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.
The district court readily acknowledged the various cases on both sides of the issue concerning the use of statistical sampling. Its decision, however, ultimately was informed by the fact-specific nature of the claims at issue and the fact that the case did not involve a situation where evidence had dissipated or where there was some other impediment to the use of direct proof.
In an interesting twist, relators and the defendants had reached a settlement in this matter after the district court’s ruling on the use of statistical sampling, but DOJ refused to consent to the settlement based on the government’s position that the settlement represented an insufficient fraction of the total damages at issue. The district court denied the defendants’ motion to enforce the settlement over the government’s objection, ruling that the unambiguous language of § 3730(b)(1) rendered the consent of the Attorney General a prerequisite to the dismissal of an FCA action pursuant to a settlement between a relator and a defendant.
The Fourth Circuit agreed to consider an interlocutory appeal of the district court’s rulings on both the use of statistical sampling and the requirement of the government’s consent to the settlement of FCA claims after the government has declined to intervene in an action. The importance of the Fourth Circuit’s consideration of the sampling issue should be evident in light of the ever-increasing frequency with which DOJ and relators are seeking to rely on statistical sampling in FCA matters and particularly, in FCA actions involving medical necessity.