386 F.3d 235 | 3rd Cir. | 2004
STAPLETON, Circuit Judge: the M e d ic a re p ro g ra m (“Prem ier
Participants”). The contract committed Richard G. Schmidt, M.D. Zimmer to provide orthopedic implants to (“Schmidt”), an orthopedic surgeon in the Premier Participants for a period of Bala Cynwyd, Pennsylvania, brought this five years. qui tam action pursuant to the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et Under this contract, the Premier seq. , against defendant Zimmer, Inc. Participants were rewarded if they (“Zimmer”), a manufacturer, seller, and purchased Zimmer’s products in sufficient distributor of orthopedic implants. The numbers to increase Zimmer’s market District Court dismissed Schmidt’s share. Among these rewards was a complaint for failure to state a claim under “conversion incentive.” This incentive Rule 12(b)(6) of the Federal Rules of Civil was intended to compensate the Premier Procedure. We will reverse the judgment Participants for purchasing implants from of the District Court. Zimmer rather than its competitors. Under
the “conversion incentive,” when a I. Premier Participant purchased more than the total number of implants it had In his first amended complaint, purchased the year before, each additional which is at issue in this appeal, Schmidt implant could be purchased for a reduced purported to allege FCA violations against price of $200. In addition, the contract both Zimmer and M ercy Health Systems allegedly provided that each Premier (“Mercy”). [1] In particular, Schmidt alleged Participant would receive a 2% bonus on that Zimmer entered into a contract with implant purchases if the Premier
Participant met the pre-set market share and volume purchase commitments. Finally, the contract allegedly provided for [1] Mercy is a Pennsylvania corporation additional incentives “targeted to offset the that owns and operates hospitals and other costs associated with com petitive health care facilities, including Mercy conversion.” Each Premier Participant Fitzgerald Hospital, Mercy Hospital of would forfeit the foregoing rewards if they Philadelphia a/k/a M isericordia Hospital, failed to meet the commitments pre-set by Mercy Haverford Hospital, Mercy Zimmer. Community Hospital, Mercy Catholic Medical Center, and Mercy Suburban
Schmidt further alleged that the Hospital. rewards provided under the contract were paid to Mercy and the other Premier Participants “in cash or cash equivalents,”
Furthermore, if services and that these payments are a classic identified by this report example of “kickbacks.” Moreover, it was were provided or procured alleged that Zimmer and Mercy induced through the payment directly certain of its physicians and orthopedic or indirectly of a kickback departments to assist in meeting Zimmer’s or were otherwise illegal, prescribed volume and market share levels c r i m i n a l , c i v i l a n d by sharing with them all or part of the administrative action, fines, rewards received from Zimmer under the and/or imprisonment may contract. result. J.A. at 35-36. The form also requires the According to Schmidt, each following certification by an officer or Premier Participant reported its costs administrator of the health care provider: associated with the purchase of orthopedic I hereby certify that I have implants in annual cost reports that were read the above statement submitted to the United States Government and that I have examined the under the Medicare program. The accompanying electronically reporting form, United States Department filed or manually submitted of Health and Human Services’s Form cost report and the Balance HCFA-2552, required a health care Sheet and Statement of provider to certify that the costs being Revenue and Expenses submitted were true and correct, and that prepared by . . . (Provider the provider had complied with all laws Name(s) and Number(s)) for and regulations regarding the provision of the cost reporting period health care services. [2] Such certification, beginning . . . and ending . . . and that to the best of my knowledge and belief it is a [2] Specifically, Form HCFA-2552, true, correct and complete according to the first amended complaint, statement prepared from the provides that: books and records of the
M i s r e p r e s e n ta t i o n o r provider in accordance with f a l s i f i c a t i o n o f a n y applic able instruc tions, information contained in except as noted. I further this cost report may be certify that I am familiar punishable by criminal, civil w i t h t h e l a w s a n d and administrative action, regulations regarding the fine and/or imprisonment provision of health care u n d e r f e d e r a l l a w . services and that the
