As we previously reported, in the FCA case against hospice-provider AseraCare, U.S. ex rel. Paradies v. AseraCare, Inc., the U.S. District Court for the Northern District of Alabama granted AseraCare’s motion for a new trial based on error in instructing the jury during the falsity phase of the trial (The trial was bifurcated into falsity and scienter phases.) The court released its written order on the motion this week.
This order is an instructive read for any defense of a false certification case. As the court explains, a false certification case does not rest on allegations that, for example, a defendant forged doctor signatures, billed for unperformed services, or submitted claims for fictitious patients. Rather, such a claim, as in this case, rests on a theory that the underlying medical records do not support the physician’s certifications (here, of hospice eligibility), rendering those certifications false. But, as the court ultimately recognized in reviewing its jury instructions, a mere difference of clinical judgment is not enough to show falsity. The court stated that it should have advised the jury that the FCA requires proof of an “objective” falsehood. It also added that a proper instruction should have stated that a difference of opinion between doctors, without more, is insufficient to show that a Medicare hospice claim is false.
But that was not all, in a case that has proved itself a procedural primer. The court also reopened summary judgment. The court noted at the outset of its order that the law on many key issues under the FCA is still developing, particularly in the hospice realm. Based on its findings regarding the correct legal standard of falsity and the government’s evidence on falsity, the court notified the parties that it will consider summary judgment under Federal Rule of Civil Procedure 56(f)(3), which provides that a court may “consider summary judgment on its own after identifying for the parties the material facts that may not be genuinely in dispute.” Thus, before setting a new trial date, the court will reconsider summary judgment, giving the government an opportunity to point to objective evidence of falsity offered during the trial.
The government faces a challenging case on summary judgment under the clarified legal standard. In replying to contention interrogatories, the government represented that it would use only its expert’s testimony and the underlying medical records to try to prove falsity. Because the government’s evidence showed a difference in only clinical judgment about patients’ terminal prognoses, “the court now questions whether the Government, under the correct legal standard, has sufficient admissible evidence of more than just a difference of opinion to show that the claims at issue are objectively false as a matter of law.” Government witness testimony at trial further undermines the government’s case. As the court noted, the government expert acknowledged that he had changed his opinion regarding the eligibility of patients between his review in 2010 and 2013: “I was not the same physician in 2013 as I was in 2010.” Likewise, another government witness testified that “two doctors using their clinical judgment could come to different conclusions about a patient’s prognosis and neither be right or wrong.”
As a result of its decision to reconsider summary judgment, it may be that the re-trial of the falsity phase will not happen (and so too the scienter phase), or that the hospice claims for consideration are significantly winnowed. FCA practitioners and the federal jury pool in Birmingham alike eagerly await the court’s decision.