United States District Court, E.D. Missouri
UNITED STATES OF AMERICA, ex rel. PAUL CAIRNS, et al., Plaintiff,
D.S. MEDICAL, L.L.C., et al., Defendants.
MEMORANDUM AND ORDER
G. FLEISSIG, UNITED STATES DISTRICT JUDGE
qui tam action under the federal False Claims Act
(“FCA”) is now before the Court on two oral
motion made in open court on the record by Defendants at the
close of the evidence: (1) motion for judgment as a matter of
law against Plaintiff (ECF No. 409); and (2) motion for
judgment as a matter of law against Plaintiff with respect to
24 claims submitted to Medicaid for reimbursement (ECF No.
426). The motions were argued in open court, and written
briefs were subsequently submitted. For the reasons set forth
below, both motions will be denied.
standard to be applied to a motion for judgment as a matter
of law is
whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided
that one party must prevail as a matter of law. In ruling on
a motion for [judgment as a matter of law], the court should
review all of the evidence in the record and draw all
reasonable inferences in favor of the nonmoving party,
without making credibility determinations or weighing the
Tatum v. City of Berkeley, 408 F.3d 543, 549 (8th
Cir. 2005) (citations omitted).
case, Plaintiff alleges that Defendants violated the FCA by
submitting, or causing to be submitted (and/or conspiring to
do so), false claims to Medicare and Medicaid for
reimbursement for Defendant Dr. Sonjay Fonn's services in
performing 228 spinal surgeries at St. Francis Medical Center
(“SFMC”) between December 2008 and March 2012,
and for the cost of implant devices used in each of those
surgeries. The claims for reimbursement were allegedly false
because they were based on alleged kickbacks involving the
implant devices, in violation of the federal Anti-Kickback
respect to the second motion noted above, Defendants argue
that there was no evidence that Medicaid was
“billed” for the implant devices for 24 of the 55
surgeries for which Medicaid claims were paid. Defendants
rely on the fact that Plaintiff's claims data charts show
a revenue code identified as “Supplies/Implants”
for 31 of the 55 Medicaid claims at issue, while 24 did not
include this revenue code. Defendants urge the Court to
reject Plaintiff's proposition that testimony with
respect to a Medicaid “bundled per diem rate” for
surgeries showed that this rate captured all costs related to
the surgeries, including the costs of the implant devices.
no explanation was given at trial (or in post-trial argument)
for why the revenue codes on the claims data charts was
different for 31 of the 55 surgeries noted, Defendant Debra
Seager has admitted that Defendant D.S. Medical, LLC, was the
distributor for at least one implant device used by Dr. Fonn
in all of the 228 surgeries, including the 24 at issue.
Gov't's Ex. 960. The evidence further shows that
claims for those surgeries were submitted to Medicaid for
reimbursement. This provides a sufficient evidentiary basis,
along with the other evidence at trial, for the jury to
conclude that Defendants violated the AKS, and thereby, the
FCA, in connection with each of the surgeries.
support of the first motion noted above, Defendants first
argue that Plaintiff did not present any evidence to
establish that Defendants' kickback activities were
material to Plaintiff's decision to make payment on the
Medicare claims submitted by SFMC, under the materiality
standard set forth in Universal Health Services, Inc. v.
United States ex rel. Escobar, 136 S.Ct. 1989 (2016),
and under the “but for” causation standard (set
forth in Burrage v. United States, 134 S.Ct. 881
(2014)), that should apply to this case. The Court concludes
that the evidence at trial that federal regulators and
prosecutors aggressively pursue allegations of improper
kickback relationships between physicians and their
distributors and vendors for medical devices was sufficient
for a jury to find that the Defendants' kickback
activities would influence the payment decision made by
Medicare for the claims submitted by SFMC, and were therefore
material. See United States v. Luce, 873 F.3d 999,
1008 (7th Cir. 2017) (noting that the government's
actions in beginning disbarment proceeding following its
discovery of the FCA defendant's fraud supported a
finding of materiality). Indeed, Defendants' own attorney
advised Defendants of the substantial risk of enforcement
action for any violation.
Court also rejects Defendants' argument that a “but
for” causation standard applies to this case, as
discussed more fully at the pretrial conference in addressing
Defendants' motion in limine raising this argument.
See id. at 1011-14 (explaining why a “but
for” causation test does not apply in FCA cases, and
rather, the proximate causation standard for common law fraud
applies). The Court concludes that Plaintiff presented
sufficient evidence for a jury to determine that
Defendants' actions in submitting, or causing the
submission of, false claims were the proximate cause of
next argue that Plaintiff failed to produce any evidence that
the claims filed by SFMC were indeed false. Specifically,
they argue there was no evidence that the SFMC claims contain
any representations that they were in compliance with the
AKS. This is essentially a legal argument, and one that the
Court has ruled on previously in this case, concluding that a
Medicare or Medicaid claim for reimbursement that includes
items that were obtained in violation of the AKS is false for
the purposes of the FCA, and that this is true for claims
submitted before the effective date of the 2010 amendment to
the AKS, clarifying the law by specifically so stating. Thus,
Plaintiff can prevail on its FCA claims without evidence that
SFMC made an express false statement in order to obtain the
reimbursement funds it sought.
Court also rejects Defendants' argument with respect to
damages for “outlier” and
“co-morbidity” components of payments made by
Medicare or Medicaid for some of the 228 surgeries. Plaintiff
presented evidence that all of the surgeries at issue were
tainted by an AKS violation. The Court did not find
Defendant's evidence with respect to outliers and/or
co-morbidities sufficient to require Plaintiff to attempt to
allocate parts of the Medicare and Medicaid payments for the
surgeries to outlier or comorbidity factors. Moreover, the
jury was instructed that the government was not entitled to
speculative damages, and presumably rejected Defendants'
argument on this matter.
the Court rejects Defendants' argument that they are
entitled to judgment as a matter of law on Plaintiffs
conspiracy claim due to the lack of testimony by any of the
manufacturers of the implant devices used by Dr. Fonn that
there was anything improper in the relationship between the
manufacturers and Defendants. Such testimony was not required
to establish the alleged conspiracy.
IT IS HEREBY ORDERED that Defendants'
oral motions (ECF ...