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.
The district court denied the defendant’s summary judgment motion. Citing Michigan Dept. of Educ. v. U.S. Dept. of Educ., 875 F.2d 1196 (6th Cir. 1989), the district court stated that “the Sixth Circuit reasoned that using statistical methods and a random sampling technique as a basis for making arguments about the whole was not only valid but also necessary in certain complex situations, especially when the opposing party fails to demonstrate any other feasible way of making the necessary determination.” The district court rejected a claim-by-claim review urged by the defendant, stating that it would be “unreasonable,” “likely impossible,” “a waste of resources,” and likely to “frustrate the purposes of the FCA.” The district court concluded that the government’s use of statistical sampling was not improper as a matter of law and that the weight given to such evidence in determining the exact number of fraudulent claims and the exact amount of damages in this matter should be left to the jury.
The district court’s holding follows three recent federal district court opinions—U.S. ex rel. Martin v. Life Care Centers of America, Inc. (E.D. Tenn. Sept. 29, 2014), U.S. ex rel. Guardiola v. Renown Health (D. Nev. Nov. 5, 2014), and United States v. AseraCare, Inc. (N.D. Ala. Dec. 4, 2014)—in which the use of statistical sampling to establish FCA liability has been approved. The district court’s opinion in Robinson, however, is unique in its reliance on appellate authority to support the use of statistical sampling. And, it is also troubling. The Sixth Circuit’s opinion in Michigan Department of Education involved an administrative appeal considered under a different, more deferential, standard of review than an FCA case—something even the district court in Life Care acknowledged in giving little value to similar cases.
It is noteworthy that the defendant in Robinson failed to present any evidence regarding the validity of the government’s sample or the manner in which it was obtained, but instead relied solely on a general contention that extrapolation in FCA cases is improper. Defendants in FCA cases must be prepared to challenge the use of any statistical sampling through their own expert testimony because, without any appellate guidance, this trend may soon become the norm.