March 2020

On Thursday, AseraCare, a national hospice care provider, announced that it had settled a long-standing Medicare billing dispute with the DOJ, a case that has garnered nationwide attention in healthcare since 2008. At issue was statistical sampling, and the use of statistics to prove liability.

Statistical sampling is nothing new in FCA investigations, but these methods are typically used to establish damages. But in AseraCare, the Government was using statistical sampling to prove liability, i.e., that the claims submitted were actually false. The Government’s theory was only the first of many unusual aspects of this case, which included an actual trial (rare in FCA cases), later split into two distinct trials, with one focused on falsity and the other on knowledge of falsity, as well as the district judge remanding the case sua sponte after deciding that the jury instructions were in error.

AseraCare actually settled the case for $1 million—a far cry from the original $200 million sought by DOJ. The resolution is not only a win for AseraCare, but welcome news for hospice providers as well as healthcare providers across all aspects of Medicare. Chiefly important, while on appeal, the Eleventh Circuit squarely addressed the controversial issue of statistical sampling and held that this method—i.e., a difference of reasonable physician’s opinions regarding medical treatment—could not by itself establish liability.

The case is U.S. ex rel. Paradies v. AseraCare Inc. et al., 2:12-cv-00245, in the U.S. District Court for the Northern District of Alabama.