A federal district court granted summary judgment to AseraCare in a False Claims Act case about hospice eligibility certifications and more than $200 million in potential damages. The court held that the government’s evidence did not prove falsity as a matter of law because it rested on a medical expert’s disagreement with the physicians who had certified patients for hospice care.
The court ruled that a difference of medical opinion, without more, does not establish falsity under the False Claims Act. The ruling followed a jury verdict that found 104 Medicare claims involving hospice patients objectively false.
The dispute over hospice eligibility
AseraCare provides hospice and palliative care services. The Department of Justice and qui tam relators accused the company of overbilling Medicare by withholding information from physicians. They alleged that this conduct caused physicians to certify patients for hospice care even though the patients were not terminally ill.
To prove that AseraCare had falsely certified patients as eligible for hospice care, the government relied on the opinion of one medical expert. The expert reviewed patient files and concluded that the records did not support the certifications at issue. The physicians who signed the certifications had reached different conclusions about whether the patients met the requirements for hospice eligibility.
The court characterized the dispute as a conflict between the certifying physicians and the government’s medical expert. It explained that physicians and medical experts may review the same records and reach different conclusions about hospice eligibility. In that situation, the opinion of one medical expert, by itself, cannot prove falsity without additional evidence of an objective falsehood.
The court also expressed concern about the effect of treating a professional disagreement as proof of falsity. If a difference of opinion alone were enough, hospice providers could face False Claims Act liability whenever the government found a medical expert who disagreed with a certifying physician’s clinical judgment. That approach would also reduce the role of clinical judgment in hospice certifications.
The bifurcated trial and jury verdict
The district court granted AseraCare’s request to divide the trial into two phases. Phase I addressed whether the claims were objectively false. Phase II would have addressed whether AseraCare knew the claims were false and whether the other elements of a False Claims Act claim were satisfied.
The government first identified a sample of 124 patients from a group of 2,181 patients for its damages calculation. The judge later removed some claims from Phase I, leaving claims involving 121 patients. In October, the jury found that 104 of those claims were objectively false.
Four days after the verdict, Judge Karon O. Bowdre held a hearing on her own initiative to examine the jury instructions used in Phase I. She concluded that the instructions did not explain objective falsity or objective evidence of falsity. She also concluded that the court had improperly rejected AseraCare’s request for an instruction stating that a difference of opinion is not enough to establish falsity.
Judge Bowdre granted AseraCare’s motion for a new trial and denied the government’s motion for reconsideration. The court later stated that it would reconsider summary judgment before setting a new trial date. It has now granted summary judgment to AseraCare, finding that the government’s evidence could not establish falsity as a matter of law.
Statistical sampling and evidentiary limits
The case also involved the government’s use of statistical sampling. The government reviewed payments for the sample of 124 patients, extrapolated those payments to a larger group of claims, and then tripled the amount because the False Claims Act permits treble damages. The resulting damages figure exceeded $200 million.
The court also restricted the evidence the government could present during Phase I. It found that the government had waited too long to tell AseraCare that it intended to rely on evidence beyond expert testimony and patient records to prove objective falsity.
The sampling method and the decision to divide the trial into two phases were important procedural features of the case. The ruling itself, however, rested on the evidence offered to prove falsity. The court found that a single expert’s disagreement with the certifying physicians did not provide the required objective evidence.
Significance of the ruling
The decision does not hold that medical opinions can never support a False Claims Act case. Instead, it rejects the position that a disagreement between one reviewing expert and a certifying physician is, by itself, enough to show that a hospice claim was objectively false.
The ruling has implications for False Claims Act defendants in cases that involve allegations about medical necessity and rely on medical experts to prove falsity. It also separates the falsity element from the knowledge element. Because the court resolved the falsity issue in AseraCare’s favor, the planned Phase II inquiry into whether the company knew the claims were false did not occur.
The government may appeal the decision. The case involves substantial potential damages and legal precedent concerning the use of competing medical opinions to prove falsity.