Publications & Presentations
July 7, 2016
District Court Rejects Claims Based on Difference of Medical Opinion and Disallows Statistical Sampling and Extrapolation Methodologies in Hospice Eligibility Case

By Emma R. Cecil and Brian F. McEvoy

A federal district court in the Northern District of Texas has granted summary judgment in favor of hospice care providers on relator’s FCA claims based on differences of clinical judgment regarding patients’ eligibility for hospice services. The court also rejected the relator’s attempts to prove liability through the use of statistical sampling and extrapolation.

The case involved allegations by a social worker employed at one of the defendants’ hospice clinics that defendants violated the FCA by causing patients who were not eligible for the Medicare hospice benefit to be certified as eligible, and then submitting claims for ineligible patients. Specifically, the relator claimed that some of the defendants’ patients were ineligible for hospice services because they were not “terminally ill,” or because documentation supporting a six-month prognosis was not included in their medical records. As a result, she claimed, the necessary certifications of eligibility and the Medicare claims for these patients were false. She also alleged that the defendants violated the FCA by certifying compliance with the Anti-Kickback Statute while engaging in schemes to pay kickbacks to promote hospice enrollment.

In support of her claims, the relator relied on: (1) an expert report by a hospice physician concluding, after a review of 291 patient files, that a large percentage of those patients were ineligible for hospice benefits; (2) evidence of a corporate “scheme” to admit and maintain patients, including a practice of admitting patients before determining their eligibility, requiring layers of review before discharging patients, and instructing staff to document evidence supporting eligibility, along with anecdotal evidence that information in some patient charts had been falsified; and (3) an expert report by a statistician extrapolating from the expert physician’s report to draw conclusions about the number of false claims submitted for a universe of nearly 12,000 patients.

The court first found that because a physician must use his or her clinical judgment to determine hospice eligibility, an FCA claim involving the exercise of that judgment must be predicated on the presence of an objectively verifiable fact at odds with the exercise of that judgment. Expert testimony questioning the subjective clinical analysis of the certifying physician and disagreeing with the certifying physician’s prediction of life expectancy is not, the court concluded, enough to show falsity. The court reasoned, inter alia, that allowing relators to prove falsity simply by putting up a medical expert to provide an opinion contrary to that of the certifying physician would undermine the integrity of medical decision making and would “be directly at odds with the assurances given by CMS that doctors need not fear the exercise of their medical judgment as to the future course of a terminal patient.”

The court also ruled that evidence that the defendants had pressured their employees to admit large numbers of hospice patients, and that employees had falsified data on a few patient charts, was insufficient to create an inference that claims submitted on behalf of the 291 patients whose charts the relator’s medical expert had reviewed were false, since the relator failed to tie that evidence to the submission of any actual false claims on behalf of those particular patients.

Finally, the court rejected as unreliable the statistician’s extrapolation evidence to show both damages and liability, finding that in a case like this, where the underlying determination of eligibility for hospice is inherently subjective, patient-specific, and dependent on the judgment of treating physicians, statistical sampling cannot establish liability for fraud in submitting claims for ineligible patients. In other words, proof regarding one claim is not sufficient proof regarding other claims “involving different patients, different medical conditions, different caregivers, different facilities, different time periods, and different physicians.”

Amid a number of district court rulings in the past two years upholding the use of statistical sampling and extrapolation to prove not only damages, but also liability, in FCA cases, this decision marks an important victory for hospice and other long-term care providers faced with FCA suits that involve questions of clinical judgment and rely upon experts to second-guess treating physicians’ conclusions regarding the medical necessity of services. As we reported in May, although there is still a great deal of disagreement among the district courts as to whether statistical sampling and extrapolation can be used to establish liability where falsity depends on individual physicians’ judgment regarding individual patients, the Fourth Circuit may be the first circuit to provide some meaningful guidance to FCA litigants on this important issue.