UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVI - PDF document

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION Plaintiffs, CIVIL ACTION NO. v. 1:07-C -2509-CAP DAVITA, INC. and GAMBRO companies Defendants. This matter is before the court on the plaintiffsdefendants’ counterclaim [Doc. No. 79], summary judgment [Doc. Nooplaintiffs’ motion for leave to file surreply [Doc. No. 115], and the plaintiffsaintiffsNo. 116]. As an initial matter, the court nothe court’s analysis. Therefore, each of these motions [Doc. Nos. 100, 115, and Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 1 of 22 2 The Plaintiffs’ Motion to Dismiss the Defendants’ Counterclaim Factual and Procedural Backgroundsease. It is the second largest independent provider of dialyse country. Gambro ovider that sold its United ta in October 2005. The relators are former DaVita and Gambro employees. Alon Vainer is a board certified nephrologist who served as the medical dia during the relevant time period. Hypertension Consultants, Inc., whose physicians have served and continue s in Georgia. Vainer has admitting privileges at multiple DaVita cnurse licensed in Georgia. Between 2000 and 2006 he was employed by Gambro and DaVita as the the court is required to accept the true; therefore, the facts presented in this portion of the order are taken from ’ Fourth Amended Complaint [Doc. No. 77]. Further factual r partial summary judgment will be presented in Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 2 of 22 3 Between 1997 and 2000, Barbir was employed by Gambro in Atlanta, Georgia, as a hemodialysis RN. Gambro, DaVita and Gambro were competitors. Alon Vainer, his brotand their medical director agreements with each Defendant to provide Medical Director On or about July 1, 2002, the VainVainers agreed to provide medical director services at those facilities. These Supervising the delivery of all performed by Center for all ts of Group or Physician) who thout violating Overseeing the training of Center nurses and technicians and ensuring that they are adequately trained and capable of job responsibilities. Cooperating and parteducation programs and in-service programs. Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 3 of 22 4 Suppliers for End-Stage Renal Disease Services and all other a these duties “appl[ied] Pursuant to Section 6.2 of the MDsfied, during such month and be signed by an authorized representaAccordingly, every invoice for medical contained a certification signed by Alminimum level of On or about June 5, 2002, the Vainers, entered into a medical director medical directors of four dialysis mming, Ford Factory SqThe Gambro MDA was amended on more than one occasion prior to January 1, 2008, at which time it was replaced by a new agreement. Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 4 of 22 5 On or about January 1, 2008, the Gambro (“the Replacement MDA”). Pursuant to its terms, the Replacemas amended, effective 12:00 a.m. on January 1, 2008. The Replacement MDA became effective as of 12:01 a.m. on January 1, 2008. At the signed the Replacement MDA, he had alThe Replacement MDA applied to the Cumming and North Fulton d North Fulton dialysis centers, including the performance of services toneal dialysis on Vainer and Sorin Vainer each as a “Medical The Replacement MDA expressly referenced bylaws that required all ws that required all Centers for Medicare and Medicaid Services (“CMS”) Conditions of Coverage.” DaVita, Inc. Medical Staff Bylaws ction 8.1.1(g). Section 2.2 of the staff, to comply with all Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 5 of 22 6 cooperate and comply with all DaVitaAlon Vainer and Vainer & Vainer sent monthly invoices to DaVita for Each such invoice containeent and provided e required by the agreement.” Every invoice during the months of January 2008 through Alon Vainer and Vainer & Vainer alsoprovided to the Fulton facility pursuant to the Gaand December of 2007, whic The defendants filed a counterclaim alleging the following: Alon Vainer breached the Gamband the Replacement Medical Director Agreement by falsely representing that he would iation of any applicable law, Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 6 of 22 7 regulation or breach of complianemployees or agents became aware. Alon Vainer further by falsely certifying, on a monthlterms of those Agreements on the invoices he sent to DaVita. voices he sent to DaVita. allege that Vainer acted in bad faith ct, costs and expenses of litigation, and attorney’s fees unde In their motion to dismiss, the plaibecause it amounts to a claim for contribution or indemnity for wrongdoing, which is barred by the False Claims Act. See Israel Disc. Bank Ltd. V. Entindamages from a breaLegal Standard A Rule 12(b)(6) motion requires anhas set forth claims upon which this court may grant relief. In considering a ’s allegations as Hishon v. King & Spaldingcomplaint in the non-movant’s favor, Duke v. Cleland, 5 F.3d 1399, 1402 (11th Cir. 1993). A complaint attacked by a Rule 12(b)(6) Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 7 of 22 8 ulaic recitation of the elements of a cause , 550 U.S. 544, 555–56 (2007). Ultimately, the complaint is required to contain "only enough facts to at 570. Fed. R. Civ. P. 8(a) requires only "a short and plain n osing party] fair notice fair notice claim is and the grounds upon which it rests." Dura Pharmaceuticals, Inc. v. , 544 U.S. 336, 346 (200conclusions or a formulaic recitation