FCA UPDATE
FCA UPDATE
Exploring Recent Developments in False Claims Act Litigation, Enforcement and Compliance
FCA UPDATE
Exploring Recent Developments in False Claims Act Litigation, Enforcement and Compliance
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Another Court Rejects Claims Based on Differences of Clinical Judgment; Also Rejects Extrapolation Attempt

By and on Jun 29, 2016
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On June 20, 2016, the United States District Court for the Northern District of Texas granted summary judgment in defendants’ favor on all but her retaliation claims in relator’s False Claims Act (FCA) suit against defendants Vista Hospice Care, Inc. and VistaCare, Inc.  The court found that the relator, a former social worker at Defendants’ facility, failed to provide any evidence of a corporate scheme to admit Medicare beneficiaries before they were eligible.  The decision echoed principles announced by the United States District Court for the Northern District of Alabama in US ex rel. Paradies v. AseraCare, Inc., which we have been following on this blog (and which is now on appeal to the Eleventh Circuit).

The relator relied on two types of evidence: (1) expert testimony that physicians incorrectly certified certain patients’ eligibility; and (2) Defendants’ implementation of corporate policies designed to incentivize improper admissions.

The relator’s expert identified a population of 12,000 patients who had been discharged in the relevant period and were on hospice for a total of at least 365 days.  The expert then selected a stratified sample of 291 patients for evaluation by a second expert.  The first expert then extrapolated the second expert’s analysis to form an opinion as to the total number of claims submitted for the 12,000 patients that were allegedly false.

The court rejected this approach.  First, the court cast doubt on extrapolation evidence, refusing to find it reliable.  The court stated that “[i]n this context, statistical sampling of the type done by [the expert] . . . cannot establish liability for fraud in submitting claims for ineligible patients, as the underlying determination of eligibility for hospice is inherently subjective, patient-specific, and dependent on the judgment of involved physicians.”  The court concluded that “proof regarding one claim does not meet Relator’s burden of proof regarding other claims involving different patients, different medical conditions, different caregivers, different facilities, different time periods, and different physicians.”

Second, the court found that the manner in which the expert chose the stratified sample of 291 patients was “fundamentally flawed” because the sample the expert relied on was not randomly selected and did not control for variables the expert identified as important, such as geographical differentiation, different clinical staffs and doctors or disease type.  Thus, the court prohibited the relator from presenting evidence beyond the 291 patients.

The court also rejected the evidence the relator presented as to these 291 patients.  The court concluded that the relator’s expert’s mere disagreement with a certifying physician’s assessment of hospice eligibility was insufficient to prove a violation of the FCA.  Rather, “[b]ecause a physician must use his or her clinical judgment to determine hospice eligibility, an FCA claim . . . must be predicated on the presence of an objectively verifiable fact at odds with the exercise of that judgment, not a matter of questioning subjective clinical analysis.”  For example, a relator must show that a physician “never reviewed the patient’s medical condition nor saw the patient, or that the [...]

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Tenth Circuit Says “CMS Is Unfamiliar With Its Own Law” In Pursuing Home Health Agency for Overpayments

By on Jun 22, 2016
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In many industries, but especially health care, the amount of regulation and guidance issued by the responsible agencies is tremendous and continues to grow.  The Centers for Medicare and Medicaid Services (CMS) is no exception.  In a recent appeal by a home health agency, the Tenth Circuit examined the “pace [of CMS’] frenetic lawmaking,” finding that CMS applied a homebound status definition and documentation requirement that did not exist at the time the claims were submitted.

In Caring Hearts Personal Home Services., Inc. v. Burwell, No. 14-3243, 2016 BL 171256, (May 31, 2016), CMS litigated an alleged overpayment of about $800,000 for medically unnecessary home health services through the entire administrative process.  The services were provided in 2008, but, according to the Tenth Circuit, CMS applied the more restrictive 2010 version instead.  CMS took the position in this litigation that the 2010 changes simply clarified the prior rule and made it more consistent with the governing statute.  The Administrative Law Judge, the Department Appeals Board and even the United States District Court took the same view.  On appeal the Tenth Circuit disagreed.

The Tenth Circuit found that the 2008 version of the regulation applied to the claims, that Caring Hearts home health services and documentation content complied with that regulation, and that the statute did not clearly support CMS’ litigation position.  In 2008, CMS’s homebound definition stated that, “[g]enerally speaking, a patient will be considered homebound if they [sic] have a condition due to an illness or injury that restricts their ability to leave the place of residence except with the aid of: supportive devices such as crutches, canes, wheelchairs, and walkers … .”  In 2010, CMS added a second, more restrictive requirement – the patient must also “normal[ly]” be unable “to leave home” even with a wheelchair and any attempt to leave home must also “require a considerable and taxing effort.”  As for documentation requirements, no requirements existed in 2008.  The specific requirements CMS said the agency did not comply with were not created until 2010.

While Caring Hearts was dealt the lemon of defending this case, the opinion yields some potentially valuable lemonade in useful lessons and precedents for the rest of the health care community.  First, due to the way the case was argued below, the Tenth Circuit was not presented with a direct Chevron challenge to CMS’ homebound definition or documentation requirements.  While the court took some pains to say that it was not opining on whether the current homebound definition or documentation requirements were consistent with the statute, 42 U.S.C. § 1395f(a)(8), the opinion lays out a roadmap to this challenge.

Second, the court had the unusual opportunity to opine on section of the Social Security Act, 42 U.S.C. § 1395pp.  This section creates, according to the Tenth Circuit, “a sort of good faith affirmative defense” that permits payment for claims that are not payable for specific reasons, including for patients who do not qualify as homebound, if the provider did not know, and could not reasonably [...]

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Court Dismisses FCA Case against AseraCare, Holding that Difference of Medical Opinion Insufficient to Establish Falsity

By on Apr 4, 2016
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After granting a new trial based on error in a jury instruction and sua sponte re-opening summary judgment, on March 31, 2016, the U.S. District Court for the Northern District of Alabama granted summary judgment to AseraCare on all remaining counts in U.S. ex rel. Paradies v. AseraCare, Inc.  The outcome is significant because it confirms that mere difference of clinical judgment—here, regarding conditions for a medical certification of hospice eligibility—is not enough to show that the claims are objectively false under the False Claims Act (FCA).

The turn of events is a significant win for AseraCare, as a jury had determined last October that 104 of 123 hospice claims submitted by AseraCare for Medicare payment were false.  (The trial was bifurcated into falsity and scienter phases.) However, after that jury verdict, on October 29, 2015, the court granted AseraCare’s motion for a new trial on the issue of falsity after expressing concern that it had “committed major reversible error in the jury instructions.”

As the court explained in a subsequent order, the FCA case was based on a false certification theory: specifically, that the underlying medical records did not support the physicians’ certifications of hospice eligibility, rendering the associated claims false. In reviewing its jury instructions, the court held 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. The court sua sponte re-opened summary judgment and invited the government to point to evidence, other than its expert’s clinical opinion, that the certifications for the claims in question were false.

In the March 31 summary judgment, the court made clear that it was not satisfied with the government’s proffer, observing that the government only pointed to its own conclusions about the underlying medical records and its expert’s disagreement with AseraCare’s certification. In granting summary judgment, the court again confirmed that mere differences in clinical judgment are not enough to establish FCA falsity: “If the court were to find that all the Government needed to prove falsity in a hospice provider case was one medical expert who reviewed the medical records and disagreed with the certifying physician, hospice providers would be subject to potential FCA liability any time the Government could find a medical expert who disagreed with the certifying physician’s clinical judgment.  The court refuses to go down that road.”



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