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

841 F.3d 927

United States of America ex rel., Chester Saldivar, Petitioner–Appellant,

v.Fresenius Medical Care Holdings, Inc., d/b/a Fresenius Medical Care North America, Respondent–Appellee.

No. 15-15497

United States Court of Appeals, Eleventh Circuit.

Date Filed: November 8, 2016

Nathan M. Peak, Landover, MD, Christopher Vincent Tisi, Washington, DC, Ashcraft & Gerel, LLP, Julie Keeton Bracker, Jason Marcus, Bracker Marcus Law Firm, Marietta, GA, Andrea S. Hirsch, Herman Gerel, LLP, Atlanta, GA, for Plaintiff–Appellant.

James F. Bennett, Edward L. Dowd, Jr., Megan S. Heinsz, James G. Martin, Dowd Bennett, LLP, Saint Louis, MO, Juanita Rose Brooks, Fish & Richardson, PC, San Diego, CA, J. Matthew Maguire, Jr., Parks Chesin & Walbert, PC, Atlanta, GA, Respondent–Appellee.

Before ED CARNES, Chief Judge, JORDAN, Circuit Judge, and LAMBERTH,^* District Judge.

ROYCE C. LAMBERTH, District Judge:

Relator Chester Saldivar appeals the district court's order granting summary judgment to defendant Fresenius Medical Care Holdings, Inc. (Fresenius). This case is a qui tam action arising under the False Claims Act (FCA), 31 U.S.C. §§ 3729 –3733. This is an appeal of a final judgment pursuant to 28 U.S.C. § 1291. Whether or not jurisdiction ultimately exists in this case is the focus of this opinion.

I.

Fresenius is a provider of End Stage Renal Disease (ESRD) outpatient services. As part of these services, Fresenius administers the drugs Epogen and Zemplar, both of which are distributed in vials. These vials contain slightly more of the drug than is indicated on the packaging, referred to as “overfill.” In the course of providing its services, Fresenius administered this overfill to patients, and sought and received reimbursement for such overfill from the Centers for Medicare and Medicaid Services (CMS).

Relator, Chester Saldivar, filed the instant qui tam action claiming Fresenius violated the FCA by billing the government for overfill that it received for no cost—allegedly a violation of the statutes governing CMS billing. See U.S. ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc. , 972 F.Supp.2d 1339, 1348 (N.D. Ga. 2013) (Saldivar I ). Saldivar filed suit in the United States District Court for the Northern District of Georgia in 2010. In March 2011, the Government declined to intervene in this case, its right under the FCA. 31 U.S.C. § 3730(b).

Fresenius maintained that the action should be dismissed for lack of subject matter jurisdiction due to the Public Disclosure Bar in the FCA, an argument they raised—unsuccessfully—twice. U.S. ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc. , 157 F.Supp.3d 1311, 1313 (N.D. Ga. 2015). The Public Disclosure Bar prevents qui tam actions if the allegations in question were publicly disclosed. 31 U.S.C. § 3730(e)(4). In determining there was jurisdiction under § 3730(e)(4), the district court concluded that while Saldivar's allegations of overfill billing were publicly disclosed and the disclosed information was the basis of Saldivar's suit, Saldivar was an “original source” under § 3730(e)(4)(B) and was thus not barred from bringing this action. 157 F.Supp.3d at 1317–1325.

Specifically, Saldivar alleged improper billing for overfill based on his personal experience tracking the use of overfill along with conversations he had with other Fresenius employees and his knowledge of corporate policies. The district court found that Saldivar's allegations—that Fresenius was not just using, but billing, for overfill—had been disclosed to the government through several communications between Fresenius and CMS as well as publicly disclosed through a complaint in another case. Id. at 1318–1321. Moreover, the district court held that given our precedent on the issue, the disclosed information was the basis of Saldivar's suit. Id. at 1321–1323. However, the district court found that Saldivar was an original source based on (a) his experience ordering and otherwise managing inventory for Zemplar and Epogen, (b) discussions with supervisors and coworkers about overfill use and billing, and (c) his familiarity with Fresenius corporate policies and clinic rankings that factored in the use of overfill. Id. at 1323–1326.

