5th Circ. Says Fresenius FCA Suit Not Supported By Evidence

The Fifth Circuit said Monday there’s insufficient evidence Fresenius Medical Care North America retaliated against a worker alleging illegal kickbacks involving Medicare patients, and also found that a district court’s sanctions against an attorney in the False Claims Act case were justified.
The opinion upheld a Texas federal court judge’s decision to wipe out several counts after a trial but before consideration by a jury because he found there wasn’t adequate basis for the allegations against Fresenius and against Alfonso Chavez, the medical director at two of the international company’s Texas dialysis clinics.
 
Chavez is represented by Christopher Stephen Johns of Johns Marrs Ellis & Hodge LLP.

The case was brought by former clinic staffer Rebecca Gonzalez, who alleged that Chavez illegally billed for work performed by his assistants and that Fresenius overlooked the misconduct in exchange for referrals from the doctor’s private practice.After reviewing the record, the appeals court agreed that Gonzalez “did not provide legally sufficient evidence that Fresenius and Chavez knowingly and willfully entered into an illegal kickback scheme involving dialysis referrals.”In addition, the appeals court refused to revive Gonzalez’s claims of retaliation by her superiors, saying it was unclear they knew of her qui tam action. Gonzalez also “fails to address the district court’s conclusion that Fresenius had a legitimate basis for taking disciplinary action, including allegations that [she] violated Fresenius’ theft policies and claimed hourly wages while on workers’ compensation,” the Fifth Circuit said.

The appeals court also preserved a penalty of more than $15,000 in attorneys’ fees levied against Gonzalez’s lawyer, Thomas E. Stanton, who was blamed for pursuing the case even after central allegations had been seriously undermined.

In upholding the fees, the Fifth Circuit pointed to “inconsistent statements” Gonzalez allegedly made during the runup to trial. According to the appeals court, the relator at first said she’d been ordered to take part in Medicare fraud, and produced a letter in which she said she wouldn’t lie to authorities and wouldn’t cover up the fact that assistants were handling certain duties for which the clinics billed.

During her deposition, however, Gonzalez reportedly denied ever feeling like she was required to assist in fraudulent activities. Stanton later submitted paperwork correcting Gonzalez’s answers so that they matched allegations in the original complaints, according to the appeals court.

At a second deposition, Gonzalez stuck to the original story, but at trial she again reversed course, saying her replies in the first deposition were accurate and that her attorney had helped her write the letter in which she refused to lie to authorities.

“Although clients do sometimes make substantive missteps in deposition testimony which may be corrected … attorneys may not … push a case to trial where the client no longer adheres to the allegations supporting the claim,” the Fifth Circuit said. “The evidence in the record before us supports the district court’s conclusion that relator’s counsel did just that.”

Stanton was not immediately available for comment. Counsel for Fresenius had no immediate comment.

Christopher Stephen Johns of Johns Marrs Ellis & Hodge LLP, counsel for Chavez, said the outcome restores his client’s “impeccable reputation.”

“I’m really excited for Dr. Chavez and his whole practice and his whole family,” Johns said. “They’ve been through a nightmare.”

Not considered on appeal were three false claims allegations that did reach the jury and were rejected after 90 minutes of deliberation.

The plaintiff is represented by Thomas E. Stanton.

Fresenius is represented by James F. Bennett, Jennifer Lynn Aspinall, James O. Darnell and Megan Susan Heinsz of Dowd Bennett LLP.

The case is Rebecca Gonzalez v. Fresenius Medical Care et al., case number 10-50413, in the U.S. Court of Appeals for the Fifth Circuit. 

By Jeff Overly