Schmidt alleged, was a cond ition alleged to have violated § 1320a-7b(b)(1) precedent for Premier Participants to by knowingly and wilfully soliciting or obtain Medicare funds from the federal receiving such unlawful remunerations, government and to retain Medicare funds and Zimmer was alleged to have violated advanced by the federal government. § 1320a-7b(b)(2) by knowingly and Schmidt alleged that, despite these wilfully paying or offering to pay such unlawful remunerations. [4] Both Mercy requirements, the cost reports submitted by Mercy and the other Premier Participants did not disclose the rewards that they allegedly received from Zimmer under the [4] 42 U.S.C. § 1320a-7b(b) provides, in contract. [3] Schmidt further alleged that relevant part, that: Mercy and the other Premier Participants (1) whoever knowingly and also falsely certified on their cost reports willfully solicits or receives that they were in compliance with all laws any remuneration (including and regulations regarding the provision of any kickback, bribe, or health care services. rebate) directly or indirectly, overtly or covertly, in cash
According to Schmidt, the or in kind – remunerations paid by Zimmer to Mercy (A) in return for referring an and the other Premier Participants under individual to a person for the contract were made in violation of the the furnishing or arranging federal Anti-Kickback Act, 42 U.S.C. § for the furnishing of any 1320a-7b. In particular, Mercy was item or service for which payment may be made in whole or in part under a
services identified in Federal health care program, this cost report were or p r o v i d e d i n (B) in return for purchasing, c o m p l i a nc e wit h l e a s in g , ord e rin g, o r s u c h l a w s a n d a r r a n g i n g f o r o r regulations. recommending purchasing, J.A. at 36. leasing, or ordering any [3] With the exception of Mercy, good, facility, service, or Schmidt’s first amended complaint did not item for which payment may identify any other Premier Participant who be made in whole or in part was alleged to have filed a false Form under a Federal health care HCFA-2552 cost report. Nor did the program, complaint indicate the number of cost shall be guilty of a felony reports that were allegedly submitted by and upon conviction thereof, Mercy or any other Premier Participant. shall be fined not more than
and Zimmer were alleged to have violated § 1320a-7b(a)(3) by failing to disclose to the federal government the allegedly
$ 2 5 , 0 0 0 o r unlawful remunerations. [5] imprisoned for not more than five years, or both.
and (2). (2) whoever knowingly and [5] 42 U.S.C.§ 1320a-7b(a)(3) provides, in willfully offers or pays any remuneration (including any relevant part, that: kickback, bribe, or rebate) Whoever . . . having directly or indirectly, overtly k n o w l e d g e o f t h e or covertly, in cash or in occurrence of any event kind to any person to induce affecting (A) his initial or such person – continued right to any (A) to refer an individual to [benefit or payment under a a person for the furnishing Federal health care program or arrang ing for th e (as defined in subsection (f) furnishing of any item or of this section)], or (B) the service for which payment initial or continued right to may be made in whole or in any such benefit or payment part under a Federal health of any other individual in care program, or whose behalf he has applied (B) to purchase, lease, order, for or is receiving such o r a r r a n g e f o r o r benefit or payment, conceals recommend purchasing, or fails to disclose such leasing, or ordering any event with an intent good, facility, service, or fraudulently to secure such item for which payment may benefit or payment either in be made in whole or in part a greater amount or quantity under a Federal health care than is due or when no such program, benefit or payment is shall be guilty of a felony authorized, . . . shall (i) in and upon conviction thereof, the case of such a statement, shall be fined not more than representation, concealment, $25,000 or imprisoned for failure, or conversion by any not more than five years, or person in connection with both. the furnishing (by that
In addition, § 1320a-7b(b)(3) provides person) of items or services certain exceptions to, and safe harbors for, for which payment is or may acts within the scope of § 1320a-7b(b)(1) be made under the program,
Schmidt’s first amended complaint complaint alleged that there was a also alleged that both Mercy and Zimmer “financial relationship” between Mercy violated the Anti-Self-Referral Act (also and certain physicians that worked at known as the “Stark Act”), 42 U.S.C. § Mercy’s facilities, and that such a 1395nn, by presenting, or causing to be relationship also existed between Mercy presented, Medicare reimbursement claims and Zimmer. Despite these alleged for services furnished pursuant to financial relationships, according to the prohibited referrals. [6] Specifically, the complaint, Mercy nonetheless unlawfully