The proceedings were bifurcated and the parties filed motions for summary judgment on multiple distinct issues. The parties first filed motions for summary judgment on the questions of (a) if submission of claims for free overfill violated the Medicare Act and (b) if it was thus a false claim. The district court found that the submissions did violate the Medicare Act and were, as a result, false claims. Saldivar I. Next, the parties filed motions for summary judgment on the question of whether Fresenius's actions met the intent requirement under the FCA: that the party “knowingly” take an action. 31 U.S.C. § 3729 ; U.S. ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc. , 145 F.Supp.3d 1220 (N.D. Ga. 2015) (Saldivar II ). The court found that Fresenius's actions did not meet the intent requirement and thus granted its motion for summary judgment. Saldivar II. Saldivar appeals that decision to this Court and, in its briefing, Fresenius argues again that there is no jurisdiction due to the public disclosure bar.

II.

In 2007, Saldivar started working at Fresenius as an equipment technician for two clinics, where he later became the chief technician. As an equipment technician, Saldivar repaired dialysis machines and completed other tasks as directed, including placing orders for Epogen and Zemplar. In addition to ordering the drugs, Saldivar was asked to report the “Zemplar analysis” which included an inventory form. Saldivar would input the vial count at the beginning and end of the month as well as the dosages administered. The form then automatically calculated and displayed the amount of overfill utilized throughout the month. In 2009, Saldivar began inventorying Epogen as well, though he was only responsible for inputting the vial counts—others entered the doses administered throughout the month.

With respect to these inventory forms, Saldivar was told the forms were of particular importance because they were the basis for billing medicare. Indeed, conversations about overfill and billing seem to have been fairly common. Saldivar stated that Fresenius employees talked about the company's overfill policy in meetings, in one-on-one conversations with managers, and in monthly as well as quarterly reports.

Despite being told about overfill billing and the relationship between his inventory forms and billing, Saldivar was not himself directly involved in billing. At his deposition, when asked if the inventory forms he filled out were provided to the government for billing purposes, he responded, “I have no idea. I'm pretty sure they filled out a different form for reimbursement.” When asked if he had any facts, other than what he was told by managers, to suggest the inventory forms were used as the basis for billing he responded, “No. I just go by what my managers told me.” At multiple points when asked about billing practices he responded that he “was not in the billing department.”

Starting before Saldivar was ever hired, overfill was the subject of much discussion. Indeed, a July 2008 BNA article in “Pharmaceutical Law & Industry Report” stated that the use of overfill was “certainly not a secret,” that Fresenius had publicly acknowledged its utilization—including in a disclosure to the Securities and Exchange Commission (SEC), and that overfill had been discussed in two Office of the Inspector General (OIG) reports. Fresenius was also in communication with the OIG about its overfill practices due to a “corporate integrity agreement” between Fresenius and the OIG which was in place from 2000 to 2008. During a deposition with an official from CMS, Fresenius asked specifically about CMS's knowledge of Fresenius' overfill practices. Specifically, Fresenius asked, “throughout the time period of 2000 to 2010 CMS was aware that outpatient dialysis facilities were administering and billing for overfill for Epogen and Zemplar, right?” to which the CMS official responded “Yes.” Fresenius later asked “there's simply no question that Fresenius fully disclosed to you that it was using and billing for Zemplar and Epo overfill, right?” Response: “they did disclose that to me, yes.” That same official later stated he “wasn't aware of any CMS policy that prohibited the use of billing overfill,” that he was under the impression Fresenius had been and still was billing for overfill as of March 2007, and that Fresenius “disclose[d] to [him] that they were using and billing for overfill Epogen and Zemplar.”

Complicating the facts of this case is the 2003 passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). MMA, Pub. L. 108–173, 117 Stat. 2066 (codified in scattered sections of 42 U.S.C. and 26 U.S.C.). As part of this act, Zemplar and Epogen reimbursement were calculated by the “Average Sales Price” (ASP) beginning in 2006. In 2010, CMS announced a proposed rule, to be effective January 1, 2011, which “clarified” that billing for ESRD overfill drugs was improper under ASP. Saldivar thus argues that the operative question is Fresenius's behavior and disclosures after ASP reimbursement went into effect in 2006.

III.

We review a district court order granting summary judgment de novo, viewing the evidence and all reasonable inferences drawn from it in the light most favorable to the nonmoving party. Battle v. Bd. of Regents for Ga. , 468 F.3d 755, 759 (11th Cir. 2006). However, “to survive summary judgment, the nonmoving party must offer more than a mere scintilla of evidence for its position; indeed, the nonmoving party must make a showing sufficient to permit the jury to reasonably find on its behalf.” Urquilla–Diaz v. Kaplan Univ. , 780 F.3d 1039, 1050 (11th Cir. 2015). Additionally, “[a]s courts of limited jurisdiction, we are obliged to ‘scrupulously...