After litigation spanning more than a decade, hospice provider AseraCare announced its $1 million settlement with the U.S. Department of Justice (DOJ) in a closely-watched False Claims Act (FCA) case in the U.S. District Court for the Northern District of Alabama.
The case began in 2008 when three whistleblowers filed a qui tam complaint against AseraCare, alleging that it submitted Medicare claims for patients who were not medically eligible for hospice services. The government intervened in the lawsuit in 2012, arguing that AseraCare violated the FCA when it certified patients who were not terminally ill and submitted claims for reimbursement to Medicare. Following a bifurcated trial, vacated verdict and the trial court's sua sponte decision to grant summary judgment in favor of AseraCare, the government appealed to the U.S. Court of Appeals for the Eleventh Circuit. The circuit court held that to establish the falsity element of a claim for hospice benefits under the FCA, the government must show more than a mere difference in professional opinion between physicians regarding a patient's prognosis. Rather, the court explained that the underlying clinical judgment certifying the patient for treatment must reflect an objective falsehood to trigger FCA liability.
In addition to clarifying the standard for proving falsity under the FCA, the AseraCare case is notable for the government's use of statistical sampling and extrapolation in calculating its original $200 million damages figure. The government began developing its case by identifying approximately 2,000 patients whom it believed could have been improperly certified as qualifying for Medicare hospice benefits. Then, the government's medical expert reviewed the medical records and clinical histories of a sample of 223 patients from this group. The medical expert ultimately concluded that 123 of the patients from the sample were ineligible for hospice benefits at the time they were certified. Had the government proven the invalidity of these sample claims at trial, it intended to extrapolate the results to the wider universe of AseraCare hospice patients who received Medicare benefits in order to impose additional liability on the company for those claims. On appeal, the Eleventh Circuit instructed that the government must link its evidence of improper certification to the specific claims at issue in the 223 patient sample, rather than making a general showing AseraCare's improper corporate and clinical practices. On remand in December 2019, the trial court denied the government's motion to reopen discovery, which was followed by the settlement announcement last week.