sought Medicare reimbursements for services furnished under prohibited
be guilty of a felony referrals. and upon conviction thereof fined not
Finally, based on these alleged more than $25,000 or violations of the Anti-Kickback Act and imprisoned for not the Stark Act, Schmidt alleged that more than five years Mercy’s certifications of compliance with or both, or (ii) in the federal health care law, contained in its case of such a annual cost reports submitted to the federal s t a t e m e n t , r e p r e s e n t a t i o n , concealment, failure,
1395nn(a)(1)(A), a physician may not refer c o n v e r s i o n , o r Medicare patients to an entity for provision of counsel “designated health services,” including or assistance by any inpatient and outpatient hospital services, other person , be if the referring physician has a nonexempt g u i l t y o f a “financial relationship” with such entity. misdemeanor and Under § 1395nn(a)(1)(B), the entity is u p o n c o n v ic t i o n prohibited from presenting or causing to thereof fined not be presented a Medicare claim for services more than $10,000 or furnished pursuant to a prohibited referral. imprisoned for not With certain exceptions, “financial more than one year, relationship” is defined as (1) an or both. ownership or investment interest in the [6] The Stark Act prohibits the entity, or (2) a compensation arrangement presentation of a claim to Medicare for a with the entity. 42 U.S.C. § 1395nn(a)(2). designated health service by an entity See generally United States ex rel. where the service was furnished pursuant Thompson v. Columbia/HCA Healthcare to a prohibited referral by a physician that Corp. , 125 F.3d 899, 901-02 (5th Cir. has a financial relationship with the entity. 1997) (describing the operation of the See 42 U.S.C. § 1395nn(a). Under § Stark Act). government on Form HCFA-2552, were it caused Mercy to submit false. Mercy’s false certifications, an allegedly false cost according to the complaint, constituted report. But the Amended violations of three provisions of the FCA, Complaint does not allege rendering both Mercy and Zimmer liable: Z i m m e r r e v i e w e d , (1) 31 U.S.C. § 3729(a)(1), which approved, or received copies prohibits knowingly presenting, or causing of Mercy’s cost reports or to be presented, to an officer or employee p a r t i c i p a t e d i n t h e ir of the United States Government a false preparation; nor does it claim for payment or approval, (2) § allege Zimmer certified the 3729(a)(2), which prohibits knowingly truthfulness of Mercy’s cost making, using and/or causing to be made reports. or used a false record, claim, or statement to get a false claim paid or approved by the Courts have found a party federal government, and (3) § 3729(a)(7), caused the submission of a barring false certifications intended to false claim by another party conceal, avoid, or decrease an obligation only where the non- to refund Medicare payments made by the submitting party purposely federal government. and intentionally duped the
submitting party to submit Both Mercy and Zimmer responded the false claim. to the complaint by filing a motion to dismiss. Zimmer’s motion to dismiss was J.A. at 6-7 (citing United States v. granted with prejudice; Mercy’s motion Bornstein , 423 U.S. 303 (1976)). was granted without prejudice and Schmidt was allowed to file a second II. amended complaint against it. Ultimately, Schmidt’s claim against Mercy was We exercise plenary review over settled, and he filed this appeal of the the District Court’s dismissal of a claim order granting Zimmer’s motion to for failure to state a cause of action under dismiss. Fed. R. Civ. P. 12(b)(6). Pinker v. Roche
Holdings Ltd. , 292 F.3d 361, 374 n.7 (3d Cir. 2002). [7] “A court should not dismiss a The District Court explained its decision to dismiss Schmidt’s FCA claim against Zimmer in the following manner: complaint under Rule 12(b)(6) for failure muster under the Anti-Kickback and Stark to state a claim for relief ‘unless it appears Acts. We therefore conclude that these beyond doubt that the plaintiff can prove issues cannot be resolved in the context of no set of facts in support of his claims a motion to dismiss. Accordingly, like the which would entitle him to relief.’” Pryor District Court, we assume without v. National Collegiate Athletic Ass’n , 288 deciding for purposes of this appeal that F.3d 548, 559 (3d Cir. 2002) (quoting Zimmer’s marketing program violated Conley v. Gibson, 355 U.S. 41, 45-46 both Acts. (1957)). “In evaluating the propriety of the dismissal, we accept all factual Zimmer insists that the Anti- allegations as true, construe the complaint Kickback Act provides a safe harbor for in the light most favorable to the plaintiff, marketing programs offering discounts to and determine whether, under any health care providers and that its program reasonable reading of the complaint, the was designed to take advantage of this safe plaintiff may be entitled to relief.” Pinker , harbor. See 42 U.S.C. § 1320a- 292 F.3d at 374 n.7 (citing Colburn v. 7b(b)(3)(A); 42 C.F.R. § 1001.952(h). Upper Darby Township , 838 F.2d 663, When the record is fully developed, this 665-66 (3d Cir.1988)). may turn out to be the case, but the
