Fresenius Medical Care Lake Forest, LLC v. Norman Foster, in His Capacity as Director of Department of Finance; City of New Orleans Department of Finance, Bureau of Revenue

• Court: Louisiana Court of Appeal
• Decided: June 25, 2025
• Docket: 2024-CA-0804
• Status: Published

Opinion

FRESENIUS MEDICAL CARE * NO. 2024-CA-0804 LAKE FOREST, LLC * VERSUS COURT OF APPEAL * NORMAN FOSTER, IN HIS FOURTH CIRCUIT CAPACITY AS DIRECTOR OF * DEPARTMENT OF FINANCE; STATE OF LOUISIANA CITY OF NEW ORLEANS ******* DEPARTMENT OF FINANCE, BUREAU OF REVENUE

CONSOLIDATED WITH: CONSOLIDATED WITH:

FRESENIUS MEDICAL CARE LAKE NO. 2024-CA-0805 FOREST, LLC

VERSUS

NORMAN WHITE, IN HIS CAPACITY AS DIRECTOR OF DEPARTMENT OF FINANCE; CITY OF NEW ORLEANS DEPARTMENT OF FINANCE, BUREAU OF REVENUE

APPEAL FROM BOARD OF TAX APPEALS NO. L00402, Judge Cade R. Cole ****** Judge Rachael D. Johnson ****** (Court composed of Judge Tiffany Gautier Chase, Judge Dale N. Atkins, Judge Rachael D. Johnson)

Jesse R. Adams, III Andre B. Burvant JONES WALKER WAECHTER POITEVENT CARRERE & DENEGRE, L.L.P. 201 St. Charles Avenue 51st Floor New Orleans, LA 70170-5100

COUNSEL FOR PLAINTIFF/APPELLEE

James M. Roquemore Donesia D. Turner Derek Michael Mercadal City Attorney CITY OF NEW ORLEANS LAW DEPARTMENT 1300 Perdido Street, Suite 5E03 New Orleans, LA 70112

Russell J. Stutes, Jr. Russell J. Stutes, III STUTES & LAVERGNE, LLC 600 Broad Street Lake Charles, LA 70601

COUNSEL FOR DEFENDANT/APPELLANT

AFFIRMED JUNE 25, 2025 RDJ Appellant, Norman Foster, in his capacity as director of Department of TGC Finance for the City of New Orleans (the “City”), appeals the Board of Tax DNA Appeals (the “Board”) June 5, 2024 judgment granting Appellee, Fresenius

Medical Care Lake Forest, LLC’s (“Fresenius”), motion for partial summary

judgment. The City alleges that the Board erred in determining that Fresenius’

purchase of prescription drugs from AmerisourceBergen Drug Corporation

(“ABC”) is exempt from Louisiana sales and use tax under the Medicare exclusion

or exemption. After reviewing the record, we affirm the Board’s ruling.

FACTS AND PROCEDURAL HISTORY

From May 2017 through December 2021, Fresenius provided dialysis

treatment and administered prescription drugs to patients with End-Stage Renal

Disease (“ESRD”) in Orleans Parish. According to Title 42 of the Code of Federal

Regulations § 410.50, regular dialysis treatment for ESRD is covered by Medicare

Part B1 if it is furnished in approved ESRD facilities. The institutional dialysis

services covered are (1) all services, items, supplies, and equipment necessary to

1 Medicare Part B covers medically necessary services and preventive services. Medically

necessary services are services or supplies that meet accepted standards of medical practice to diagnose or treat a medical condition. Preventative services are defined as health care to prevent illness or detect it at an early stage when treatment is likely to work best.

1 perform dialysis and drugs medically necessary for the treatment of an ESRD

patient; (2) routine dialysis monitoring tests; (3) routine diagnostic tests; and (4)

Epoetin and its administration. 42 C.F.R. § 410.50. It is undisputed that Fresenius’

clinic is a Medicare-approved and certified ESRD facility. To maintain their

certification, Fresenius must comply with the Conditions of Coverage (“CFC”)

issued by Centers for Medicare and Medicaid Services (“CMS”). CFC does not

impose a requirement on the transactions between an approved ESRD facility

(Fresenius) and prescription drug vendors. 42 C.F.R. § 494.1 through 494.180.

