A recent jury verdict in an FCA lawsuit pending in the United States District Court for the Middle District of Florida resulted in a not-so-subtle reminder of just how high the stakes can be in such litigation.  On February 15, 2017, in U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, a case in which both the United States and the state of Florida declined to intervene, the jury returned a verdict finding that the operators of 53 skilled nursing facilities(SNFs) had committed FCA violations resulting in more than $115 million in damages.  The FCA violations resulted from the submission of false claims to Medicare and Medicaid stemming from the inflation and upcoding of Resource Utility Group (RUG) levels for patients and false certifications that the SNFs had created timely and adequate patient care plans.

The jury’s verdict represented only actual damages.  On March 1, 2017, the district court assessed a statutory penalty of $5,500 per claim to 446 false claims and trebled the jury’s damages number, the result being a staggering judgment of almost $348 million.  This dwarfs even the largest of the long-term care settlements that have preceded it.


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After granting the relators’ petition for an interlocutory review of the district court’s rejection of the use of statistical sampling to establish FCA liability, the Fourth Circuit ultimately declined to reach that issue in its opinion recently issued in U.S. ex rel. Michaels v. Agape Senior Community, Inc.  This conclusion comes as no surprise based on the comments and questions posed by the panel during the course of oral argument, as we covered here.
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The United States District Court for the Northern District of Texas recently released a noteworthy FCA opinion, one that includes a key ruling on the use of statistical sampling and extrapolation. In United States v. Vista Hospice Care, Inc., No. 3:07-CV-00604-M, 2016 WL 3449833 (N.D. Tex. June 20, 2016), the relator brought claims alleging, among other things, that the defendant violated the False Claims Act by certifying patients as eligible for hospice, when the patients were not terminally ill or their records lacked documentation supporting the requisite six-month life expectancy prognosis.  In deciding a motion to strike and a motion for summary judgment, the district court issued two very favorable defense rulings.

Statistical Sampling/Extrapolation

The relator relied on the expert testimony of a hospice physician, who reviewed 291 patient files and concluded that a large portion of the patients were not eligible for hospice for at least some of the days. An expert statistician, in turn, extrapolated from the physician’s testimony to conclude that defendants had submitted false claims on approximately 12,000 patients.


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The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering the requirement that a relator plead and prove falsity to establish an FCA claim and evaluate the different theories of falsity that have emerged during the last several years.

Use of Statistical Sampling to Establish Falsity

Following last year’s landmark ruling in U.S. ex rel. Martin v. LifeCare Centers of America, Inc., 2014 U.S. Dist. LEXIS 142657 (E.D. Tenn. Sept. 29, 2014), statistical sampling has become an increasingly important issue in FCA cases. This year, decisions by the district court in U.S. ex rel. Paradies v. AseraCare, Inc., 2015 WL 8486874 (N.D. Ala. Nov. 3, 2015), reiterated this fact. AseraCare faced allegations that it falsely billed the government for hospice patients that failed to satisfy requirements that patients be terminally ill and have a life expectancy of six months or less. Anticipating lengthy trial testimony concerning the statistical sample of 233 claims, the district court bifurcated the trial for the FCA’s falsity element from trial for all other elements. In arriving at its novel decision, the district court rejected the government’s objections that bifurcation would result in juror confusion and duplicative evidence.


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There are a number of key issues that will drive the government’s enforcement efforts in the coming year and that will have a significant impact on how healthcare fraud matters are pursued by relators asserting FCA claims and are defended on behalf of healthcare providers.  In the previous weeks, we have examined these issues in greater depth and why healthcare providers should keep a close eye on these issues.  This week, we examine the Fourth Circuit’s upcoming appellate consideration of the use of statistical sampling to establish falsity under the FCA.

In 2014, the district court’s opinion in U.S. ex rel. Martin v. Life Care Centers of America rejected a motion to exclude the government’s expert testimony regarding the intended use of statistical sampling to establish liability over an extrapolated universe of claims.  Since that time, a number of other district courts have considered the issue of whether such evidence may be used to establish liability by either the government or relators.  See U.S. ex rel. Paradies v. Aseracare, Inc., 2014 U.S. Dist. LEXIS 167970 (N.D. Ala. Dec. 4, 2014) (denying motion for summary judgment and noting that “[t]he Government has statistical evidence regarding all of the Government’s universe of 2,181 claims. Statistical evidence is evidence.”); U.S. ex rel. Guardiola v. Renown Health, 2015 WL 5123375 (D. Nev. Sept. 1, 2015) (issuing discovery ruling regarding the underlying data universe relevant to relator’s use of statistical sampling); U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, 2015 WL 1926417 (M.D. Fla. Apr. 28, 2015) (granting relator’s motion to admit expert testimony based on statistical sampling that had not been undertaken by relator as of the date of the motion).


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Bass, Berry & Sims attorney Brian Roark was interviewed for an article in Becker’s Hospital Review and identified five trends that will impact False Claims Act (FCA) recoveries in 2016. Several case rulings from 2015 and a shift in government focus has the potential to allow for continued financial recoveries in the coming year, especially

On September 29, 2015, the Fourth Circuit granted a petition for interlocutory appeal that may result in the first significant appellate decision to determine whether an FCA plaintiff may rely on statistical sampling to prove liability or damages.

In U.S. ex rel. Michaels v. Agape Senior Community, Inc., relators asserted that a nursing home operator violated the FCA by submitting false claims with respect to hospice and other nursing home-related services. While not in complete agreement, the parties both asserted that the action, in which DOJ declined intervention, involved more than 10,000 patients and more than 50,000 claims. The district court concluded that relators would be required to prove the falsity of each and every claim based upon evidence relating to each particular claim.


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The U.S. District Court for the Middle District of Florida issued yet another opinion endorsing the use of statistical sampling in FCA cases. In its April 28, 2015 opinion in United States ex rel. Ruckh v. Genoa Healthcare, LLC., the district court held that the relator could use expert testimony of statistical sampling to establish FCA violations concerning claims submitted by defendants’ skilled nursing facilities.

The relator alleged that the defendants violated the FCA by falsifying reports summarizing patients’ medical conditions and the treatment provided to those patients. Relator further alleged fraud by the defendants who allegedly allowed unauthorized individuals to submit reports to CMS. After the defendants’ motions to dismiss the complaint were denied, the relator moved to admit expert testimony on statistical sampling due to the “voluminous discovery” and the impossibility of “producing and processing the relevant medical records at the fifty-three medical facilities and some fifty-three off-site storage locations within a reasonable time.” DOJ, which did not intervene in the case, filed a statement of interest in support of statistical sampling.


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On March 31, 2015, in United States v. Robinson, the U.S. District Court for the Eastern District of Kentucky issued the latest opinion approving the use of statistical sampling by the government and relators to establish FCA liability.  In Robinson, the government has asserted that an optometrist provided medically unnecessary optometric services to nursing home residents over a five-year period and subsequently billed Medicare for these services.  As support for its medical necessity argument, the government submitted an expert witness opinion based on an examination of a sample of 30 of the 25,779 claims at issue.

In moving for summary judgment, the defendant argued in part that the government should not be permitted to utilize statistical sampling to extrapolate FCA liability and damages to the 25,779 claims at issue.  The government contended that requiring a claim-by-claim review in FCA cases involving this magnitude of claims would enable many defendants to evade prosecution and that other courts have found statistical sampling appropriate in establishing FCA liability in similar cases.


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