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United States ex rel. Greenfield v. Medco Health Solutions, Inc.

United States Court of Appeals, Third Circuit

January 19, 2018

UNITED STATES OF AMERICA, ex rel. STEVE GREENFIELD, Appellant
v.
MEDCO HEALTH SOLUTIONS, INC.; ACCREDO HEALTH GROUP, INC.; HEMOPHILIA HEALTH SERVICES, INC.

          Argued September 27, 2017

         On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 1-12-cv-00522) District Judge: Honorable Noel L. Hillman

          Ross Begelman Marc M. Orlow Regina D. Poserina Begelman Orlow & Melletz Counsel for Appellant

          Paul E. Boehm Enu Mainigi Craig D. Singer Daniel M. Dockery Williams & Connolly Counsel for Appellees

          Chad A. Readler Acting Assistant Attorney General William E. Fitzpatrick Acting United States Attorney

          Katherine T. Allen Michael S. Raab Charles W. Scarborough United States Department of Justice Counsel for Amicus Curiae in Support of Neither Party United States of America

          Before: AMBRO and KRAUSE, Circuit Judges, and CONTI [*] , Chief District Judge

          OPINION

          AMBRO, Circuit Judge

         Accredo Health Group, Inc., a specialty pharmacy that provides home care for patients with hemophilia (a rare condition that prevents blood from clotting properly), made donations to charities, two of which allegedly recommended Accredo as an approved provider for hemophilia patients. This raises whether the donations came with something expected in return for the recommendations, which might trigger violations of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), and, if so, whether Accredo's healthcare reimbursement claims for persons who may have received the charities' recommendations run afoul of the False Claims Act, 31 U.S.C. § 3729(a)(1)(A)-(B). No federal agency, however, made a claim against Accredo. In stepped Steve Greenfield, a private citizen and a former area vice president of Accredo, who sued it and affiliates Medco Health Solutions, Inc., and Hemophilia Health Services, Inc. (for simplicity, all are referred to as "Accredo") for alleged violations of the two federal statutes.[1]If Greenfield prevailed, he would get at least 25% of any civil penalty or damages award.

         The District Court, at the end of discovery, entered summary judgment against Greenfield and for Accredo, and the Government here has chosen not to intervene. It found that Greenfield failed to provide evidence of even a single federal claim for reimbursement by Accredo that was linked to the alleged kickback scheme. As he disagrees, Greenfield appeals to us.

         I. BACKGROUND

         Accredo delivers clotting medication (medically called "clotting factor") to patients at their homes and provides nursing assistance that is tailored to hemophilia patients' needs. Along with its pharmaceutical services, Accredo makes donations to various charities, including two that are pertinent to this appeal: Hemophilia Services, Inc. ("HSI"), and Hemophilia Association of New Jersey ("HANJ, " and collectively with HSI, "HSI/HANJ"). From 2007 to 2012, Accredo's donations to HSI/HANJ ranged from approximately $200, 000 to $550, 000 on an annual basis.

         Accredo contributed funds to HSI, which in turn provided grants to HANJ. HSI's grants served two purposes- an insurance program for patients who are not eligible for Medicare or Medicaid, and support for outpatient hemophilia treatment centers. Accredo believed its donations went to HANJ's insurance program, but was aware that HANJ also funded treatment centers.

         HANJ purportedly recognized Accredo's contributions by identifying it as an HSI-approved provider or HSI-approved vendor on its website. It stated HSI-approved vendors "maintain the highest quality of care while providing [a] continuity of services and constantly supporting the community in numerous ways." It also directed users to "[r]emember to work with our HSI [approved] providers" and included hyperlinks to the approved providers' websites. HANJ also provided treatment centers with lists identifying specialty pharmacies that were designated as HSI-approved providers. Accredo was noted in one list as one of four HSI-approved vendors that "continually contribute to this community."

