The trial court in AseraCare grappled with how to apply the FCA to claims that are alleged to be false because of a difference of scientific, clinical, or medical opinion, and ultimately granted summary judgment in favor of the hospice provider, holding that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law.”1
The Eleventh Circuit affirmed, in part, and vacated, in part, the district court’s decision, remanding for further proceedings. In so doing, however, the Eleventh Circuit concurred with the district court’s ultimate determination that “a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment.”2 Simply put, mere difference of opinion does not constitute falsity under the FCA.
Background
The AseraCare case turned principally on a protracted legal battle about expert testimony from a physician who performed after-the-fact reviews of a sample of 223 medical charts from patients for whom AseraCare had billed the government for at least 365 days of continuous hospice care. Contradicting AseraCare’s certifying physicians and medical expert, the government’s expert concluded that 123 of these patients were ineligible for the hospice benefit.
Hospice eligibility depends upon whether a patient is “terminally ill.” Under the Medicare hospice regulations, a physician must “certify in writing at the beginning of [each hospice benefit] period, that the individual is terminally ill . . . based on the physician’s or medical director’s clinical judgment regarding the normal course of the individual’s illness.”3 The regulations define “terminally ill” to mean that the individual has a medical prognosis that life expectancy is 6 months or less if the illness runs its normal course.4 In other words, the certifying physician must predict life expectancy based on an examination of the patient’s current condition and symptoms. Unsurprisingly, AseraCare Decision 1. United States v. AseraCare Inc, 176 F. Supp. 3d 1282, 1286 (N.D. Ala. 2016). 2. United States v. AseraCare Inc., 938 F.3d 1278, 1281 (11th Cir. 2019). 3. 42 U.S.C. 1395f(a)(7)(A). 4. 42 U.S.C. 1395x(dd)(3)(A). 10 Hogan Lovells CMS has recognized that “[p]redicting life expectancy is not an exact science.”5 CMS recognizes that the hospice benefit covers reimbursement for periods of care that extend beyond six months, as long as the patient’s eligibility is recertified every 60 days after an initial 90-day period.6 It is not unusual for hospice patients to live for years after the initial certification.
The AseraCare case took an unusual twist when the defendants moved for summary judgment, arguing that the government’s expert opinion evidence was insufficient to establish the falsity of the government’s sample claims. The district court denied that motion, but invited, and later granted, a motion to bifurcate the trial, holding that the defendants would be unfairly prejudiced, and the jury confused, if evidence of defendants’ business practices not specifically tethered to the government’s sample patients were presented as part of the government’s case on the falsity of the claims. The first phase of the bifurcated trial dealt with evidence of falsity, and the second phase with the presentation of “pattern and practice” evidence as to whether AseraCare submitted false claims “knowingly” in the context of the FCA.
After a 10-week trial and nine days of deliberations on phase one, the jury found that 104 out of the 123 sample claims were false. The district court then ordered a new trial, however, finding that its own jury instructions on falsity were incomplete. On its own motion, the district court then reopened, and granted, summary judgment for AseraCare, holding that where “all that exists is a difference of opinion,”7 there is insufficient evidence to establish that a claim is false.
The Ruling from the Eleventh Circuit
On appeal, the Eleventh Circuit agreed with the district court’s analysis on the key issue of falsity. The appellate court, taking a hard look at the text and history of the hospice rules and regulations, found that “CMS’s rulemaking commentary signals that well-founded clinical judgments should be granted deference.”8 The Eleventh Circuit further found that the legal framework asks only that “physicians exercise their best judgment in light of the facts at hand and that they document their rationale.”9 It does not require certainty.
The government sought to exalt the importance of a regulation that requires supporting documentation of eligibility, asserting that eligibility “turns on” whether the clinical information and other documentation accompanying a certification of terminal illness support, as a factual matter, the physician’s certification. The Eleventh Circuit disagreed10 finding instead that “the physician’s clinical judgment dictates eligibility as long as it represents a reasonable interpretation of the relevant medical records.”11
The Eleventh Circuit did agree with the government that the district court erred in granting summary judgment after the jury verdict was returned. The appellate court found that the district court should have considered all the evidence, both in the trial record and the summary judgment record, to determine whether a triable issue existed regarding falsity.12 It acknowledged that there may be evidence of improper certification practices that could support a finding that AseraCare presented objectively false claims for payment to Medicare. However, the court held that, on remand, the government must link evidence of improper certification practices to the specific claims at issue. This holding may be even more significant for the broader issue of FCA liability.
Looking ahead
What does this mean, more broadly, for falsity under the theory of false certification?
First, clinical disagreement by a physician who performs a post-hoc chart review is not enough: “A properly formed and sincerely held clinical judgment is not untrue even if a different physician later contends that the judgment is wrong.”13 To state a claim under the FCA in the context of hospice reimbursement, a plaintiff alleging that a patient was falsely certified for hospice care must identify an objective and knowing falsehood.
Objective falsity can be proven, according to the court, if (1) the certifying physician fails to examine the underlying medical records, (2) the certifying physician did not subjectively believe that the patient was terminally ill, or (3) if expert evidence proves that no reasonable physician could have concluded that a patient was terminally ill.14 In the absence of such evidence of an objective falsehood, however, the FCA is “an inappropriate instrument.”15 This holding could narrow the circumstances in which the government attempts to impose FCA liability where mere clinical disagreement about eligibility is the only evidence of falsity. Plaintiffs likely will try, however, to frame defendants’ conduct into one of the three categories articulated by the court.
Second, in the hospice context, relators and the government will now face greater difficulty in arguing that the supporting documentation for hospice eligibility must support, as a factual matter, the validity of the physician’s clinical judgment. As the Eleventh Circuit explained, “While there is no question that clinical judgments must be tethered to a patient’s valid medical records, it is equally clear that the law is designed to give physicians meaningful latitude to make informed judgments without fear that those judgments will be second-guessed after the fact by laymen in a liability proceeding.”16
Third, the Eleventh Circuit’s admonishment that, on remand, the government must be able to link evidence of improper certification practices to the specific claims at issue could have a far-reaching impact in FCA litigation. The court expressed appropriate caution about an approach increasingly taken by relators and the government in many health care cases: broadly allege that evidence of a widespread “corporate scheme” supports the inference that a defendant caused the presentation of false claims, and use that scheme as the basis to extrapolate from a small sample of claims to establish liability to a larger universe. Here, the Eleventh Circuit held that “untethered” evidence of corporate atmosphere is insufficient. That holding may help defense counsel argue against extrapolation from a sample for liability and damages where there is no linkage between the alleged falsity and the extrapolated claims in other contexts.
References
1. United States v. AseraCare Inc, 176 F. Supp. 3d 1282, 1286 (N.D. Ala. 2016).
2. United States v. AseraCare Inc., 938 F.3d 1278, 1281 (11th Cir. 2019).
3. 42 U.S.C. § 1395f(a)(7)(A).
4. 42 U.S.C. § 1395x(dd)(3)(A).
5. 75 Fed. Reg. 70372, 70448 (Nov. 17, 2010).
6. Id.
7. AseraCare, 176 F. Supp. 3d at 1285
8. AseraCare, 938 F.3d at 1295.
9. Id. at 1296.
10. Id. at 1294.
11. Id.
12. Id. at 1303.
13. Id. at 1297.
14. Id.
15. Id. at 1301.
16. Id. at 1295.