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United States ex rel. Cairnes v. D.S. Medical, L.L.C

United States District Court, E.D. Missouri

May 23, 2017

UNITED STATES OF AMERICA, ex rel. PAUL CAIRNS, et al., Plaintiffs,
v.
D.S. MEDICAL, L.L.C., et al., Defendants.

          MEMORANDUM AND ORDER

          AUDREY G. FLEISSIG, UNITED STATES DISTRICT JUDGE

         This qui tam action under the False Claims Act, 31 U.S.C. §§ 3729-33 (“FCA”) is before the Court on the motion (ECF No. 197) of the United States as Intervenor/Plaintiff for partial summary judgment, or for an Order under Federal Rule of Civil Procedure 56(g) that certain material facts are not genuinely in dispute and should be treated as established in the case. For the reasons set forth below, the government's motion will be denied, with leave granted to the government to amend the proposed findings that are the subject of the motion.

         BACKGROUND

         The operative complaint (Doc. No. 26) claims that the four Defendants in the case - Dr. Sonjay Fonn, a neurosurgeon; Midwest Neurosurgeons, LLC (“Midwest Neurosurgeons”), a company formed and operated by Dr. Fonn; Deborah Seeger, Dr. Fonn's fiancée; and D.S Medical, LLC (“DSM”), a company formed and created by Seeger for the distributorship of spinal implant devises - violated the FCA by submitting or causing to be submitted to the federal Medicare and Medicaid programs false claims for reimbursement for Dr. Fonn's services in performing spinal surgeries at St. Francis Medical Center (“SFMC”) in Cape Girardeau, Missouri, between December 2008 and March 2012, and for the purchase of implant devices used in those surgeries. The claims for reimbursement were allegedly false because they did not disclose that they were the result of alleged kickbacks that violated the federal criminal Anti-Kickback Statute (“AKS”).

         The complaint alleges that Dr. Fonn would select the devices he would use during surgeries at SFMC, based, at least in part, on the fact that DSM would serve as the local distributor for the manufacturer of those devices. DSM would then be paid commissions by the manufacturers, and DSM and Seeger would in turn share those commissions with Dr. Fonn. The alleged illegal kickbacks are from Seeger and DSM to Dr. Fonn, and from spinal manufacturers to DSM in the form of inflated commissions. The complaint also asserts common law claims for payment by mistake of fact, unjust enrichment, and fraud.

         The government asks the Court for a Rule 56(g) order, finding the following four facts as established with regard to the FCA claims in this case:

1. Defendants “arrang[ed], ” within the meaning of the AKS, 42 U.S.C. § 1320a-7b(b)(1)(A)-(B), for spinal devices to be purchased by SFMC through DSM for use in the 228 surgeries performed by Dr. Fonn listed in Exhibit 1 (Doc. No. 201-1) to the government's Statement of Uncontroverted Material Fact;
2. The above “arrangement” was to procure spinal devices “for which payment may be made in whole or in part under a Federal health care program”;
3. Defendants presented or caused to be presented at least 119 “claims, ” within the meaning of the FCA, 31 U.S.C. §§ 3729(a)(1)(A), 3729(b)(2), for professional services, and at least 173 “claims” for hospital services, to the Medicare program; and
4. Defendants “caused” to be presented at least 55 “claims, ” within the meaning of the FCA, 31 U.S.C. §§ 3729(a)(1)(A), 3729(b)(2), for hospital services to the Missouri Medicaid program.

         The government asserts that these facts are undisputed, and that granting the Rule 56(g) order requested would narrow and simplify the jury's task at trial. Exhibit 1 is a chart that lists 228 surgeries by date from January 19, 2019, through March 12, 2012. It was prepared by Timothy Minden, Special Agent for the Department of HHS, Office of the Inspector General, Office of Investigations. The chart contains a column showing alleged payment amounts made by Medicare or Medicaid for each of the 228 surgeries. Agent Minden's affidavit describes how he and individuals working at his direction retrieved the data underlying the chart from federal and state agencies, and chose which data to include in the chart. According to the government,

[t]he undisputed material facts show that Dr. Fonn selected which spinal devices to use for each of the surgeries at issue; that he arranged for DSM to make those particular products available to him during the surgeries he performed; and that both Midwest Neurosurgeons and SFMC billed federal healthcare programs and were subsequently reimbursed for those surgeries. Therefore, the government respectfully requests that the Court rule, as a matter of law, that one element of the AKS has been satisfied: Defendants arranged for the purchasing and furnishing of items by SFMC through DSM.

         Defendants jointly respond that disconnecting the AKS requirement of “arranging” from the AKS requirement that remuneration is received in return, as granting the government's motion would do, would be confusing to the jury and prejudicial to Defendants. They also argue that Exhibit 1 is inadmissible because it is based on Agent Minden's inadmissible affidavit. Defendants challenge Agent Minden's affidavit on the ground that it is not based on his personal knowledge of how the data he used is collected. The admissibility of Exhibit 1 and Agent Minden's affidavit is the subject of a separate motion to strike filed by Defendants.

         Defendants argue that, moreover, even if admissible, the accuracy of Exhibit 1 is not undisputed. Defendants point to Agent Minden's deposition testimony that he did not validate the data he used for the chart. They also point to discrepancies in the government's data, especially with regard to Medicare Part B claims supposedly submitted by Dr. Fonn or Midwest Neurosurgeons. Defendants maintain that they are entitled to cross-examine whatever witnesses the government may decide to present to attempt to properly introduce the data at issue. Lastly, Defendants argue that the government failed to ...


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