Fresenius Former General Counsel Files Suit Alleging Retaliatory Firing

ByGwen Catherine

Apr 23, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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Fresenius Medical Care AG

is being sued by its North American unit’s former general counsel,

Douglas Kott,

who alleges the healthcare company fired him for reporting possible misconduct.

Mr. Kott, who said he was terminated from a role at the company in March, filed a lawsuit Tuesday in Suffolk County Superior Court in Boston.

Mr. Kott alleged that he was dismissed after making serial reports of possible misconduct to Fresenius’s leadership during a legally fraught period for the company, after it had begun an internal investigation in 2012 into bribery allegations and was seeking a resolution with U.S. authorities.

Fresenius declined to comment, saying it doesn’t comment on personnel matters.

Mr. Kott in his lawsuit said he had engaged in a yearslong pattern of whistleblowing before being demoted and ultimately fired last month.

He joined Fresenius’s U.S. unit, known as FMCNA, in 1997 and became its general counsel in 2012, according to the lawsuit. He said that in 2014 he discovered information on “apparent misconduct” within Fresenius that violated U.S. securities laws. He reported it to then-FMCNA Chief Executive

Ron Kuerbitz

and the company’s compliance department, he said.

Some of the reported conduct included FMCNA’s possible violation of U.S. laws meant to stop healthcare companies from providing kickbacks to federally funded service providers that use their products, and possible manipulation of publicly reported revenue, Mr. Kott said.

Mr. Kott by early 2016 also had learned of possible embezzlement and corporate waste, which he reported to the compliance department, he said in the suit.

In April 2016, he was demoted from his general counsel role and placed in a legal operations position, moving from supervising 75 people to just one other person, he said. The new role also removed Mr. Kott from any meaningful compliance oversight duties, a “retaliation for his reports of misconduct and illegal activity,” he said.

In March 2022, he was fired. Mr. Kott alleges that Fresenius breached his employment contracts and violated Massachusetts employment law.

The alleged firing came as Fresenius, a Germany-based company known for its dialysis clinics and products, remains in a period of oversight by the U.S. Justice Department. The mandatory oversight is part of a settlement over bribes that Fresenius paid in Angola and Saudi Arabia and over its failure to sufficiently monitor its books in several other countries.

Under a nonprosecution deal with the DOJ and related deal with the Securities and Exchange Commission, announced in March 2019, Fresenius agreed to pay about $231 million. The company also agreed to allow an independent monitor to check on its compliance for two years and to report to prosecutors for another year afterward. The company said in its most recent annual report that due in part to pandemic restrictions, the monitorship program faced delays but that it is now scheduled to terminate on Dec. 31. A DOJ spokeswoman confirmed Thursday that the “monitorship is ongoing.”

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