In late March, three major health care trade associations filed amicus briefs in support of the defendant-appellees in U.S. ex rel. Michaels v. Agape Senior Community, et al., Record No. 15-2145 (4th Cir.).  As we have previously reported, the relator in Agape is pursuing an interlocutory appeal to the U.S. Court of Appeals for the Fourth Circuit regarding the use of statistical sampling to prove False Claims Act (FCA) liability.  In their respective briefs, the American Hospital Association (AHA), Catholic Health Association (CHA) and American Health Care Association (AHCA), did not mince words – a reversal of the District Court’s ruling that sampling cannot be used to prove FCA liability would have catastrophic consequences for the thousands of hospitals and health care providers throughout the United States.

In their joint brief, AHA and CHA noted that their member hospitals “submit thousands of claims to Medicare and Medicaid every day based on physicians’ medical judgments about patient conditions and courses of treatment.”  On behalf of its members, AHA and CHA affirmed that “statistical analyses are no substitute for the on-the-ground medical context a treating physician knows, understands, and relies upon in making treatment decisions for a given patient.” The crux of the AHA/CHA argument is as follows: if the government and relators want to benefit from the treble damages and statutory penalty provisions of the FCA, then they must accept the “essential safeguard against its abuse: each claim must be separately proved.”  The alternative, suggested AHA/CHA, is a “Trial by Formula” approach that was firmly rejected by the Supreme Court of the United States in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), and further explained just last month in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146 (Mar. 22, 2016).  With the majority of FCA qui tam cases being handled by relators directly—with limited oversight from a non-intervening United States—AHA/CHA argue that allowing statistical sampling to prove FCA liability would “shortcut” a physician’s clinical judgment.  Moreover, they observe that “[p]erversely, the bigger the relator’s allegations, the lower his burden of proof would become; the result would be more health care providers forced into costly defense of meritless FCA suits and more in terrorem settlements,” diverting resources from patient care and increasing health care costs for everyone.

(more…)