In recent days, people the world over have witnessed the heroism and sacrifice of doctors and other healthcare workers on the front lines of the COVID-19 crisis. But while people have applauded from their balconies, how much gratitude and deference are courts overseeing False Claims Act cases willing to give the medical profession? Not much, according to a pair of decisions this month from the Third and Ninth Circuits, which reversed district court rulings that a doctor's subjective medical opinion cannot be "false" under the FCA. Last year, the Eleventh Circuit issued a decision, U.S. v. AseraCare, Inc., 938 F.3d 1278 (11th Cir. 2019), that is more deferential to doctors' clinical judgments, creating a circuit split that may support Supreme Court review of this important issue.
This month, the Third and Ninth Circuits' decisions in U.S. ex rel. Druding v. Care Alternatives, 2020 WL 1038083 (3d Cir. Mar. 4, 2020) and Winter ex rel. United States v. Gardens Regional Hospital and Medical Center, Inc., 2020 WL 1329661 (9th Cir. Mar. 23, 2020), rejected the proposition that only "objective falsehoods" can create FCA liability, and revived claims by relators that doctors' subjective clinical judgments were false. Both Druding and Winter take issue with last year's Eleventh Circuit decision in AseraCare, which held that a mere difference of clinical opinion, without more, cannot show falsity. In AseraCare, the only "evidence" of the falsity of clinical judgments regarding hospice care for terminally ill patients was an expert witness for the government, who disagreed that patients were actually terminally ill, but "declined to conclude that [the] physicians had lied about their clinical judgment or even that their judgments were unreasonable or wrong—as opposed to just different from" the expert's opinions. 938 F.3d at 1300 (footnote omitted).
By contrast, in Winter, the Ninth Circuit reversed the dismissal of a relator's complaint alleging that doctors falsely certified that patients' inpatient hospital stays were medically necessary. Similarly, in Druding, the Third Circuit reversed summary judgment for the defendants, where the relators had alleged that doctors falsely certified that patients' hospice admissions were medically necessary. In both cases, the relators alleged that the admissions were unsupported by the patients' medical records. And in both cases, the district courts reasoned that the allegations or evidence reflected no more than a difference of opinion about the admitting physicians' clinical judgments, rather than an "objective falsehood," and therefore the claims based on those clinical judgments were not actionable under the FCA. Not so, said the appeals courts. As Winter put it, a doctor's opinion can trigger FCA liability just like "any other representation," if the doctor knows it is false or makes it in "reckless disregard of its truth or falsity." 2020 WL 1329661, at *2.
But in practical application, both decisions—and particularly the Third Circuit's ruling in Druding—could subject doctors to potentially limitless scrutiny of their clinical decisions under the FCA's harsh treble damages and civil penalties provisions. In Druding, despite noting that the record revealed only the existence of "dueling expert opinions" to support the relator's claim of falsity, the Third Circuit nonetheless reversed summary judgment, reasoning that the expert testimony alone raised a "triable issue of fact for the jury regarding falsity." 2020 WL 1038083, at *9. This broad ruling creates an unfair burden for doctors who are already stretched thin by the demands of their profession. Although Druding insisted that the FCA's separate scienter element would limit liability in cases of mere diagnostic disagreement, this is cold comfort to a doctor who must shoulder the costs and burdens of discovery after a court denies his or her motion to dismiss on the grounds that scienter "may be alleged generally." Fed. R. Civ. P. 9(b). In such FCA cases, Druding invites courts to routinely second-guess doctors' subjective clinical judgments, by suggesting that all a plaintiff's lawyer needs to survive dispositive motions and proceed to trial is to pay some "expert" to contradict a doctor's judgments, based solely on that "expert's" post hoc review of a paper record.
The Ninth Circuit's analysis in Winter took a somewhat more nuanced view than the Druding court, leaving the door open to argue that as long as a doctor honestly holds a clinical judgment, then a mere difference of reasonable medical opinions, standing alone, cannot render the judgment "false." According to the Ninth Circuit, the Winter relator carried her burden by including in her complaint an analysis of sixty-five supposedly unjustifiable admissions, where "each admission [allegedly] failed to satisfy the hospital's own admissions criteria." 2020 WL 1329661, at *8. The court emphasized that those criteria "represent[ed] the 'consensus of medical professionals' opinions,' so a failure to satisfy the criteria also means that the admission went against the medical consensus." Id.
Still, by letting claims based on diagnostic disagreements proceed to discovery or trial, the Third and Ninth Circuits' decisions overlook important realities about the practice of medicine, including the need for rapid diagnoses and treatment decisions and the many complexities presented by seeing live patients in dire circumstances—issues that the present COVID-19 crisis has brought into sharp relief. Both savvy patients and doctors know that a contrary second opinion or clinical judgment does not necessarily mean that the first opinion was wrong, let alone false or fraudulent. As recent events show, we owe doctors the deference they need and deserve to make the critical—and sometimes lifesaving—judgments that our well-being demands.
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