         Although Accredo donated approximately $363, 000 to HSI/HANJ in 2010, it informed both charities that it planned to reduce its annual donation to $175, 000 in the following year. In response, HSI sent a letter to its members informing them of Accredo's reduced pledge and encouraging them to request that Accredo restore funding. HSI's letter focused on the possible shortfalls to HANJ's private insurance program; in HSI's view, Accredo's funding cuts would "place[] the Insurance Program in jeopardy of being 'phased out' and ceasing to exist in the foreseeable future." HSI also forwarded a copy of the letter to treatment centers, stating that "[t]he attached [letter] is self explanatory. [Hemophilia Health Services]/Accredo has behaved despicably, while enjoying the fruits of HANJ's labor."

         As a result of HSI's letter, Accredo received approximately 75 letters from HSI members requesting an increase in funding. It then asked Greenfield (as noted, an area vice president for Accredo) to analyze the potential return on investment if it were to increase its annual donation from $175, 000 to $350, 000. It also requested him to project the "likely business deterioration to [its New Jersey] market share" if it opted not to increase funding. Greenfield's analysis indicated that, absent a funding increase to $350, 000, "all new and existing business [could be] at risk, " and Accredo could expect to "lose 100% of the margin" associated with patients who switched out of Accredo's services. Based on this analysis, Accredo restored its annual donation to $350, 000 in 2012.

         Greenfield thereafter filed a qui tam suit against Accredo, alleging it violated the False Claims Act by falsely certifying it complied with the Anti-Kickback Statute.[2]Although the statutory scheme gave the Government the option to intervene in the suit, it declined to do so. See 31 U.S.C. § 3730(b)(2).

         The case proceeded to summary judgment, where the parties' cross-motions presented differing theories on whether Greenfield had established a False Claims Act violation. He argued Accredo violated the Act by paying kickbacks to HSI/HANJ in the form of charitable contributions to induce recommendations and referrals of Accredo by HSI/HANJ to its members. In Greenfield's view, Accredo's alleged kickback scheme amounted to a False Claims Act violation because at least some referrals or recommendations were directed to Medicare beneficiaries and because Accredo falsely certified compliance with the Anti-Kickback Statute while submitting Medicare claims for payment.[3] Accredo argued Greenfield could not prove a violation of the False Claims Act, as there was no evidence any federally insured patient purchased its prescriptions because of its contributions to HSI/HANJ.

         The District Court denied Greenfield's motion for summary judgment while granting that of Accredo. In the Court's view, his claim required him to (1) "establish that defendants violated the [Anti-Kickback Statute] through [their] alleged quid pro quo arrangement with HANJ/HSI" and (2) "show that, as a result of defendants' [Anti-Kickback Statute] violation, defendants received payment from the federal government" in violation of the False Claims Act. United States ex rel. Greenfield v. Medco Health Sys., Inc., 223 F.Supp.3d 222, 227 (D.N.J. 2016). For purposes of its analysis, the Court did not determine whether Greenfield established an Anti-Kickback Statute violation.[4] Instead, it focused its analysis on the second prong of the inquiry and concluded that, even if an Anti-Kickback Statute violation were assumed, Greenfield did not show sufficient evidence of a False Claims Act violation.

         Although discovery revealed that Accredo submitted claims for 24 federally insured patients during the relevant time period, the Court concluded this evidence alone did not provide "the link between defendants' 24 federally insured customers and defendants' donations to HANJ/HSI." Id. at 230. Instead, it explained Greenfield must show that federally insured patients were referred to Accredo as a result of its donations to HSI/HANJ. "Absent some evidence . . . that those patients chose Accredo because of its donations to HANJ/HSI, " the Court reasoned, Greenfield could not carry his burden on his claim. Id. Thus it entered summary judgment for Accredo.

         Greenfield appeals, arguing the District Court erred in requiring him to prove a direct link between the alleged kickback scheme and each false claim. The Government appears as an amicus curiae in support of neither party, contending the Court erred to the extent it required Greenfield to prove that patients chose Accredo because of HSI/HANJ's referrals and recommendations. In its view, all that needed to be shown was a claim that sought reimbursement for medical care that was provided in violation of the Anti-Kickback Statute. In response, Accredo maintains, inter alia, that the District Court correctly stated Greenfield's burden in establishing a False Claims Act breach.

          II. ...


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