Eleventh Circuit Holds That Winning the "Battle of the Experts" Won't Prove Falsity
On September 9, 2019, the Eleventh Circuit held in US v. AseraCare, Inc., No. 16-13004, that a reasonable difference of medical opinion is insufficient to establish falsity under the False Claims Act. AseraCare contrasts with two recent decisions from the Sixth and Tenth Circuits—US v. Paulus, 894 F.3d 267 (6th Cir. 2018), and US ex rel. Polukoff v. St. Mark's Hospital, 895 F.3d 730 (10th Cir. 2018), which seemed to lighten DOJ's burden in medical necessity cases. Instead, AseraCare takes the more reasoned position that DOJ cannot establish FCA liability "if the underlying clinical judgment does not reflect an objective falsehood."1
In the Northern District of Alabama, after a jury returned a verdict for DOJ, the district court entered post-trial summary judgment in favor of AseraCare, a multi-state hospice provider. DOJ appealed. A key question before the Eleventh Circuit was whether DOJ had sufficient evidence to support a verdict that AseraCare falsely certified that patients qualified for hospice care.
The trial was bifurcated into two evidentiary phases: falsity and knowledge. Seeking more than $200 million in damages, DOJ's initial falsity case rested on a statistical sample of 123 claims reviewed by DOJ's physician expert. The DOJ expert had taken a "checkbox approach" for assessing terminal illness,2 by comparing medical records with a Medicare contractor's sub-regulatory guidance requirements, contained in the contractor's Local Coverage Decision (LCD). At trial, jurors compared that rote analysis with defense expert testimony that used a "whole patient approach" to assess hospice eligibility. After the jury verdict against AseraCare, the district court granted AseraCare's motion for a new trial, finding that it failed to instruct the jury that "a difference of opinion is not enough" to establish falsity.3 As the Eleventh Circuit put it, the trial court found that it should have instructed the jury "(1) that the FCA's falsity element requires proof of an objective falsehood, and (2) that a mere difference of opinion between physicians, without more, is not enough to show falsity."4 Ultimately, the trial court then granted summary judgment sua sponte for AseraCare, holding that when "hospice certifying physicians and medical experts look at the very same records and disagree about whether the medical records support hospice eligibility, the opinion of one medical expert alone cannot prove falsity without further evidence of an objective falsehood."5
On appeal, the Eleventh Circuit agreed with the lower court's legal analysis, concluding that DOJ must prove more than a reasonable difference of medical opinion concerning a patient's likely longevity. Notably, "there [was] no dispute that each patient certification was supported by a meaningful set of medical records evidencing various serious and chronic ailments for which the patient was entitled to some level of treatment."6 As a result, the jury was improperly left to decide "which doctor's interpretation of those medical records sounded more correct. In other words, in this battle of experts, the jury was to decide which expert it thought to be more persuasive, with the less persuasive opinion being deemed to be false."7
The Eleventh Circuit explained that "[n]othing in the statutory or regulatory framework suggests that a clinical judgment regarding a patient's prognosis is invalid or illegitimate merely because an unaffiliated physician reviewing the relevant records after the fact disagrees with that clinical judgment."8 Instead, DOJ must prove an "objective" falsehood by showing that "the clinical judgment on which the claim is based contains a flaw that can be demonstrated through verifiable facts."9 For example, an objectively false hospice certification might exist where "a physician did not, in fact, subjectively believe that his patient was terminally ill at the time of certification," or "when expert evidence proves that no reasonable physician could have concluded that a patient was terminally ill . . . ."10
Despite agreeing with the trial court about objective falsity, the Eleventh Circuit found that the lower court's summary judgment ruling failed to consider any of the trial record. The circuit court noted that some of DOJ's trial evidence could provide a "potential basis for inferring [the defendants'] knowledge" of objective falsity.11 As a result, it vacated the judgment and remanded the case for a reassessment of the available evidence under its objective falsehood standard. On remand, DOJ must now "identify facts and circumstances surrounding the patient's certification [for treatment eligibility] that are inconsistent with the proper exercise of a physician's clinical judgment. Where no such facts or circumstances are shown, the FCA claim fails as a matter of law."12
After seven years of litigation on claims dating back over a decade—and where the lead DOJ trial attorney was separately convicted for trying to sell material from a different sealed qui tam case after leaving government service—AseraCare is back before the district court to reevaluate whether summary judgment should be granted. And beyond AseraCare, healthcare providers facing FCA challenges to their medical judgments now have more ammunition to fend off enforcement actions based on little more than a "battle of the experts."
© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.