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From Health Law Daily, March 12, 2015

Whistleblower gets third chance to make Zemplar® reuse allegations stick

By Bryant Storm, J.D.

A district court denied a dialysis care services company’s motion to dismiss in False Claims Act (FCA) (31 U.S. C. § 3729) litigation over the provider’s alleged submission of false claims related to reimbursement for the drug Zemplar® and the reuse of single-use Zemplar vials. Although the court held that the relator’s complaint alleged sufficient facts to survive the motion to dismiss, the court directed the whistleblower to file an amended complaint clarifying the specific time period in which the alleged FCA violations occurred (Foglia. v. Renal Ventures Management, LLC, March 11, 2015, Hillman, N.).

Fraud. Thomas Foglia, a registered nurse, was employed by Renal Ventures Management LLC (Renal), a dialysis care services company, from March 13, 2007, until November 7, 2008, when he was terminated. During his time there, Foglia allegedly gained personal knowledge that Renal Ventures failed to maintain the nurse to patient ratio required by HHS and was reusing Zemplar vials and falsely submitting claims for reimbursement asserting that the vials had only been used once. Foglia filed a qui tam complaint against Renal. The United States did not intervene. After Foglia filed an amended complaint, the district court granted Renal’s motion for judgment on the pleadings and Foglia filed a second amended complaint (SAC).

Appeal. The district court dismissed the SAC because it determined that Foglia had failed to state his claim with the heightened level of particularity required for fraud claims. Foglia appealed his case to the Third Circuit, which held that Foglia was not obligated to plead facts of a specific false claim and could instead satisfy the pleading requirement with particular details of a scheme to submit false claims if that evidence was coupled with reliable information that led to a strong inference that the claims were actually submitted to the government. The Third Circuit reversed the dismissal of the case to allow Foglia to proceed with his FCA allegations and the case was remanded back to the district court (see False Claims Act pleading with “particularity” standard relaxed, June 9, 2014)

Motion. Once again before the district court, Renal Ventures moved to dismiss the action again for failure to meet the pleading standards required in an FCA fraud action. The court relied on the Third Circuit’s analysis of the relevant pleading standards in a fraud case and held that in order to survive a motion to dismiss, a plaintiff “must provide particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Renal Ventures contended that the existence of billing records demonstrating that the provider charged the government per microgram of Zemplar used, rather than per vial as Foglia alleged was dispositive of the fact that Renal Ventures did not submit false claims.

Records. Although the court held that an “undisputedly authentic document” attached as an exhibit to a motion to dismiss could lead to a dismissal, the court reasoned that the billing records offered by Renal Ventures did not constitute undisputedly authentic documents. The court reasoned that because Foglia did not concede to the records’ authenticity, the court could not use them as a basis for dismissal of the action. Despite agreeing with Foglia that the billing records were not a sufficient basis for dismissal, the court did caution that the billing records could be demonstrated to be dispositve of the issue. Additionally the court noted that although Foglia was being granted an opportunity to file a third amended complaint (TAC), the court directed that the TAC should only contain allegations to support the Zemplar related FCA violations and should specify the time period of Renal Venture’s alleged wrongdoing.

The case number is No. 09-1552.

Attorneys: Ross Begelman (Begelman & Orlow, PC) for Thomas Foglia. Richard J. Kravitz (Fox Rothschild LLP) for Renal Ventures Management, LLC.

Companies: Renal Ventures Management, LLC

MainStory: TopStory FCANews QuiTamNews BillingNews FraudNews DrugBiologicNews PrescriptionDrugNews NewJerseyNews

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