Use of Statistical Sampling to Establish Damages in FCA Cases Still Controversial

By on May 19, 2015

As we previously posted, on April 28, 2015, the United States District Court for the Middle District of Florida in U.S. ex rel. Ruckh v. Genoa Healthcare LLC et al, held that expert testimony based on statistical sampling was appropriate in False Claims Act (FCA) cases and could not be excluded solely due to the concern that sampling, by its nature, subverts individualized proof. The court did, however, preserve the importance of Daubert motions to assail a purported sample, noting that defects in methodology or other evidentiary defects could still result in exclusion of an expert’s sampling analysis. Given the difficulties inherent in identifying a reliable sample in FCA cases involving issues of individualized proof, effective Daubert challenges to a relator’s or the government’s sampling expert are critical when litigating in courts that are inclined to permit sampling, whether offered to prove liability or damages.

In Ruckh, the relator alleged that the defendant defrauded the United States and the State of Florida by “upcoding” and “upcharging” for services provided to patients at 53 of the defendants’ medical facilities in Florida. Plaintiffs have long tested the limits of sampling, especially in actions alleging Medicare/Medicaid fraud in which issues of individualized medical decision making are in play. The relator, Ruckh, took this practice a step further, moving to admit expert testimony based on statistical sampling, prior to a sampling analysis having actually been completed. Ruckh argued that individually analyzing each claim from all 53 facilities was impractical and unnecessary to establish damages.

The defendants responded that, among other things, the court’s ratification of Relator’s statistical sampling methodology was premature. While the court did not foreclose sampling, it agreed with the defendants on the issue of ripeness, noting that arguments that go to the weight or reliability of an expert opinion are best reserved for Daubert proceedings.

This issue is an important one, as sampling can allow a plaintiff to increase the scope of alleged and provable damages dramatically without developing robust, individualized proof of its claims. Defendants have had success attacking the kind of methodology which purports to allow plaintiffs to draw inferences over a universe of claims that covers too wide an array of services. For example, defendants have successfully attacked analyses when a given universe of claims is rife with variability in terms of provider and type of procedure, arguing that such variability undermines the reliability of extrapolating from a statistical sample. While the law on the propriety of sampling in these types of cases is unsettled, there is no question that Daubert challenges will play an important role in any FCA case in which a relator or the government attempts to rely on a sample.

T. Reed StephensT. Reed Stephens
T. Reed Stephens represents clients in the life sciences industry, including pharmaceutical and biotech manufacturers, wholesalers and individuals, as well as health care systems and non-health care related companies in other global industries such as the defense and financial services/banking sectors. He also represents clients in matters involving state and federal government law enforcement, voluntary disclosures and congressional investigations. Read T. Reed Stephens' full bio.

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