In prior years, sampling has been at issue in FCA cases largely in the context of damages. Specifically, where there were allegations of a specific course of wrongful conduct that allegedly impacted large volumes of claims, sampling could be used to determine and extrapolate damages. However, a couple of recent decisions have suggested an expanded use of sampling that would also encompass issues of liability.
On September 29, 2014, a federal judge in the United States District Court for the Eastern District of Tennessee ruled that the Government could take extrapolations from a sample of billing statements in order to determine and establish liability against the defendants for submitting false claims. The case of U.S. ex rel. Martin v. Life Care Centers, presented an issue of first impression in the FCA context. Life Care Centers was accused of billing for medical care that was not necessary over a period of several years. The Government sought to use a random sample of 400 patient admissions (representing a larger number of separate claims) to establish liability for false billings relating to more than 50,000 patient admissions (and more than 100,000 claims). Judge Harry S. Mattice, Jr. ultimately ruled that the government could extrapolate the number of fraudulent billings using the sample of 400 patient records. Judge Mattice issued his ruling on the grounds that it would be overly burdensome to force the Government to establish liability separately for each individual false claim in a case with such volume. Moreover, Judge Mattice noted that, while the statutory language of the FCA is silent on the issue of sampling, Congress could have included a restriction on the use of sampling if that was intended.
More recently, on April 28, 2015, in an opinion issued in the United States District Court for the Middle District of Florida, the district judge stated that “no universal ban on expert testimony based on statistical sampling applies in a qui tam action.” In the case of U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, the relator had filed a motion in limine regarding the potential expert testimony on sampling prior to the expert’s testimony being ready and prior to any challenge to the testimony. The district judge found that the motion in limine was premature but did not accept arguments from the Defendants that sampling was improper. Rather, the district judge rebuffed the assertion of a bar on sampling to establish liability and stated that arguments should instead be directed at the reliability of the sampling.
These recent opinions regarding the use of sampling as a means to establish liability in False Claims litigation will likely lead to further attempts by relators to use sampling. In light of the significant number of claims that are typically at issue in a False Claims case, the potential for sampling may make it easier and less expensive for relators to establish liability for a broad number of claims. Conversely, where a relator has an incorrect theory of wrongdoing, sampling may reduce the cost for the defense by allowing a sample to establish a lack of liability rather than requiring a review of thousands of claims. This issue remains undecided by the United States Supreme Court and by the appellate courts and there are significant bases for challenging the use of sampling to establish liability, including the fact that allegations of fraud warrant proof of wrongdoing at an individual claim level. We expect that there will be further legal developments relating to the use of sampling in the near future and will provide updates on this topic.