United States ex rel. Saldivar v. Fresenius Medical Care Holdings, Inc.
145 F. Supp. 3d 1220
N.D. Ga.2015Background
- Relator Chester Saldivar sued Fresenius under the False Claims Act, alleging Fresenius routinely billed Medicare for "overfill" (extra drug volume in vials) that manufacturers provided free, for Epogen and Zemplar administered at dialysis clinics. The court earlier held billing for administered overfill was not reimbursable from 2006–2010 (ASP period) and thus could be a "false claim."
- Key legal question at summary judgment was scienter: whether Fresenius "knowingly" (actual knowledge, deliberate ignorance, or reckless disregard) submitted false claims under 31 U.S.C. § 3729. The parties filed cross-motions limited to knowledge.
- The administrative and factual record shows widespread industry use and billing of overfill, multiple OIG and CMS studies, OIG/CMS awareness of overfill use, and repeated disclosures by Fresenius to OIG, CMS, and other government actors during 1990s–2000s (including during a Corporate Integrity Agreement).
- CMS adopted ASP/AAC reimbursement methodologies (2005–2006) that did not account for overfill; CMS issued a 2010 proposed rule and a 2011 final regulation expressly prohibiting billing for amounts "in excess of that reflected on the FDA‑approved label." CMS maintained the rule was a clarification of existing policy.
- Fresenius and its in‑house and outside counsel consistently believed billing for administered overfill was permissible and relied on industry practice, prior government investigations that did not result in enforcement, counsel advice, and communications with CMS/OIG. Fresenius did not bill for discarded overfill (wastage) beyond label amounts.
- The district court granted Fresenius’s summary judgment motion and denied Relator’s: the court found the record insufficient for a reasonable jury to find Fresenius acted with the requisite knowledge or recklessness in submitting claims for administered overfill.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fresenius knowingly submitted false claims (scienter) for billing administered overfill 2005–2010 | Saldivar: Fresenius had information to deduce overfill was non‑reimbursable after ASP adoption and thus acted knowingly or recklessly by continuing to bill | Fresenius: Reasonable, industry‑wide interpretation that administered overfill was billable; relied on counsel, OIG/CMS interactions, and lack of authoritative prohibition | Held for Fresenius — no reasonable jury could find actual knowledge or recklessness; summary judgment for defendant |
| Whether billing administered overfill constituted a "false claim" (falsity) for all years 2005–2010 | Saldivar: overfill billing violated Medicare rules and therefore claims were false throughout period | Fresenius: Medicare rules did not expressly prohibit overfill billing for entire period; ambiguity precludes falsity as matter of law | Court declined to revisit prior ruling as to 2006–2010 falsity, but held scienter deficiency dispositive; did not resolve 2005 conclusively |
| Whether Zemplar claims are governed by the "incident to" doctrine (and thus barred if provider incurred no expense) | Saldivar: Zemplar falls under "incident to" rules so overfill (a free good) is non‑reimbursable | Fresenius: "Incident to" applies to physician services, not separately billable ESRD drugs administered in dialysis facilities; Zemplar is separately billable under statute | Held for Fresenius — "incident to" rules do not govern Zemplar at ESRD facilities; Relator’s partial SJ denied |
| Whether government knowledge/acquiescence negates scienter | Saldivar: CMS’s ASP methodology and limited post‑2005 disclosures show government did not clearly condone billing, so acquiescence is not exculpatory | Fresenius: Extensive communications and OIG/CMS awareness (and lack of enforcement) made Fresenius’s belief reasonable; government knowledge is relevant to scienter | Held for Fresenius — substantial evidence CMS/OIG knew of industry practice and took no enforcement steps; that fact supports no reckless or knowing submission |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary judgment standard and genuine dispute test)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (movant’s burden on summary judgment)
- Reeves v. Sanderson Plumbing Prods., 530 U.S. 133 (2000) (view evidence in light most favorable to nonmovant)
- Saldivar v. Fresenius Med. Care Holdings, Inc., 972 F. Supp. 2d 1339 (N.D. Ga. 2013) (district court’s prior ruling that overfill billing was not reimbursable 2006–2010)
- Urquilla‑Diaz v. Kaplan Univ., 780 F.3d 1039 (11th Cir. 2015) (FCA scienter standards; recklessness vs. deliberate ignorance)
- United States ex rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39 (D. Mass. 2011) (agency clarification and industry practice regarding overfill)
- Williams v. Renal Care Group, 696 F.3d 518 (6th Cir. 2012) (reliance on counsel and government knowledge undermines recklessness)
- Hixson v. Health Mgmt. Sys., 613 F.3d 1186 (8th Cir. 2010) (reasonable statutory interpretation defeats FCA scienter)