 and 2006.
Relator's Ex. 520, 521, 523, 524.
Arguably,
Thus, neither the electronic claim forms, nor the cost reports, nor any other document in evidence, contained an express certification of compliance with the referral statutes as a condition of payment by Medicare.
Similarly, Relator did not present any evidence of any certification of compliance with the Anti-Kickback Act or Stark Law by Chavez. The claim forms Chavez submitted to the fiscal intermediary for transmission to Medicare were not offered into evidence,
Therefore, the Court granted the defendants' motions for judgment as a matter of law and withdrew from the jury's consideration the two counts of FCA (a)(1) liability premised on false certification of compliance with the Anti-Kickback Act and Stark Law as to both Fresenius and Chavez.
The Fifth Circuit has repeatedly declined to recognize an "implied certification" theory of False Claims Act liability. In the most recent Fifth Circuit case to raise the issue, United States ex rel. Marcy v. Rowan Cos., Inc., the panel noted that the Fifth Circuit "has previously deferred" the question of whether "implied certifications may be claims under the [False Claims] Act" and chose to "do so again." 520 F.3d 384, 389 (5th Cir.2008); see also United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 379 (5th Cir.2004) (finding an element satisfied "without resorting to an implied certification theory of liability"); United States ex rel. Willard v. Humana Health Plan of Tex., 336 F.3d 375, 382 (5th Cir.2003) ("This court need not determine here whether it will recognize the `implied certification' theory ....").
Other district courts in the Fifth Circuit have acknowledged the Fifth Circuit's decision not to recognize an implied certification theory. See, e.g. United States ex rel. Foster v. Bristol-Myers Squibb Co., 587 F.Supp.2d 805, 823 (E.D.Tex.2008) ("The Fifth Circuit has never formally recognized the `implied certification' theory."); United States ex rel. Bailey v. Ector County Hosp., 386 F.Supp.2d 759, 764 (W.D.Tex.2004) ("The Fifth Circuit has not addressed whether it will recognize the `implied certification theory.'").
Given the Fifth Circuit's decision not to recognize an implied certification theory
The Court granted judgment as a matter of law to Fresenius and Chavez on the FCA counts predicated on the referral statutes because of the lack of certifications of compliance, as outlined in the previous sections. However, the Court finds, in the alternative, that Relator presented legally insufficient evidence of violations of the Anti-Kickback Act and the Stark Law
However, the services provided by Fresenius and Chavez at issue in this case, namely outpatient dialysis services, are not designated health services and are not covered by the Stark Law. Only the dialysisrelated drugs, such as Epogen (or EPO), that Fresenius provided to its patients and billed to Medicare may be covered by Stark as "outpatient prescription drugs." See § 1395nn(h)(6)(J). However, the relevant regulations exempt "EPO and other dialysis-related drugs" from coverage by Stark provided certain criteria are met.
The Anti-Kickback Act, a criminal statute, prohibits anyone from, among other things, knowingly and willfully soliciting, receiving, offering, or paying any remuneration in return for referring an individual for any item or service for which payment may be made under a federal health care program. 42 U.S.C. § 1320a-7b(b)(1), (2). Thus, the Anti-Kickback Act requires proof that a defendant acted "knowingly and willfully"—criminal intent—in paying remuneration to induce referrals (or receiving remuneration as an inducement to refer). See United States v. Davis, 132 F.3d 1092 (5th Cir.1998). Relator did not provide legally sufficient evidence that Fresenius and Chavez knowingly and willfully entered into an illegal referral scheme.
Relator did not allege, nor did she come forward with evidence to suggest, that any information contained in Fresenius's electronic claim forms was factually false.
However, at the Rule 50 stage, Relator put forth a novel theory that Fresenius's claims were false due to the allegedly "fraudulent course of conduct" in the Cliffview and Gateway clinics. Relator pointed to the following language in the recent Fifth Circuit decision in Longhi in support of this "per se tainted" approach to FCA liability in this case:
Longhi, 575 F.3d at 467 (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)).
Relator suggested that a defendant's "fraudulent course of conduct," understood in so broad a way as to encompass Fresenius's alleged conduct
In Longhi, the Government established, by way of summary judgment evidence, that the defendant had included false
By contrast, in the instant case, Relator did not allege fraudulent inducement. She did not assert in her complaint that Fresenius made false statements to induce the Government to allow Fresenius to participate in the Medicare program. Because Longhi is limited to the fraudulent inducement context, it is inapplicable in this case and cannot support an alternative theory of (a)(1) liability as to Fresenius.
