United States of America v. Fresenius Vascular Care, Inc.
1:14-cv-03505
E.D.N.YOct 31, 2024Background
- Relators John Pepe, M.D., and Richard Sherman, M.D. brought a qui tam suit under the federal False Claims Act (FCA) and analogous state laws, alleging widespread fraudulent billing by Fresenius Medical Care entities and an individual executive, Dr. Miller.
- The core allegation was that Fresenius systematically conducted and billed for unnecessary medical procedures (fistulagrams/angioplasties) through self-referrals, false documentation, and misleading statements to patients, with claims submitted to Medicare and Medicaid nationwide.
- Relators cited specific examples involving six patients (mostly in New York, one in New Jersey), claiming these were representative of nationwide fraud within Fresenius’s network.
- The U.S. only partially intervened on federal FCA claims (mostly related to New York); a few states also intervened on narrower claims, while most states did not.
- Defendants moved to dismiss all non-intervened claims—including nationwide FCA, non-intervened state FCA, and claims against Dr. Miller—arguing failure to meet Rule 9(b) particularity requirements for pleading fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Relators pleaded nationwide FCA fraud with particularity under Rule 9(b) | Detailed patient examples from NY/NJ and company-wide policies show nationwide, systemic fraud | No specific facts tie alleged fraud to nationwide conduct or specific out-of-state claims/billing | Claims dismissed: Insufficient particularity and no basis to extrapolate nationwide fraud from limited examples |
| Whether aggregate Medicare data suffices to infer submission of false claims | Payment and volume data for Fresenius providers, combined with anecdotes, establish high-probability of fraudulent claims | High Medicare billings alone do not show fraud; no specific instances of false claims presented | Data alone is insufficient to support inference of fraud without specific allegations of false claims |
| Whether state law claims can proceed absent specific factual allegations for each state | National conduct, policies, and patient anecdotes support state law claims in all listed states | Must allege specifics for each state; generic allegations or extrapolation from NY/NJ is inadequate | Claims dismissed: No state-specific facts pleaded, no inference of other-state fraud allowed |
| Whether claims should proceed against Dr. Miller based on his executive role and statements | Miller was architect of the scheme; presentations/promotions demonstrate personal involvement | No specific facts connect Miller to fraudulent billing in other states or specific claims | Claims against Miller dismissed: No sufficient particularized allegations of his involvement nationwide |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Rule 12(b)(6) plausibility pleading standard)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state more than merely possible claims)
- Mikes v. Straus, 274 F.3d 687 (elements for a claim under the FCA in the Second Circuit)
- Rombach v. Chang, 355 F.3d 164 (Rule 9(b) particularity requirements and purpose in fraud cases)
- Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124 (Rule 9(b) requirement to specify who, what, when, where, and how of alleged fraud)