United States Ex Rel. Williams v. Renal Care Group, Inc.
2012 U.S. App. LEXIS 20806
6th Cir.2012Background
- Renal Care Group (RCG) owned RCG Supply Company (RCGSC); Fresenius later became successor to both.
- Medicare reimburses home dialysis via Method I (services included) or Method II (supplies only, higher rates); Method II has strict restrictions.
- RCGSC was formed in 1998 as a wholly-owned subsidiary to harvest higher Method II reimbursements; RCG and RCGSC shared operations and funding, creating an alter-ego-like structure.
- Internal memos and emails showed attempts to convert CCPD patients to Method II and to treat RCGSC as the vehicle for higher reimbursements, with some concern raised about legality.
- Alexander letter and CMS responses remained contested; discovery disputes arose over whether CMS knew of the relationship and whether the government must disclose deliberative-process materials.
- District court granted partial summary judgment favoring the United States on falsity and related claims, then later on others, prompting appeals; this court reverses and remands on multiple counts while denying reassignment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RCGSC was an eligible Method II supplier and thus its claims were false. | RCGSC was not an independent entity; it was a conduit to obtain higher payments. | RCGSC could be a separate entity meeting regulatory ownership/control standards. | Count One’s falsity finding reversed; no liability for reckless disregard. |
| Whether defendants acted with knowledge under FCA (reckless disregard, actual, or constructive knowledge). | Defendants knew or acted with reckless disregard regarding RCGSC’s eligibility. | Regulations were ambiguous; defendants sought guidance and acted to comply. | Reversal: defendants did not act with reckless disregard; Count One reversed on knowledge. |
| Whether the district court properly denied production of deliberative-process materials and sanctions related to the Alexander letter. | Document defense of privilege affirmed; no sanctions for discovery disputes. | ||
| Whether Count Two (DME supplier standards) supports FCA liability given regulatory conditions of participation. | Violations of supplier standards render false claims actionable. | FCA does not automatically punish technical regulatory noncompliance. | Count Two grants summary judgment for defendants; other counts remanded. |
| Whether reassignment to another judge was appropriate. | Reassignment denied; case remanded.” |
Key Cases Cited
- United States ex rel. Compton v. Midwest Specialty, Inc., 142 F.3d 296 (6th Cir.1998) (reckless disregard requires reasonable inquiry into contract compliance)
- Parke, Davis & Co. v. Califano, 623 F.2d 1 (6th Cir.1980) (deliberative process analysis in privilege determinations)
- United Health Grp., Inc. v. Wilkins, 659 F.3d 295 (3d Cir.2011) (FCA testing and regulatory compliance distinctions)
- Solomon v. United States, 467 F.3d 928 (6th Cir.2006) (reassignment factors and rarity of reassignment)