Whistleblower (Qui Tam) Law What We’ve Been Working On

Current Litigation:

U.S. ex rel Saldivar v. Fresenius (Case No. 15-15497): 

Ashcraft & Gerel is currently appealing the District Court’s October 30, 2015 Order granting Fresenius’ motion for summary judgment. Although the District Court explicitly found undisputed facts from which a reasonable jury could find that Fresenius had knowingly or recklessly submitted false claims for overfill, it improperly removed the question of intent from the jury and declared it “negligent” instead of “reckless.” Appellant’s brief was filed in the 11th Circuit Court of Appeals on February 12, 2016.  Oral argument was heard August 19, 2016.

Ashcraft & Gerel has been actively litigating this case since the government declined intervention in March 2011. Originally filed in the United States District Court for the Northern District of Georgia, this case involves allegations that Fresenius Medical Care (FMC) violated the False Claims Act when it knowingly billed Medicare and other government health programs for injectable drugs which the company had received for free. In short, the whistleblower alleges that Fresenius billed Medicare for vial “overfill,” which is the bit of extra drug in vial. Overfill is not included in the cost of the drug, greatly profiting Fresenius, one of the largest providers of ESRD dialysis services.

In a published opinion, the District Court found that Fresenius submitted false claims as a matter of law over a five year period, from 2006 through and including 2010. United States ex rel. Saldivar v. Fresenius Medical Care Holdings, Inc., 972 F. Supp. 2d 1339 (N.D. Ga. 2013). The District Court held that Fresenius’ claims for overfill were false as a matter of law because (a) Medicare prohibits payments for goods and services for which a provider does not incur a cost, and (b) under the Average Sales Price (ASP) reimbursement paradigm adopted in 2006, providers do not incur a cost for overfill.

Following its September 17, 2013 Order, the District Court requested the parties to address whether there was evidence from which a jury could find that Fresenius billed for free overfill with the requisite intent. That briefing resulted in the Order of October 30, 2015 granting Fresenius’ motion for summary judgment. United States ex rel. Chester Saldivar v. Fresenius Medical Care Holdings, Inc., 2015 WL 7293156 (N.D.GA. October 30, 2015). In that order, which is the subject of the appeal, the Court concluded that a jury could not consider Fresenius’ conduct reckless.

Successful Whistleblower Cases:

U.S. ex rel Barker v. Columbus Regional (Case No. 4:12-cv-00108-CDL):

A&G’s Nathan Peak represented a whistleblower in two federal False Claims Act cases that settled for an amount that could total $35 million, to be paid over time by the Defendants, Columbus Regional Healthcare System (CRHS). The settlement resolves two separate cases that allege CRHS violated the Stark Law regarding its physician compensation practices, as well as allegations involving the “upcoding” of certain services by physicians. While the settlement resolves two cases, Mr. Peak was one of two private lawyers who aggressively litigated the first of the two cases filed, which the Department of Justice elected not to intervene. The United States Department of Justice intervened in the second filed case and the settlement resolves all allegations in both matters. An individual physician was also a party to the settlement. “This is a fantastic result for taxpayers and could not have been possible without the courage of Mr. Barker to step forward and do what he thought was morally right” remarked Mr. Peak.

U.S. ex rel Thomas v. Education Affiliates (Case No. JKB-14-332):

A&G’s Nathan M. Peak represented whistleblower, Dorothy Thomas, in a Federal False Claims Act (qui tam) action that resolved for $13 million, as announced by the Department of Justice (DOJ) on June, 24, 2015.  Education Affiliates (“EA”), a for profit education company based in White Marsh, Maryland agreed to the $13 Million settlement to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student financial aid and for students enrolled in its various degree programs.EA provides post secondary education and training degree programs in the areas of healthcare and other trade professions. EA operates 50 campuses in 5 states and operates under various trade names. The settlement agreement resolves five lawsuits in total as well as an administrative action brought by the Department of Education. The settlement resolves allegations that Education Affiliates changed students’ test scores and enrolled students with invalid high school diplomas, violating federal regulations for student financial aid. Ms. Thomas, who was formerly a Senior Regional Director for EA, has over 25 years of experience working in the federal financial aid industry. Because of that experience, she was uniquely equipped with the knowledge of the industry. Nathan M. Peak, attorney for Ms. Thomas, says, “I applaud the efforts of Ms. Thomas and whistleblowers like her who make the courageous decision to fight fraud at great risk of potential financial and professional harm to themselves. This is a fantastic result for the government and whistleblowers alike.”

U.S. ex rel Bukh v. Guldmann, Inc. (Case No. 8:14-cv-1089):

A&G’s Nathan M. Peak and Ashcraft & Gerel, LLP represented whistleblower, Per Bukh, in this qui tam case against Guldmann, Inc. which settled for a total of $2 million. The case was declined by the Department of Justice in October, 2013 and was litigated by Mr. Peak and co-counsel, Kevin Darken of the Barry A. Cohen Legal Team for over two years, resulting in the successful settlement on behalf of Mr. Bukh. The settlement resolves claims that 1) Guldmann, Inc. sold patient lift systems to Veterans Administration hospitals that violated the FAR/GSA pricing obligations under Guldmann’s government contract; and 2) Guldmann, Inc. sold patient lift systems to the Veterans Administration that were manufactured in countries that violated the Trade Agreements Act (TAA). The case was initiated by whistleblower, Mr. Bukh, under the qui tam provisions of the False Claims Act in June, 2011. The government did an initial investigation and declined to intervene in the case. Mr. Peak and Mr. Darken, as private counsel for Mr. Bukh, then aggressively litigated the case on behalf of their client and the U.S. government. The case settled after two years of litigation and 5 weeks short of trial.

U.S. ex rel Simmons v. Samsung (Case No. PWG-11-2971):

Ashcraft & Gerel’s representation of a whistleblower in this qui tam case led to a settlement of $2.3 million.  Filed in the United States District Court for the District of Maryland, this suit against Samsung Electronics America, Inc. alleged that the tech company violated the False Claims Act by providing resellers with incorrect information regarding the country of origin of its products, violating the Trade Agreements Act (TAA).  As part of doing business with the US, Samsung is required to certify the electronics and information technology it sold to the government was in compliance with the Trade Agreements Act.  The whistleblower’s complaint alleged that Samsung knew its products were not in compliance while simultaneously certifying to the government they were, in fact, compliant with the Trade Agreements Act.  The United States joined the suit after investigating the whistleblower’s allegations in his Complaint and eventually settled the matter.  Under the qui tam provisions of the False Claims Act, Mr. Simmons is entitled to a percentage of between 15% – 25% of the $2.3 million settlement.

U.S. ex rel Niland v. ZTEK (Case No. 11-cv-1436-BEN (DHB)):

Ashcraft & Gerel’s representation of the whistleblower in this qui tam case led to a settlement of $600,000.  Filed in the United States District Court for the Southern District of California, this suit against a government contractor alleged that the company violated the False Claims Act by knowingly selling to the United States Navy a defective hydrogen reformer.  Upon investigating the allegations made by the whistleblower, the government intervened in this case.  Based largely on the information supplied by Mr. Niland, the government settled the matter.  Under the qui tam provisions of the False Claims Act, Mr. Niland is entitled to a percentage between 15% – 25% of the total settlement.