complaint alleged that the rewards given to III. Mercy were paid to it in “cash or cash equivalents” and this appears to be According to Zimmer, it is apparent inconsistent with Zimmer’s safe harbor from the face of the first amended theory. See 42 C.F.R. § 1001.952(h)(5)(i) complaint that its marketing program did (“The term discount does not include – not violate the Anti-Kickback Act or the Cash payment or cash equivalents (except Stark Act. Because it concluded that that rebates as defined in [42 C.F.R. § Zimmer was not alleged to have caused the 1001.952(h)(4)] may be in the form of a presentation of a claim, the District Court check).”). did not reach this issue, assuming without deciding that violations of those Acts had Similarly, we cannot say that it is been alleged. Based on our reading of the clear from the face of the complaint that first amended complaint, it is not clear that Zimm er’s marketing program was the alleged conduct of Zimmer passes consistent with the Stark Act. The
marketing scheme, according to the complaint, allegedly involved both Zimmer and Mercy sharing remunerations
this appeal pursuant to 28 U.S.C. § 1291 with physicians at Mercy in order to because the District Court’s Order and induce these physicians to help in meeting Stipulation of Dismissal resulted in a final Zimmer’s prescribed volume and market decision. share levels. In providing such help, these physicians allegedly made “prohibited statement to conceal, avoid, referrals” for Mercy to provide health or decrease an obligation to services for which Mercy then allegedly pay or transmit money or s o u g h t M e d i c a r e r e i m b u r s e m e n t. property to the Government, Inasmuch as the complaint alleges a is liable to the United States compensation arrangement, a referral for Government for a civil services, and a Medicare claim for those penalty of not less than services, Zimmer’s marketing scheme does $5,000 and not more than not appear to be consistent with the Stark $10,000, plus 3 times the Act. See 42 U.S.C. § 1395nn(a); amount of damages which Columbia/HCA Healthcare , 125 F.3d at the Government sustains 901-02. because of the act of that
person . . . .
IV.
31 U.S.C. § 3729(a). In this context, “the The FCA provides, in relevant part: terms ‘knowing’ and ‘knowingly’ mean that a person, with respect to information Any person who – – (1) has actual knowledge of the (1) knowingly presents, or information; (2) acts in deliberate causes to be presented, to an ignorance of the truth or falsity of the officer or employee of the information; or (3) acts in reckless United States Government disregard of the truth or falsity of the or a member of the Armed information, and no proof of specific Forces of the United States a intent to defraud is required.” 31 U.S.C. § 3729(b). [8] false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or [8] The term “claim” as used in the FCA is used, a false record or defined as including “any request or statement to get a false or demand, whether under a contract or fraudulent claim paid or otherwise, for money or property which is a p p r o v e d b y t h e made to a contractor, grantee, or other Government; recipient if the United States Government (3) conspires to defraud the provides any portion of the money or government by getting a property which is requested or demanded, false or fraudulent claim or if the Government will reimburse such allowed or paid; [or] . . . contractor, grantee, or other recipient for (7) knowingly makes, uses, any portion of the money or property or causes to be made or which is requested or demanded.” 