The district court affirmed a magistrate judge’s order directing the government to disclose to the defendants any evidence that alleged kickbacks directly caused physicians to use the defendants’ products or conduct additional surgeries, or to acknowledge that it had no such direct evidence. The government argued that the mere receipt of a kickback tainted any future claims, and therefore it was not required to disclose such evidence, but the district court agreed the government should disclose any direct evidence of causation or foreclose the use of such evidence at a later stage.
The United States appealed a magistrate judge order directing the government to provide evidence that alleged kickbacks resulted in physicians using the defendants’ products, or acknowledge that it did not have such evidence, thereby foreclosing the use of such evidence later.
Relator Kipp Fesenmaier filed a qui tam complaint alleging that the Cameron-Ehlen Group Inc., doing business as Precision Lens, and its founder and majority owner, Paul Ehlen, provided kickbacks to physicians in violation of the Anti-Kickback Statute, which resulted in the submission of false claims for payment to Medicare. The complaint also alleged common-law claims for unjust enrichment and payment by mistake. The United States intervened.
During proceedings, the defendants served a deposition notice to the United States with four deposition topics. The government objected to and refused to provide a witness to testify on one topic, which requested for each claim identified as false by the government, the factual basis and methodology for the United States of America’s determination that the claim resulted from the alleged kickback.
During a discovery conference convened by the magistrate judge, the defendants argued that this topic in their deposition notice sought to discover what facts and methodologies the United States relied on to conclude (1) that particular surgeries occurred because of a kickback and (2) a particular physician would not have chosen to use defendants’ product but for the kickback.
The government argued that those causation questions were inconsistent with the relevant legal standard in an FCA case. Instead, the government argued that once there is a kickback, that kickback taints claims going forward. Under that legal standard, the government argued it need only show that a physician received a kickback and subsequently submitted a claim to Medicare during the “taint period.” According to the United States, the presumptive taint period is one year.
In response, the defendants argued that if the government’s response was adequate if its assertions relied solely on a legal presumption. However, if the government relied on any factual basis, it should be required to produce a witness to testify about that factual basis. In short, the defendants argued that where the government asserted factual causation, then they should be allowed to inquire about it. Alternatively, the government must acknowledge that its case does not rely on any as-yet undisclosed facts, which would foreclose the use of such evidence at the dispositive motion or trial stages.
The magistrate judge sided with the defendants, ordering the government to provide a statement addressing two matters:
- Is the government aware of any evidence of actual causation of additional surgeries or use of the defendant’s products that is separate and apart from any deposition testimony taken to date? In other words, the government must clearly state whether it has evidence that there’s such causation. If it does, the magistrate judge stated he would allow a deposition about that topic.
- In addition, the government was directed to provide a statement of why it chose a taint period of one year and what factors it relied on when it finds the taint period to be greater than one year.
The government appealed, first arguing that the ruling essentially requires a contention deposition that is “inefficient, disruptive, and highly disfavored by courts.” The district court noted the government relied on now case law within the Eighth Circuit to support its argument or any other binding authority. Further, even if the government were correct that the outcome would be inefficient or disruptive, that did not establish the ruling was erroneous.
Next, the government argued that the ruling was erroneous because it was based on a causation standard that is inapplicable in this case. The court found no dispute that there is a causation element that the government must prove, as the Anti-Kickback Statute provides that “a claim that includes items and services resulting from a violation of this section constitutes a false or fraudulent claim.” However, the parties disagreed over the precise causation standard the government must meet to prove the alleged violations.
The court reasoned it need not resolve the question of the proper causation standard at this stage. The court agreed with the magistrate judge that the disputed deposition topic might lead to relevant and discoverable information even if that information is not dispositive. Indeed, discoverable information need not be admissible in evidence, the court explained. Finally, the court found the ruling consistent with the causation standard the government argued was the correct standard.
Because the magistrate judge’s ruling was not clearly erroneous, the district court affirmed.