Given the insufficiency of the evidence on an express certification theory, and because the implied certification and "per se tainted" theories are not viable in the Fifth Circuit, Relator could not reach the jury on Fresenius's allegedly false claims.
Once the Court determined that Fresenius's claims to Medicare were not false under (a)(1) as a matter of law, it followed that the remaining FCA counts under (a)(2) (false records or statements) and (a)(3) (conspiracy) based on false claims submitted by Fresenius could not reach the jury. This conclusion follows from the statutory language, relevant Fifth Circuit authority, and the purposes of the False Claims Act.
Section (a)(2) states that a defendant is liable if it "knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government." § 3729(a)(2) (emphasis added). Section (a)(3) imposes liability on those who "conspire[] to defraud the Government by getting a false or fraudulent claim allowed or paid." § 3729(a)(3) (emphasis added). The use of some form of the verbs "to get" and "to pay" in each of these subsections strongly suggests a requirement of a false claim actually being paid by the Government for liability to attach.
Indeed, the Fifth Circuit in United States v. Southland Management Corp. articulated this principle clearly:
The Court is mindful that there is some contrary authority on this point. In United States ex rel. Grubbs v. Kanneganti, the Fifth Circuit found that "the recording of a false record, when it is made with the requisite intent, is enough to satisfy [(a)(2)]; we need not make the step of inferring that the record actually caused a claim to be presented to the Government." 565 F.3d 180, 193 (5th Cir.2009). The panel then applied the same rationale to (a)(3). Id. The Court agrees with the view that a defendant company charged with violating (a)(2) need not have actually submitted the false claim itself, but rather that someone must have submitted a false claim. Indeed, the Fifth Circuit's statement in Grubbs might be read to mean just that.
The reasoning of Southland Management is bolstered by the careful analysis in a recent decision by the Eleventh Circuit. In Hopper, the Eleventh Circuit squarely addressed the question of whether the payment of a false claim is required for (a)(2) liability, and determined it was. 525 F.3d 439. The court reiterated the wellestablished principle that the submission of a false claim is the sine qua non of a False Claims Act violation. Id. at 1328. It went on to examine the statutory language, finding the phrase "paid or approved by the Government" in (a)(2) to suggest that Congress intended to impose liability only where false statements actually cause the submission of claims to the Government for amounts it does not owe. Id. The Sixth Circuit is in agreement with Hopper and Southland Management. United States ex rel. Marlar v. BWXT Y-12, L.L.C., 525 F.3d 439, 447 (6th Cir.2008) (noting that the Sixth Circuit has "repeatedly held that proof of a false claim is required" for (a)(2) and (a)(3) and citing several cases). The Court thus concludes, based on its review of the statutory language and relevant authority, that (a) (2) and (a)(3) require proof that the Government paid a false claim.
The Court has found that Relator presented insufficient evidence of false claims by Fresenius as a matter of law. As a consequence of this finding, the Court was obligated to withdraw from the jury's consideration legal claims under (a)(2) and (a)(3)—the making of false records or
Although Relator did not present legally sufficient evidence under a certification theory for (a)(1) liability for Chavez based upon violations of the referral statutes, there was sufficient evidence of factual falsity to permit a jury to decide the fact question. A reasonable juror could believe, based on the voluminous documentary evidence and testimony at trial, that Chavez billed Medicare using G-codes for Devora and Orozco's patient visits.
If the jury were to find Chavez submitted false claims under (a) (1), there would also be enough evidence upon which it could find that Chavez and/or Fresenius made, used, or caused to be made or used a false record or statement to get Chavez's false claims paid under (a)(2). The Fifth Circuit and the Supreme Court have been clear that "presentment" is not required under (a)(2). See Grubbs, 565 F.3d at 192-93. That is, the false record or statement itself need not be submitted to the Government. In addition, a defendant can be liable under (a)(2) for supporting another entity's false claims with false records or statements. Further, because the jury could find Chavez made false claims to Medicare, it could also find based on the evidence presented at trial that Chavez and Fresenius conspired to defraud the Government by getting Chavez's false claim paid. In sum, Chavez's allegedly false claims provided the "hook" for (a)(2) and (a)(3) liability for both Chavez and Fresenius as required under Southland Management, and allowed those questions of fact to reach the jury.
For the foregoing reasons, the Court granted in part and denied in part the Fresenius Defendants' "Motion for Judgment as a Matter of Law" (Docket No. 430), and granted in part and denied in part Chavez's "Motion for Judgment as a Matter of Law" (Docket No. 431).
Fresenius's Mot. for J. as a Matter of Law 20 (quoting counsel for Relator at trial, Feb. 11, 2010).