31 used, a false record or U.S.C. § 3729(c). A suit to enforce the liability thus To establish a prima facie claim created may be instituted in two ways: under 31 U.S.C. § 3729(a)(1), a plaintiff must show that: “(1) the defendant T h e U n i t e d S t a t e s presented or caused to be presented to an Department of Justice may agent of the United States a claim for file suit to collect damages payment; (2) the claim was false or suffered as the result of fraudulent; and (3) the defendant knew the fraudulent claims which claim was false or fraudulent.” Hutchins , cause government money to 253 F.3d at 182. In order to prove a claim be expended from the under § 3729(a)(2), a plaintiff must also United States Treasury. show that the defendant made or used (or Alternatively, a private caused someone else to make or use) a plaintiff may bring a qui tam false record in order to cause the false action on behalf of the claim to be actually paid or approved. See government to recover 1 John T. Boese, Civil False Claims and losses incurred because of Qui Tam Actions § 2.01[B], at 2-20 (2d ed. fraudulent claims. 31 U.S.C. 2003) (citing United States ex rel. Aakhus § 3730(b)(1). When a v. DynCorp, Inc. , 136 F.3d 676, 682 (10th private plaintiff brings a qui Cir. 1998)). Finally, a claim under § tam action, the government 3729(a)(7) requires a plaintiff to prove a is permitted to intervene. “reverse false claim”; that is, that the But the private plaintiff may defendant made or used (or caused continue his suit even if the someone else to make or use) a false government declines to record in order to avoid or decrease an intervene. 31 U.S.C. § obligation to the federal government. See 3730(c)(1). If the qui tam Kennard v. Comstock Resources, Inc. , 363 suit is ultimately successful, F.3d 1039, 1048 (10th Cir. 2004) the private plaintiff, known (“Pursuant to § 3729(a)(7), Relators are as a relator, is entitled to up required to allege that [the defendant] had to 30% of the funds the an existing, legal obligation to pay or government recovers. 31 transmit money or property to the U.S.C. § 3730(d). Government and that [the defendant]
submitted false statements or records to Hutchins v. Wilentz, Goldman & Spitzer , conceal, avoid, or decrease that 253 F.3d 176, 181-82 (3d Cir. 2001), cert. obl iga ti on. ” ( i n t e r n a l q u o t a t i o n s omitted)). [9] denied , 536 U.S. 906 (2002). The United States declined to intervene in this case and Schmidt accordingly proceeded as a qui tam relator. [9] Moreover, we have held that FCA claims must be pleaded with particularity
In United States ex rel. Marcus v. government to pay claims Hess , 317 U.S. 537 (1943), the Supreme which were grounded in Court explained the purpose of the fraud, without regard to provisions of the FCA extending its whether that person had coverage to those who “cause [a false direct contractual relations claim] to be presented” and to those who with the government. “conspire” to obtain payment of such claims: 317 U.S. at 544. This statement of
purpose structures the issue for decision T h e s e p r o v i s i o n s , here: Can it fairly be said that Zimmer considered together, indicate knowingly assisted in causing the a purpose to reach any government to pay claims which were person who knowingly grounded in fraud? Construing the facts assisted in causing the alleged in the first amended complaint in a
light most favorable to Schmidt, we conclude that it can.
in accordance with Fed. R. Civ. P. 9(b). “[A] false certification of See United States ex rel. LaCorte v. compliance [with applicable law] creates SmithKline Beecham Clinical Labs., Inc., liability [under the FCA] when 149 F.3d 227, 234 (3d Cir. 1998). Here, certification is a prerequisite to obtaining the District Court held that Schmidt’s first a government benefit.” United States ex amended complaint did not satisfy Rule rel. Hopper v. Anton , 91 F.3d 1261, 1266 9(b) with respect to the FCA claim against (9th Cir. 1996); see Columbia/HCA Mercy, but nonetheless expressed its belief Healthcare , 125 F.3d at 902 (involving that the defects as to particularity could be alleged violations of the Anti-Kickback cured easily by amending the complaint to and Stark Acts); Harrison v. Westinghouse specify the precise Form HCFA-2552 cost Savannah River Co. , 176 F.3d 776, 787 reports that were alleged to be false. The (4th Cir. 1999). A certificate of District Court subsequently held that compliance with federal health care law is Schmidt’s second amended complaint a prerequisite to eligibility under the against Mercy was sufficient under Rule Medicare program. See 42 C.F.R. § 9(b). We will therefore assume that 4 1 3 . 2 4 ( f ) ( 4 ) ( i v ) ; C o l u m b i a / H C A Schmidt’s first amended complaint with Healthcare , 125 F.3d at 902. It follows respect to Zimmer was similarly deficient that Schmidt alleged a violation of the under Rule 9(b), but that such deficiency FCA when he alleged that Mercy certified may be cured in the same manner as was its compliance with federal health care law the second amended complaint. See Fed. knowing that certification to be false. The R. Civ. P. 15(a) (stating that leave to issue for resolution is thus whether, under amend “shall be freely given when justice the allegations of the complaint, Zimmer so requires”). knowingly assisted in Mercy’s false subcontractor under the FCA, the certification. subcontractor’s FCA liability itself was not