of the elements of a cause of action is , 556 U.S. 662, 678 (2009). ws private parties to file a qui ges on behalf of the United States, against any (A) knowingly presents, or causes to be presented, a false or fraudulent claim for paymnt claim for paym(B) knowingly makes, uses, or causes to be made or used, a false record or statement ma Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 8 of 22 9 31 U.S.C. § 3729(a)(1). Violators of this provision are liable to the government for a civil penalty of betwU.S.C. § 3730(d). “The purpose of thindividuals who are aware of fraud beinRagsdale v. Rubbermaid, Inc. Defendants in qui tam actions are not universally barred from bringing ntiff. As stated above, however, a for wrongdoing is barred by the False Claims Act. See Israel Bank, 951 f.2d at 315 n. 9 (11th Cir. 1992). These types of counterclaims serve only to offset the defendant’s liability, and are barred because such claims would frustrate he FCA’s purpose of encouraging whistleblowing. , 505 F. Supp. 2d 20, 28–29 (D.D.C. 2007). Nevertheless, if a underlying claim, it can proceed In 2009, Congress enacted the Fraud Enforcement and Recovery Act, which ering of 31 U.S.C. § 3729. , 588 F.3d 1318, 1327 n.3 (2009). Neither party has Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 9 of 22 because it is not dependent Madden v. General Dynamics Corp., 4 F.3d 827, 830–31 The issue before the court, then, is whether the counterclaim is action. The plaintiffs aressentially alleges that the plaintiff reporting violations of lalleged violations defendants are simply seeking to offset their own damages by alleging that Alon Vainer was also a wrongdoer. The defendants, on the other hand, argue es not depend on the defendants being found liable in the underlying qui tam action. plaintiff Alon Vainer breached his to violations of federal law as requirfalsely indicating that that he had materially complied with the MDA (which he could not have done if he had not informed the defendants of violations of d occurred). The possible violations of federal law the plaintiff has defendants in the underlying qui tam Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 10 of 22 defendants are seeking breach of contract damages for the plaintiff’s having not reported the alleged violations fobeing sued. ve couched their counterclaim in contract terms, this claim is nonetheless the ty barred in FCA qui Vainer breached the contract by not out violations of applicable law, the defendants would have to first prove that such violations actually occurred. If these violations occurred, then the defendants would be liable for them. Therefore, an element of the defendants’ cause of Furthermore, any damages Alon Vainer may have caused the defendants because of the alleged violations would essentially be some damage causedUnited States that such an outcome would have a chilling effect on the FCA’s goal of encouraging whistleblowing on perpetrators of fraud against the federal government. , 505 F. Supp. 2d at 28–29 (“If such suits were allowed, they would innocent Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 11 of 22 hasis in original). ndants’ counterclaim amounts to a contribution. An element of the claim requires that Alon Vainer caused them damages by contributing to the very e qui tam claim. This some measure of the plaintffs’ own alleged wrongdoing. Such an offset is a claim under 31 U.S.C. § 3730(d)(3) whereby the United States government can offset ithe amount of the qui tam plaintiff’s own unclean hands. Therefore, the h relief can be granted d 79] is GRANTED. II. The Defendants’ Motion for Partial Summary Judgment The defendants’ have moved for partial summary judgment on all claims against the defendant Gambro arising on or before December 1, 2004. The defendants argue that the United States released Gambro from these Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 12 of 22 01-cv-00553 (E.D. Mo. 2004).ement the United States released Gambro, together with its currenpartially-owned subsidiaries, including any joint ventures from any civil or administrative monetary claim the United States has or may have for the Claims Act, 31 U.S.C. §§ 3729-3733. The defendants argue that the sereleases them ro arising on or before December 1, 2004 (the date the settlement agreement went into effect) because the claims here relate to alleged false reimbursement submiVitamin D and Iron drugs for lack of argue falls under “covered conduct.” The plaintiffs argue fraudulent claims for reimbursement [Doc. No. 106] at 3. The plaintiffs arhere because this is a case about fraudulent reimbursements for wastemedicine not for (injection) of medicine. Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 13 of 22 Legal Standard Rule 56(c) of the Federal Rules of Civil Procedure authorizes a court to enter summary judgment “if the pleadings, the discoverany material fact and that the movant islaw.” The party seeking summary judgment bears the burden of , 398 U.S. 144, 156 (1970); , 74 F.3d 1087, 1090 (11th Cir. 1996). The moving party's burden is discharged merely by urt––that there is an ement of] the nonmoving Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In determining whether the movingdistrict court must view the evidence an JohnsonOnce the moving party hacts showing a genuine dispute. Matsushita v. Zenith Radio Corp.475 U.S. 574, 586 (1986). Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 14 of 22 In deciding a motion for summary cide only whether there is , 477 U.S. 242, 251 w will identify those facts that are ith are disputed, but which do not case, will not preclude the entry of summary judgment as those Genuine disputes are those by which the evidencele jury could return a Matsushita, 475 U.S. at 586. When the nonmoving party, there is noAs an initial matter, the plaintiffse defendants filed e week after discovery haplaintiffs argue that they have not had adequate timethe parties do not diSee of Undisputed Material Facts [Doc. No. Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 15 of 22 [Doc. No. 107] at 2–3. If the existence and content of the settlement are genuine issue of material fact as to whether the plaintiffs’ claims against or before December 1, 20motion can be properly adjudicated without further discovery on the issue. reement is a question of law. The reement are given their plain and ordinary meaning, and a cothe face of a clearly worded agreement. (11th Cir. 2008). Furthermore, “[t]hed enforcement of , 752 F.2d 619, 621 (11th Cir. 1985). t affects the validity of a release of significant federal rights, , 673 F.2d 1178, 1180 (11th Cir. 1982) (“Federal issues relating to the validity of and defenses to purported releases of federal tent of the partieZenith Radio Corp. v. , 401 U.S. 321, 347 Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 16 of 22 (1971). “The clearest manifestation of thn v. Cmty. Health Sys., Inc. 721 F. Supp. 763, 768 (E.D.Va.1989)). Here, the plaintiffs are they are acting only on behalf of the United States, which was a party to the F. Supp. 2d 1333, 1336 acting on the behalf of the United Statese plaintiffs argue ms at issue because the claims do not The plaintiffs have alleged that th Zemplar (a vitamin D supplement) and Venofer (an iron supplemements for these drugs were handled through the Center for Medicare and Medicaid ng Zemplar and Venofer) CMS r not only for the amount that was actually dose was administered. For example, Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 17 of 22 administered from a 10-mcm vial, the 0.5 mcg left over would be categorized are not generally available for expenses incurred onable and necessarya number of corporate policies, the waste created in its administration of Zemplar and Venofer in order to maximize thdoing ran afoul of the reasonable-and-necessary portion of the reimbursement requirements. More specificthis overarching profit maximization plan pursuant to four schemes. re-entry in single-use vials of Venofer llowed from 2002–2008) use vials, even though multi-use vials of Epogen were available; (b) Defendants implemented an iron corporate protocol that intentionally spVenofer over several dictated vial size and vial combinations to ensuprotocol that dictated fractional increases in dosages of Zemplar Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 18 of 22 to create waste where none was necessary, again without a hemes concern fraudulent waste contemplated in the covered conduct section of the settlement agreement. The e relevant portions of 3. The United States contends that Gambro improperly assigned h and/or Tenth Revisions ("ICD-9 to government healthcare programs. Gambro's computer syblished by Medicare United States also contends dications and tests coding and/or lacked the documentation to support medical describes a fifth, general “scheme,” of this “scheme” are better characterize Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 19 of 22 b. Vitamin D - The United StJanuary 1, 1991 to Decernment healthcare programs for ates contends such Vitamin D claims were false because they contained preemptive ICD-9 c. Iron - The United StatJanuary 1, 1991 to Decernment healthcare programs for Iron drugs. The United States cofalse because they contained prained prThese sections show two separate categories of pertinent covered conduct––preemptive coding and medicines administered for reasons other than “preemptive coding and/or lacked and the United States (in n )3 argue that the fraudulent conduct alleged here does not concern the administration of medicine; therefore they argue that the use of the word “adm The United States has any federal court litigation to attend Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 20 of 22 bursements as well. igation, the court concluen for summary judgment. Under federal common present evidence of the , 301 U.S. at releases only those other parties v. ITT Continental Banking Co., 420 U.S. 223, 238 (197, 420 U.S. 223, 238 (197reliance upon certain aids to construction is proper, as with any other contract. Such aids include the circuming words used may have had to the parties, and any other documents expreagreement is ambiguous whwhich released Gambro “from any civil United States has or may have for the United States may have against reimbursements related to Vitamin D and Iron drugs. It is also possible that Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 21 of 22 lease to apply more narrowclaims related to medicines developed through discovery and presented to the court. Therefore, the court first be subjected to discovery before summary judgment would be proper. III. Conclusion defendants’ counterclaim [Doc. No. 79] is GRANTED; the defendants’ motion judgment [Doc. No. 89] is DENIED; and the parties’ s [Doc. Nos. 100, 115, and 116] are DENIED. SO ORDERED CHARLES A. PANNELL, JR. United States District Judge Case 1:07-cv-02509-CAP-JSA Document 300 Filed 02/13/13 Page 22 of 22