Every ESRD patient is eligible for benefits if (1) their kidneys no longer

function; (2) they need regular dialysis treatment or have had a kidney transplant;

and (3) the patient has worked the required amount of time to qualify under social

security, is getting or is eligible for social security, or they’re the spouse or

dependent child of a person who meets either of the aforementioned requirements.2

Each ESRD patient is assigned an attending physician and the physician authorizes

the appropriate dosage of prescription drugs for the patient. Fresenius had two

different methods of purchasing prescription drugs. One method was by directly

ordering the prescription drugs from its vendors through Fresenius Medical Care

Holdings, Inc. d/b/a Fresenius Medical Care North America’s (“FMC")

procurement system. The second method was through centralized purchases of

prescription drugs from ABC, through its distribution subsidiary ASD Healthcare,

for clinic orders as needed. During the tax periods May 1, 2017, through December

2 Appellate Courts “can take judicial notice of government websites.” Pri-Tal v. Progressive

Prop. Ins. Co., 2024-0531, p. 19 (La. App. 4 Cir. 5/14/25), ___ So.3d ___, ___, 2025 WL 1414743, at *1 (quoting Filmore Parc Apartments II v. White, 2024-0475, 0476, p. 15 (La. App. 4 Cir. 2/14/25), ___ So.3d ___, ___, n.1, 2025 WL 502045, at *9). Accordingly, we take judicial notice of Medicare’s website which states the eligibility requirements for Medicare coverage of ESRD. End-Stage Renal Disease (ESRD), https://www.medicare.gov/basics/end-stage-renal- disease (last visited June 23, 2025).

2 31, 2021, ASD Healthcare provided reports showing the clinic purchasing the

drugs, the drugs that were purchased, and the total cost of the drugs purchased.

During its time of operation, Fresenius collected prescription drug purchase

data and prescription drug administration data to prepare Drug Utilization Reports

(“DUR’s”). DUR’s showed the procedures administered to patients based on

insurance coverage type - Medicare, Medicaid, Commercial, or Other. Fresenius

used the DUR’s to calculate the monthly percentage of doses of each drug

administered to Medicare patients over the total doses of each drug administered to

all patients. Fresenius also prepared a Microsoft Access database report3 to

determine the number of doses of each drug purchased for each month and the

price paid per dose for that month.

Fresenius hired Morty Steindler (“Mr. Steindler”), a consultant from State

Tax Services, LLC, to accurately calculate the refund amount for each tax period.

Mr. Steindler multiplied the cost of purchasing each prescription drug each month

by the percentage of doses that the drug was administered to Medicare patients in

the same month. He performed this calculation for both individual purchases and

bulk purchases. Mr. Steindler then added the results for the individual and bulk

purchases to find the aggregate proportion of the price paid for each drug, with

their corresponding dosage, administered to Medicare patients. Mr. Steindler then

multiplied the Medicare portion by the applicable sales tax rate to calculate the

refund amount, minus the vendor’s compensation, for each month in the May 2017

through December 2021 tax period.

3 The report contained the following information: (1) drug sales provided by ASD; (2) data

downloaded from FMC’s financial accounting system for purchases of ASD prescription drugs; and (3) FMCs accounts payable data for prescription drugs acquired from non-ASD/ABC suppliers.

3 Fresenius filed its initial petition to the Board for refund of taxes paid on

July 20, 2017. This petition was based on the May 2017 tax period. During the

subsequent months, Fresenius filed petitions for refund of taxes until the December

2021 tax period. In the current case, 56 separate refund of taxes petitions were

consolidated. On November 11, 2023, the City filed its motion for summary

judgment, alleging that Fresenius failed to prove that La. R.S. 47:337.9(F)

exempted the prescription drug purchases from sales tax. On April 9, 2024,

Fresenius filed its motion for partial summary judgment, alleging that their

prescription drug purchases were excluded and exempt under La. R.S.

47:301(10)(u) and 47:337.9(F). The Board denied the City’s motion for summary

judgment on May 2, 2024. On June 5, 2024, the Board granted Fresenius’ motion

for partial summary judgment, stating that Fresenius purchased prescription drugs

pursuant to a Medicare Part B plan and was entitled to a refund under La. R.S.

47:337.9(F). The Board signed its final judgment on July 10, 2024, awarding

Fresenius a refund of $89,668.63 for the tax periods May 1, 2017, through

December 31, 2021. The City timely filed a notice of appeal.

On appeal, the City’s sole assignment of error is whether the Board erred in

finding that Fresenius’ purchase of prescription drugs is excluded or exempt from

sales tax under the provisions of Medicare.

STANDARD OF REVIEW

When reviewing partial summary judgments, the appellate courts use a de

novo standard of review. Espinosa v. Accor N. Am., Inc., 14-0001, p. 5 (La. App. 4

Cir. 9/24/14), 148 So. 3d 244, 249 (citing Kimpton Hotel & Rest. Grp., Inc. v.