questioned. In fact, the Supreme Court, It is true, as the District Court citing to Hess , noted that “[i]t is settled stressed, that the amended complaint does that the [FCA] . . . gives the United States not allege that Zimmer “reviewed, a cause of action against a subcontractor approved, or received copies of M ercy’s who causes a prime contractor to submit a cost reports or participated in their false claim to the Government.” Id. at preparation.” The case law indicates, 309. however, that a party may assist the filing of a false claim in other ways. It does not appear from the opinion
of the Court in either Hess or Bornstein In Hess , for example, a group of that the party actually presenting the electrical contractors had devised a scheme claims to the government was aware of the under which they collusively bid contracts fraudulent conduct. This was not a matter being let by municipalities and school material to the Court’s analysis, however. districts that were participating in a federal Given the Court’s view that the crucial program providing federal funding. 317 issue was whether the defendants U.S. at 539. Claims were submitted to the knowingly assisted in the presentation of government by the local sponsors and false claims, the knowledge and conduct of there is no indication that the electrical the defendant were what mattered and the contractors participated in the preparation outcome did not turn on whether the actual or s u bm is si on o f t ho s e c la im s. presenters were “duped” or participated in
the fraudulent scheme. [10] Accordingly, we Nevertheless, because those contractors had knowingly pursued a scheme that, if believe the District Court erred in successful, would ultimately result in the concluding that someone other than the submission of a false claim to the actual presenter cannot be responsible government, they were held to have caused under the FCA in the absence of duping. those claims to be presented.
Schmidt, like the plaintiffs in Hess Similarly, in United States v. and Bornstein , alleges that Zimmer created Bornstein , 423 U.S. 303, 307 (1976), a and pursued a marketing scheme that it defendant subcontractor supplied a prime knew would, if successful, result in the contractor with falsely marked substandard electron tubes, knowing that the tubes would in turn be used in the manufacture [10] By way of example, we are confident of radio kits sold by the prime contractor that the subcontractor in Bornstein would to the United States. Although the precise have been held no less culpable under the issue in the case was the number of FCA had the prime contractor known that statutory forfeitures assessable against the the electron tubes were falsely marked. submission by Mercy and others similarly maintain their eligibility for Medicare situated of compliance certifications participation without certifying their required by Medicare that Zimmer knew compliance with federal health law. Thus, would be false. If this conduct and this when read in a light most favorable to knowledge were proven at trial, a jury Schmidt, one can reasonably infer from the could conclude that Zimmer knowingly foregoing that Zimmer must have known caused Mercy’s false claims to be filed. that Mercy could not purchase its implants,
receive kickbacks, and share those As we have indicated, Schmidt’s kickbacks with its physicians, in the complaint alleges that Zimmer came up manner provided by the contract unless with a marketing program that it knew to Mercy falsely certified itself to be in be in violation of the Anti-Kickback Act compliance with federal law. and the Stark Act. The alleged targets of this scheme were health care providers that While it is true that Mercy allegedly Zimmer knew to be participants in the made its own decision to file a false Medicare program. The complaint avers, certification, this is not inconsistent with a for example, that the purpose of the conclusion that Zimmer caused that filing. conversion incentive prescribed in the In United States ex rel. Cantekin v. Univ. contract with Premier was intended to of Pittsburgh , 192 F.3d 402, 416 (3d Cir. “influence and obtain favorable treatment 1999), this Court applied ordinary from providers who participate in the causation principles from negligence law Medicare program by inducing them to in determining responsibility under the purchase Zimmer’s products and increase FCA. Under those principles, the Zimmer’s market share for orthopedic “intervention of a force which is a normal implant hardware. . . .” JA at 38. consequence of a situation created by the Moreover, it