Blocking the government’s road to recovery, the Northern District of Alabama granted summary judgment in favor of AseraCare Inc., a national hospice provider.1 On March 31, 2016, the court held that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the False Claims Act (“FCA”) as a matter of law.”2
The U.S. Department of Justice sought $202 million in fines and penalties, arguing that AseraCare fraudulently billed Medicare for hospice patients who were not terminally ill as defined by the regulations.3 The court chose to bifurcate the trial, restricting the first phase to the issue of falsity, and the second phase to whether AseraCare knowingly submitted false claims. After a 10-week trial and nine days of deliberations on phase one, the AseraCare jury found that the majority of the sample claims4 were false. Shortly thereafter, the court ordered a new trial, finding that its jury instructions on falsity were incomplete, and sua sponte reopened summary judgment.
Yet, as the court suspected, the government failed to point the court to any admissible evidence to prove falsity other than its medical expert’s opinion that the records for the 123 patients at issue did not support the physicians’ certifications of terminal illness.5 Thus, the case boiled down to conflicting views of physicians about whether the medical records supported AseraCare’s certifications that the patients at issue were eligible for hospice care.6
The court recognized that “[w]hen two or more medical experts look at the same medical records and reach different conclusions about whether those medical records support the certifying physicians’ certifications of terminal illness, all that exists is a difference of opinion.”7 And a difference of opinion, without more, simply is not enough.8
Thus, the court expressed concern that allowing a mere difference of opinion among physicians alone to prove falsity would totally eradicate the clinical judgment required of the certifying physicians.9 In particular, the court considered guidance from the Centers for Medicare and Medicaid Services, which emphasizes the importance of a doctor’s clinical judgment in the hospice certification process10 and the uncertainty inherent in making end-of-life predictions.11 If it were to find that all the government needed to prove falsity in a hospice provider case was one medical expert who reviewed the medical records and disagreed with the certifying physician, hospice providers would be subject to potential FCA liability any time the government could find a medical expert who disagreed with the certifying physician’s clinical judgment.12 The court “refuse[d] to go down that road.”13
That “road” could have been devastating for hospice companies, as well as the patients and families for whom they care. The statute provides that one who is liable must pay a civil penalty of between $5,500 and $11,000 for each false claim and treble the amount of the government’s damages.14
While the court refused to travel off that cliff, it did provide some direction for what may be considered an objective falsehood. The government would be expected to provide evidence, such as (1) documents in the patients’ medical records were false; (2) any information on which the certifying physician relied was incorrect or false; or (3) clinicians withheld information from the certifying physicians.15
The AseraCare decision follows a similarly groundbreaking opinion, U.S. ex rel. Geschrey v. Generations Healthcare, LLC.16 In that case, the Northern District of Illinois found that a difference of opinion between physicians was insufficient to support a FCA violation. It granted defendant’s motion to dismiss where relators did not allege facts demonstrating that the certifying physician “did not or could not have believed, based on his or her clinical judgment, that the patient was eligible for hospice care.”17
Together, these opinions threaten the government’s recent efforts to pursue hospice companies on similar allegations without proof of any specific false claims. It always will be possible to find an expert who disagrees on at least some claims. But that, alone, is not enough under the FCA.
For additional information about lessons learned from the AseraCare litigation, see 5 Important Lessons From AseraCare's FCA Case.