United States ex rel. Cairns v. D.S. Med. LLC

42 F.4th 828

UNITED STATES of America, EX REL., Plaintiff - Appellee

Paul CAIRNS ; Terry Cleaver, M.D.; Kyle Colle, M.D.; Paul Tolentino, M.D.; Kevin Vaught, M.D. ; Daniel Henson, Relators; Barbara Gibbs, Personal Representative of the Estate of Scott Randall Gibbs, M.D., Relators - Appellees

v.D.S. MEDICAL LLC; Midwest Family Care, LLC, Defendants

Midwest Neurosurgeons, LLC, Defendant - Appellant

Mount Auburn Medical Group, LLC, doing business as Mount Auburn Aesthetics Group, Defendant

Sonjay Fonn, M.D., Defendant - Appellant

Deborah Seeger, Defendant

United States of America, ex rel., Plaintiff - Appellee

Paul Cairns ; Terry Cleaver, M.D.; Kyle Colle, M.D.; Paul Tolentino, M.D.; Kevin Vaught, M.D. ; Daniel Henson, Relators; Barbara Gibbs, Personal Representative of the Estate of Scott Randall Gibbs, M.D., Relators - Appellees

v.D.S. Medical LLC, Defendant - Appellant

Midwest Family Care, LLC; Midwest Neurosurgeons, LLC ; Mount Auburn Medical Group, LLC, doing business as Mount Auburn Aesthetics Group; Sonjay Fonn, M.D., Defendants

Deborah Seeger, Defendant - Appellant

United States of America, ex rel., Plaintiff – Appellee

Paul Cairns ; Terry Cleaver, M.D.; Kyle Colle, M.D.; Paul Tolentino, M.D.; Kevin Vaught, M.D. ; Daniel Henson, Relators; Barbara Gibbs, Personal Representative of the Estate of Scott Randall Gibbs, M.D., Relators - Appellees

v.D.S. Medical LLC; Midwest Family Care, LLC, Defendants

Midwest Neurosurgeons, LLC, Defendant - Appellant

Mount Auburn Medical Group, LLC, doing business as Mount Auburn Aesthetics Group, Defendant

Sonjay Fonn, M.D., Defendant - Appellant

Deborah Seeger, Defendant

United States of America, ex rel., Plaintiff - Appellee

Paul Cairns ; Terry Cleaver, M.D.; Kyle Colle, M.D.; Paul Tolentino, M.D.; Kevin Vaught, M.D. ; Daniel Henson, Relators; Barbara Gibbs, Personal Representative of the Estate of Scott Randall Gibbs, M.D., Relators - Appellees

v.D.S. Medical LLC, Defendant - Appellant

Midwest Family Care, LLC; Midwest Neurosurgeons, LLC ; Mount Auburn Medical Group, LLC, doing business as Mount Auburn Aesthetics Group; Sonjay Fonn, M.D., Defendants

Deborah Seeger, Defendant - Appellant

No. 20-2445

No. 20-2448

No. 20-3009

No. 20-3010

United States Court of Appeals, Eighth Circuit.

Submitted: December 14, 2021

Re-submitted: January 19, 2022

Filed: July 26, 2022

Counsel who presented argument on behalf of all appellants and appeared on the brief of Sonjay Fonn, D.O. and Midwest Neurosurgeons, L.L.C. was James G. Martin, of Saint Louis, MO. The following attorneys also appeared on the appellant briefs; Elizabeth C. Carver and James B. Martin (on brief of Sonjay Fonn, D.O. and Midwest Neurosurgeons, L.L.C. in 20-2445 and 20-3009), of St. Louis, Missouri; Sanford J. Boxerman and Drey A. Cooley (on brief of DS Medical, LLC and Deborah Seeger in 20-2448 and 20-3010), of St. Louis, Missouri.

Counsel who presented argument on behalf of the appellees and appeared on the brief of the United States was Daniel Winik, of Washington, DC. The following attorneys also appeared on the appellee brief of the United States; Michael Raab, of Washington, DC., Charles W. Scarborough, of Washington, DC.

Before LOKEN, ARNOLD, and STRAS, Circuit Judges.

STRAS, Circuit Judge.

There are several ways to prove that a claim is "false or fraudulent" under the False Claims Act. 31 U.S.C. § 3729(a)(1). One of them is to show that it "includes items or services resulting from a violation" of the anti-kickback statute. 42 U.S.C. § 1320a-7b(g) (emphasis added). This case requires us to determine what the words "resulting from" mean. We conclude that it creates a but-for causal requirement between an anti-kickback violation and the "items or services" included in the claim. See Burrage v. United States , 571 U.S. 204, 210–11, 134 S.Ct. 881, 187 L.Ed.2d 715 (2014). The district court did not instruct the jury along these lines, so we reverse and remand for a new trial.

I.

Sonjay Fonn is a neurosurgeon in Cape Girardeau, Missouri. To treat degenerative-disc disease and other spinal disorders, he uses spinal implants. The implants, which stabilize the spine, are made by multiple manufacturers. Deciding which to use has important economic consequences for implant distributors, who earn hefty commissions with every sale. This puts Dr. Fonn and his practice, Midwest Neurosurgeons, in a powerful position.