Liberty Mut. Fire Ins. Co., 07-1118, 07-1209, 07-1310, p. 3 (La. App. 4 Cir.

12/19/07), 974 So. 2d 72, 75). The appellate courts use the same criteria as the

4 district courts when considering whether summary judgment is appropriate. Id.

(citation omitted). “When the facts are not in dispute, summary judgment is

appropriate as the appellate court need only ‘look solely to the legal question

presented by the motion for summary judgment.”’ Cooper v. Eng. Turn Prop.

Owners Ass'n, Inc., 22-0748, p. 7 (La. App. 4 Cir. 4/25/23), 360 So. 3d 633, 638,

writ denied, 23-00743 (La. 9/26/23), 370 So. 3d 478 (citing Power Mktg. Direct,

Inc. v. Foster, 05-2023, p. 9 (La. 9/6/06), 938 So. 2d 662, 669).

DISCUSSION

The City argues that Fresenius’ purchase of prescription drugs from ABC

does not qualify for tax exemption under Louisiana Revised Statute 47:337.9(F).

Louisiana Revised Statute 47:337.9(F) states the following:

Notwithstanding any provision of law to the contrary, prescription drugs purchased through or pursuant to a Medicare Part B and D plan shall be exempt from the sales and use taxes imposed by any local governmental subdivision, school board, or other political subdivision whose boundaries are not coterminous with the state.

The City contends that purchases from ABC should be considered a “taxable

moment,” in which the transaction must stand on its own. The taxable moment

occurred when Fresenius purchased prescription drugs from ABC in bulk. During

this “taxable moment”, Fresenius did not specify whether the drugs were for

patients under Medicare, Medicaid, commercial insurance, etc. The City relied on

Crowe v. Bio-Med. Application of Louisiana, LLC, where the Court determined

that La. R.S. 47:337.9(F) did not apply to the taxpayer’s prescription drug

purchases because the medication purchased was provided to both Medicare and

Non-Medicare patients. Crowe v. Bio-Med. Application of Louisiana, LLC, 14-

0917, pp. 25-26 (La. App. 1 Cir. 6/3/16), 208 So. 3d 473, 490-91, adhered to on

5 reh'g, 14-0917 (La. App. 1 Cir. 2/17/11), 241 So. 3d 328. After reviewing the

record, we find that this assignment of error is without merit.

Fresenius is distinguishable from the taxpayer in Crowe. Fresenius provided

evidence tracing its prescription drug purchases to Medicare Part B patients.

Fresenius provided reports of the type of medication administered to each patient;

the exact dosage with the appropriate unit of measurement administered to each

patient; which day and month the medication was administered; identified whether

the patient was under Medicare, Medicaid, commercial insurance, etc.; the unit

price and date for each medication purchased; and the total cost of the medication

administered to Medicare patients. The “taxable moment” doctrine would not

apply to Fresenius because the detail provided clearly showed which patient was

receiving which medicine and the corresponding dosage.

This is in stark contrast with Crowe, where the taxpayer purchased the

prescription drugs in bulk but did not calculate the medicine and dosage given to

the patients. Crowe v. Bio-Med. Application of Louisiana, LLC, 14-0917, p. 2 (La.

App. 1 Cir. 2/17/11), 241 So. 3d 328, 329, (Chutz, J. concurring). The taxpayer in

Crowe calculated the refund “by dividing the number of dialysis treatments

rendered to Medicare patients by the total number of dialysis treatments rendered

at the kidney dialysis facility… .” Id. at pp. 1-2. Judge Chutz, concurring in the

Crowe rehearing opinion, stated that the taxpayer’s evidence was insufficient for

its refund claim because the patients were not being “administered the same

medicines in the same doses.” Id. at p. 2. The Court was unable to determine the

exact amount of prescription drugs provided to Medicare patients and determined

that the taxpayer provided insufficient evidence to support their refund claim under

La. R.S. 47:337.9(F). Fresenius provided extensive detail and was able to calculate

6 the exact refund amount for prescription drug purchases to Medicare patients and

showed that their purchases were pursuant to the Medicare Part B plan. As such,

Fresenius’ purchase of prescription drugs qualifies under La. R.S. 47:337.9(F).

DECREE

For the foregoing reasons, we affirm the Board’s June 5, 2024 judgment

granting Fresenius’ motion for partial summary judgment and awarding a refund of

$89,668.63 for the tax periods May 1, 2017, through December 31, 2021.

AFFIRMED