United States: Statistical Sampling In FCA Case Under Review By 4th Circuit Court Of Appeals

Last Updated: June 9 2016
Article by S. Todd Hemphill and Christopher P. Brewer

The issue of using statistical sampling in federal False Claims Act (FCA) cases has come to the fore in the 4th Circuit Court of Appeals, following a U.S. District Court decision denying its use in a case brought in South Carolina against a network of 24 nursing home providers (collectively, "Agape").

The case, U.S. ex rel. Brianna Michaels and Amy Whitesides v. Agape Senior Community, et al., was brought in 2012 by two former employees of Agape as relators ("plaintiffs") under the whistleblower provisions of the FCA. Plaintiffs alleged that Agape engaged in a scheme to submit claims to Medicare, Medicaid and Tricare for hospice and nursing home inpatient services that were false because the care was not medically necessary or the certifications required to obtain reimbursement were falsified. As with all FCA cases, the U.S. government investigated the allegations to determine whether it would intervene in the case on behalf of the private party plaintiffs. The Government ultimately elected not to do so, and the plaintiffs and defendants moved forward with discovery. As a result of a dispute between the parties regarding the scope of discovery, the matter came before U.S. District Court Judge Joseph F. Anderson, Jr. on the question of whether the plaintiffs would be permitted prove liability and damages based on a statistical sampling model.

In the context of health care fraud and abuse, the process of statistical sampling takes a sample of claims relating to a small group of patients which are reviewed to determine which of the sampled claims are allegedly false. The results of that analysis of the sample may then be extrapolated to the much larger universe of claims and patients to prove a plaintiff's claim of liability and damages under the FCA. In the Agape case, Judge Anderson noted that the case presented well over 50,000 individual non-related claims, involving medical charts of between 10,000 and 20,000 nursing home patients. Nevertheless, despite the extensive amount of time that would be required for the parties to review and present of all of those claims at trial, Judge Anderson determined that statistical sampling would not be appropriate in this case, because (1) each claim asserted in the case presented the question of whether services furnished to nursing home patients were medically necessary; (2) answering the question for each of the patients would involve a highly fact-intensive inquiry involving expert testimony after a review of each patient's medical chart; and (3) the medical charts of each patient for which the false claims were alleged were intact and were available for review by the parties. Thus, while the review could conceivably involve thousands of claims and patients, Judge Anderson was satisfied that those claims should be adjudicated individually, rather than using an extrapolation from a statistical sample that may not accurately reflect the non-sampled cases.

Following Judge Anderson's initial ruling on the statistical sampling issue, the plaintiffs and Agape entered into settlement discussions without the government's involvement. They ultimately reached an agreement whereby Agape would pay the plaintiffs $2.5 million in settlement of all claims. The settlement was then submitted to the government for approval, as all FCA settlements must be approved by the court and the U.S. Department of Justice (the "Government"). The Government rejected the settlement, based in large part on its own statistical sampling analysis that put the value of the case at $25 million.

The plaintiffs and Agape objected to the Government's refusal to approve the settlement, but Judge Anderson ruled that the plain language of the FCA required the Government's approval, despite the fact that it had not intervened in the case and despite the fact that he had already found that a statistical sampling methodology ‒ which formed the basis for the Government's objection ‒ could not be used in the case to determine liability or damages.

However, rather than move forward with the trial, Judge Anderson certified both of his rulings for immediate appeal, reasoning first that if the Government's objection is overturned by the Court of Appeals and, upon remand, Judge Anderson determined that the objection was unreasonable, the case would end with an amicable settlement. Conversely, Judge Anderson reasoned that if the trial proceeds without the use of statistical sampling in determining liability or damages, the parties would face a trial of monumental proportions, involving a staggering outlay of expenses by the parties, which would possibly be unnecessary if the Court of Appeals reversed his rejection of the plaintiffs' proposed statistical sampling methodology. Thus, Judge Anderson concluded, it would be much more judicially efficient to have a ruling on both questions before starting the trial.

Plaintiffs, Agape and the Government have all recently filed briefs with the Court of Appeals. In addition, the American Hospital Association (AHA), the Catholic Health Association (CHA) and the American Health Care Association (AHCA) filed amicus curiae briefs in support of Agape, asking the Court of Appeals to affirm Judge Anderson's ruling disapproving statistical sampling. The AHA/CHA joint brief argues that when the falsity of a claim depends on a doctor's medical judgment about a patient's condition, plaintiffs cannot prove liability through statistical sampling. Otherwise, plaintiffs in such cases would only have to provide evidence that there was no reasonable basis for a doctor's medical judgment for treatment of the patients in the sample, and could ignore individual treatment issues present in the non-sampled patients. Therefore, liability must be proved on a claim-by-claim basis. The joint brief further argues that the end result would be that the larger the number of patients and claims covered by a plaintiff's allegations, the lower his burden of proof would become. This "combination of lowering the burden of proof and truncating a defendant's ability to defend itself would only further incentivize the filing of questionable and meritless qui tam suits."

The ACHA brief also focuses on the need for a claim-by-claim analysis where the FCA claims are "based on physicians' medical judgments concerning their patients' conditions, prognoses, and medical needs." ACHA goes on to argue that allowing plaintiffs in this type of case to prove liability for unspecified claims using statistical sampling would essentially shift the burden of proof to providers to have to disprove the elements of FCA liability for each such unspecified claim.

The parties are now awaiting a hearing date for oral arguments on the appeal.

Originally published May 4, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
S. Todd Hemphill
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions