There are a number of key issues that will drive the government’s enforcement efforts in the coming year and that will have a significant impact on how healthcare fraud matters are pursued by relators asserting FCA claims and are defended on behalf of healthcare providers.  In the previous weeks, we have examined these issues in greater depth and why healthcare providers should keep a close eye on these issues.  This week, we examine the Fourth Circuit’s upcoming appellate consideration of the use of statistical sampling to establish falsity under the FCA.

In 2014, the district court’s opinion in U.S. ex rel. Martin v. Life Care Centers of America rejected a motion to exclude the government’s expert testimony regarding the intended use of statistical sampling to establish liability over an extrapolated universe of claims.  Since that time, a number of other district courts have considered the issue of whether such evidence may be used to establish liability by either the government or relators.  See U.S. ex rel. Paradies v. Aseracare, Inc., 2014 U.S. Dist. LEXIS 167970 (N.D. Ala. Dec. 4, 2014) (denying motion for summary judgment and noting that “[t]he Government has statistical evidence regarding all of the Government’s universe of 2,181 claims. Statistical evidence is evidence.”); U.S. ex rel. Guardiola v. Renown Health, 2015 WL 5123375 (D. Nev. Sept. 1, 2015) (issuing discovery ruling regarding the underlying data universe relevant to relator’s use of statistical sampling); U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, 2015 WL 1926417 (M.D. Fla. Apr. 28, 2015) (granting relator’s motion to admit expert testimony based on statistical sampling that had not been undertaken by relator as of the date of the motion).

In the coming year, an appellate court may very well have the first opportunity to consider the use of statistical sampling to establish liability in FCA cases.  In U.S. ex rel. Michaels v. Agape Senior Cmty., Inc., 2015 WL 3903695 (D.S.C. July 6, 2015), the district court certified two issues for interlocutory appeal to the Fourth Circuit in connection with FCA claims asserted by relators against a chain of nursing homes regarding hospice services provided to patients, including whether relators should be permitted to rely upon statistical sampling to establish liability and damages across a universe of claims and whether the government had an unfettered right to approve or reject a proposed settlement of FCA claims between a relator and defendant.  U.S. ex rel. Michaels v. Agape Senior Cmty., Inc., No. 15-238 (4th Cir.).

On the question of sampling, the district court explained that “each claim asserted here presents the question of whether certain services furnished to nursing home patients were medically necessary.”  As such, consideration of “that question for each of the patients involved in this action is a highly fact-intensive inquiry involving medical testimony after a thorough review of the detailed medical chart for each individual patient.”  In the district court’s view, the foregoing rendered the particular case unsuitable for the use of sampling.

Over the government’s opposition, the Fourth Circuit agreed to hear both of the issues certified by the district court for interlocutory appeal, and this matter is expected to be heard in mid-2016.  It is possible that the Fourth Circuit could avoid the question of statistical sampling by focusing solely on the question of the government’s rights relative to proposed FCA settlements; however, such a result is unlikely given the fact that the Fourth Circuit agreed to hear both issues on appeal.  Healthcare providers should closely watch this appeal, as an appellate decision considering the issue of statistical sampling will have a significant impact on FCA cases involving issues of medical necessity across large numbers of claims.