is a fair inference from the actor’s . . . conduct is not a superseding alleged facts regarding Zimmer’s business cause of harm which such conduct has and knowledge of the relevant market that been a substantial factor in bringing Medicare participation was an important, about.” Restatement (Second) of Torts § 443. [11] Thus, assuming that a jury were to if not an essential, characteristic of the Premier Participants. If Mercy and other Premier Participants were unable to maintain their eligibility to receive [11] The fact that Mercy’s alleged false Medicare funds, the purpose of Zimmer’s certification was an unlawful act does not marketing scheme – selling as many of it render it a superseding cause that absolves impla nts as possible to Prem ier Zimmer from responsibility. As § 448 of Participants – would be thwarted. We the Restatement explains: further regard it as a fair inference from The act of a third person in the facts alleged that Zimmer was aware committing an intentional that Premier Participants could not t o r t o r c r i m e i s a conclude that Zimmer’s marketing scheme We thus conclude, based on Hess was a substantial factor in bringing about and Bornstein , that Schmidt’s first Mercy’s filing and that Mercy’s filing was amended complaint, to the extent it is a normal consequence of the situation based on M ercy’s alleg ed fa lse created by that scheme, Zimmer could be certification of compliance with federal found to have caused, and thus be held health care law, states a claim upon which responsible for, that filing. [12] relief can be granted, and we will remand
for further proceedings. [13] In doing so, it is important to note the limits of our ruling.
superseding cause of Schmidt alleges that Mercy did not harm to another disclose to Medicare the illegal resulting therefrom, remunerations – i.e. , that it made claims although the actor’s for more than it in fact paid Zimmer. This negligent conduct appears not to have been a part of created a situation Zimmer’s marketing scheme and, indeed, which afforded an the Premier contract expressly provides opportunity to the that: t hir d p e r s o n to commit such a tort or
Participating Members shall crime, unless the disclose the specified dollar actor at the time of value of discounts or his negligent conduct reductions in price under realized or should any state or federal program have realized the which provides cost or likelihood that such a charge-based reimbursement situation might be created, and that a third person might [13] We have limited our discussion to avail himself of the addressing the specific ground cited by the o p p o r t u n i t y t o District Court for dismissing Schmidt’s commit such a tort or FCA claim against Zimmer. Although crime. raised by the parties, the District Court did Restatement (Second) of Torts § 448 not reach the issues of whether Schmidt (emphasis added). may proceed against Zimmer with respect [12] Further, as noted above, a jury finding to unnamed Premier Participants that were that Zimmer “knowingly” caused the filing also alleged to have filed false does not require scienter, but, rather, could certifications of compliance with be based on mere passive disregard that applicable law. It is more appropriate, we the jury finds to have been reckless. See believe, to reserve this issue for the U.S.C. § 3729(b). District Court’s consideration on remand.
to s u ch P a r t i c i p atin g Members for the Products and services covered by this Agreement in accordance with applicable regulations.
J.A. at 121. It thus appears that Zimmer was at least aware of the possibility that Mercy might file a false claim for more than it paid Zimmer. But mere awareness that another may, or even has, chosen to make such a claim does not alone constitute “causing a false claim to be presented.” See United States ex rel. Shaver v. Lucas Western Corp. , 237 F.3d 932 (8th Cir. 2001). Indeed, we do not understand Schmidt’s brief before us to argue that Zimmer can be held liable under the FCA for this alleged violation of that Act by Mercy. Schmidt does claim, however, that the certification of compliance with health care law is a prerequisite to entitlement to Medicare payments and that false certifications of compliance w ere necessary consequences of Zimmer’s marketing scheme.
V.
The judgment of the District Court will be reversed, and this matter will be remanded for further p roceedings consistent with this opinion.
NOTES
[7] The District Court had jurisdiction It is undisputed that Zimmer over this case under 28 U.S.C. § 1331 and never submitted any cost 31 U.S.C. § 3732, which specifically reports: Zimmer could be confers jurisdiction for actions brought liable under the FCA only if under the FCA. We have jurisdiction over