Dr. Fonn chose to use implants distributed by DS Medical, a company wholly owned by his fiancée, Deborah Seeger. The arrangement was lucrative, even though Dr. Fonn was her only large customer. In just a single year, she made $1.3 million in commissions from one manufacturer alone. For his part, Dr. Fonn received an offer to purchase company stock from the same manufacturer. Once the sale went through, he ordered more implants.

Physicians in other practices grew suspicious of Dr. Fonn's high implant use, not to mention his cozy financial relationship with Seeger. They filed complaints against him, Midwest Neurosurgeons, Seeger, and DS Medical under the False Claims Act, 31 U.S.C. § 3729 et seq. , and other laws. The United States then intervened and filed its own complaint. See 31 U.S.C. § 3730(a), (b)(2), (b)(4) (providing that the government may intervene and conduct the litigation).

The complaint consisted of five claims. The first three, which arose under the False Claims Act, alleged that the couple and their businesses submitted false or fraudulent Medicare and Medicaid claims after violating the anti-kickback statute, 42 U.S.C. § 1320a-7b(b), (g). The last two claims, which were equitable in nature, alleged unjust enrichment and payment under a mistake of fact.

A jury heard the first three claims. After each side presented its case, the district court instructed the jury that the government could establish falsity or fraud once it proved, by a preponderance of the evidence, "that the [Medicare or Medicaid] claim failed to disclose the [a]nti-[k]ickback [s]tatute violation." The jury returned a verdict for the government on two of the three claims. The district court then awarded treble damages and statutory penalties in the amount of $5,495,931.22.

Following the verdict, the government moved to dismiss its two remaining claims without prejudice, see Fed. R. Civ. P. 41(a)(2), on the ground that any recovery would be "smaller and duplicative of what the [c]ourt ha[d] already awarded." Unfortunately, the district court "inadvertently failed to rule on the government's motion" before the defendants filed an appeal, so we remanded. The government got its wish the second time around—a dismissal without prejudice—and the defendants have appealed again.

II.

The without-prejudice dismissal of the two equitable claims requires a closer look at our jurisdiction. As relevant here, we have appellate jurisdiction over "final decisions of the district courts." 28 U.S.C. § 1291. A "final decision" is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States , 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945). To determine whether a decision is final, we look for "some clear and unequivocal manifestation by the trial court of its belief that the decision made, so far as the court is concerned, is the end of the case." Goodwin v. United States , 67 F.3d 149, 151 (8th Cir. 1995) (quotation marks and brackets omitted).

The odd procedural posture complicates things. On remand, the district court dismissed the government's equitable claims, but it did so without prejudice, and the government has expressed a clear intent to revive them if we reverse. Ordinarily, "a dismissal without prejudice, coupled with the intent to refile the voluntarily dismissed claims after an appeal of the interlocutory order, is a clear evasion of the judicial and statutory limits on appellate jurisdiction." Great Rivers Co-op. of Se. Iowa v. Farmland Indus., Inc. , 198 F.3d 685, 688 (8th Cir. 1999) ; see also Riis v. Shaver , 4 F.4th 701, 705 (8th Cir. 2021) ("A dismissal without prejudice leaves the parties free to litigate as though the action never commenced." (quotation marks and ellipsis omitted)). Among other things, it creates a real risk of piecemeal adjudication. See McLish v. Roff , 141 U.S. 661, 665–66, 12 S.Ct. 118, 35 L.Ed. 893 (1891).

Not so here. The treble-damages award fully compensated the government for its injuries and then some, leaving no doubt that awarding anything more would lead to a duplicative recovery. See Adams v. Toyota Motor Corp. , 867 F.3d 903, 921 (8th Cir. 2017) (discussing double recoveries). Even if the dismissal without prejudice left the government with the ability to revive its equitable claims, deciding them on the merits would have been an "academic exercise," one without any real consequence for the parties. United States ex rel. Miller v. Bill Harbert Int'l Constr., Inc. , 505 F. Supp. 2d 20, 24 (D.D.C. 2007) (noting that "any recovery under" these circumstances "would be duplicative"); see also United States ex rel. Drummond v. BestCare Lab'y Servs., L.L.C. , 950 F.3d 277, 284 (5th Cir. 2020) ("We need not consider defendants’ challenges to the $10.6 million judgment [on the equitable claims]. That's because it is subsumed within the second judgment for $30.6 million under the False Claims Act" and consequently "moot."). Under these circumstances, with no reason to decide what remained, dismissing without prejudice was, as "far as the court [was] concerned, ... the end of the case," which is all that is necessary to satisfy the final-judgment rule. Goodwin , 67 F.3d at 151 (quotation marks and brackets omitted).¹

III.

Satisfied that appellate jurisdiction exists, we now turn to the merits. The couple argues that we must reverse the jury verdict because of two instructional errors. The first is the lack of a beyond-a-reasonable-doubt instruction, allegedly necessary here because the government relied on a criminal statute to prove its case. The second is the...