The United States District Court for the Northern District of Texas recently released a noteworthy FCA opinion, one that includes a key ruling on the use of statistical sampling and extrapolation. In United States v. Vista Hospice Care, Inc., No. 3:07-CV-00604-M, 2016 WL 3449833 (N.D. Tex. June 20, 2016), the relator brought claims alleging, among other things, that the defendant violated the False Claims Act by certifying patients as eligible for hospice, when the patients were not terminally ill or their records lacked documentation supporting the requisite six-month life expectancy prognosis.  In deciding a motion to strike and a motion for summary judgment, the district court issued two very favorable defense rulings.

Statistical Sampling/Extrapolation

The relator relied on the expert testimony of a hospice physician, who reviewed 291 patient files and concluded that a large portion of the patients were not eligible for hospice for at least some of the days. An expert statistician, in turn, extrapolated from the physician’s testimony to conclude that defendants had submitted false claims on approximately 12,000 patients.

In considering the defendants’ motion to strike relator’s statistical expert, the district court noted that “[n]o circuit has resolved whether statistical sampling and extrapolation can be used to establish liability in an FCA case where falsity depends on individual physicians’ judgment regarding individual patients.” And while it acknowledged that there are circumstances in which statistical sampling may be appropriate, the district court concluded that extrapolation could not be used to establish liability under the facts of this case.

Quoting the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011), the district court explained that “[w]here the nature of the claim requires an individualized determination, that determination cannot be replaced by ‘Trial by Formula.’”  Even CMS recognizes that prognostication is “uncertain” and not “an exact science,” and as relator’s hospice expert admitted, whether a given patient is hospice eligible is highly subjective.  Each hospice claim is uniquely fact-dependent, implicating “different patients, different medical conditions, different caregivers, different facilities, different time periods, and different physicians.”  The district court held that this diversity among claims rendered proof of liability through statistical sampling evidence inappropriate under the facts of this case.

Subjectivity of Claims

The defendants also moved for summary judgment, arguing that the relator’s FCA allegations involved medical judgments that were too subjective to be “false.” In considering the motion, the district court noted that the relator’s physician expert based his opinions regarding improper eligibility certifications on “subjective clinical analysis,” but as the district court explained, “an FCA claim about the exercise of [clinical] judgment 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, if the relator had put forth evidence that a physician certified eligibility despite never actually seeing the patient or a physician did not actually believe the patient had less than six months to live when certifying otherwise, such evidence could establish liability. But, with her subjective clinical proof, all relator had done was create a battle of the experts, which was insufficient to create a fact issue as to whether the hospice certifications in question were false.  After finding the relator’s additional evidence that defendants maintained a corporate culture of admitting ineligible patients likewise fell short of establishing falsity, the district court granted defendants’ motion for summary judgment.

This opinion further demonstrates that district courts are closely scrutinizing the government’s and relators’ attempts to utilize statistical sampling and extrapolation to prove their FCA cases. Only the relator’s retaliation claim remains pending, and the parties were ordered to mediation on July 29, so it is unclear at this point if the Fifth Circuit will have the opportunity to weigh in on the issues addressed by the district court.

The Fourth Circuit is scheduled to hear argument on the sampling/extrapolation issue in October. For more information on that case, see our previous post.