United States: Eleventh Circuit Confirms: Mere Difference Of Opinion Between Physicians Does Not Establish Falsity Under The False Claims Act

More than two years after the Northern District of Alabama granted summary judgment in a False Claims Act (FCA) case in favor of AseraCare Inc., holding that "contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law[,]"1 the Eleventh Circuit has affirmed in part and vacated in part the district court decision. The case will now be remanded to the district court for further proceedings. Critically, the Eleventh Circuit concurred with the district court's ultimate determination that "a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment."2In other words, a mere difference of opinion does not constitute falsity under the FCA.

The AsceraCare case began in 2008 when three qui tam relators filed a complaint alleging the company had submitted unsubstantiated hospice claims. The government later intervened and filed the operative complaint. The U.S. Department of Justice sought $202 million in fines and penalties, arguing that AseraCare, a hospice provider, fraudulently billed Medicare for hospice patients who were not, in the government's view, terminally ill.3

In order for a hospice claim to be eligible for Medicare reimbursement, a physician must "certify in writing at the beginning of [each] period, that the individual is terminally ill . . . based on the physician's or medical director's clinical judgment regarding the normal course of the individual's illness."4 "Terminally ill" means that the individual has a medical prognosis that the individual's life expectancy is 6 months or less if the illness runs its normal course.5 Of course, as CMS has recognized, "[p]redicting life expectancy is not an exact science."6 Accordingly, the Medicare framework covers reimbursement for periods of hospice care that extend beyond six months, as long as the patient's eligibility is continually recertified every 60 days after an initial 90-day period.7

From the beginning, this case was procedurally intriguing. The district court chose to bifurcate the trial, restricting the first phase to evidence on the issue of falsity, and the second phase to the presentation of evidence on the question of whether AseraCare submitted false claims "knowingly," as that term is defined by the FCA. After a 10-week trial and nine days of deliberations on phase one, the AseraCare jury found that the majority of the sample claims were false. Shortly thereafter, the district court ordered a new trial, finding that its jury instructions on falsity were incomplete, and sua sponte reopened summary judgment. In granting summary judgment for AseraCare, the district court recognized that "all that exists is a difference of opinion."8 And a difference of opinion, without more, simply is not enough to establish that a claim is false.

The Eleventh Circuit agreed with the district court's analysis on that issue. The evidence in AseraCare revealed a fundamental difference of expert opinion regarding the manner in which each patient's complete medical picture contributed to his or her life expectancy at the time he or she received hospice care. The Eleventh Circuit took a hard look at the text and history of the hospice rules and regulations. It found that "CMS's rulemaking commentary signals that well-founded clinical judgments should be granted deference."9The Eleventh Circuit further found that the legal framework asks only that "physicians exercise their best judgment in light of the facts at hand and that they document their rationale."10 It does not require certainty.

So what does this mean for falsity under the theory of false certification? Reasonable differences of opinion among physicians who have reviewed the same medical charts is not enough: "A properly formed and sincerely held clinical judgment is not untrue even if a different physician later contends that the judgment is wrong."11 Accordingly, in order to properly state a claim under the FCA in the context of hospice reimbursement, a plaintiff alleging that a patient was falsely certified for hospice care must identify an objective and knowing falsehood. The Eleventh Circuit noted that objective falsity can be proved if (1) the certifying physician fails to examine the underlying medical records, (2) the certifying physician did not subjectively believe that the patient was terminally ill, or (3) if expert evidence proves that no reasonable physician could have concluded that a patient was terminally ill.12 In the absence of such evidence of an objective falsehood, however, the FCA is "an inappropriate instrument."13

The Eleventh Circuit did, however, agree with the government that the district court erred in granting summary judgment sua sponte. The appellate court found that the district court should have considered all the evidence, both in the trial record and the summary judgment record, to determine whether a triable issue existed regarding falsity.14 The court acknowledged that there may be evidence of improper certification practices that could support a finding that AseraCare presented objectively false claims for payment to Medicare. However, in another holding that may be even more significant for the broader issue of FCA liability, the court admonished that, on remand, the government must be able to link any evidence of improper certification practices to the 123 claims specifically at issue in its case. Endorsing an argument that we often present on behalf of clients, the Eleventh Circuit stated that "[s]uch linkage is necessary to demonstrate both falsehood and knowledge."15

This instruction could have wide-ranging impact in FCA litigation. The court's caution may be aimed at an approach relators and the government frequently invoke in health care cases – alleging that evidence of a "corporate scheme" and evidence of false claims can support an inference of causation and then a basis for extrapolation. Here, the Eleventh Circuit states that "untethered" evidence of corporate atmosphere is not sufficient insisting that linkage must be shown before misconduct can be found to have infected a particular claim for which the defendant can be held liable under the FCA. That holding may also help defense counsel argue against extrapolation from a sample for liability and damages because there is no linkage to the extrapolated claims.

The Medicare hospice benefit does not incorporate objective standards for physician certification of terminal illness. Rather, Congress placed the difficult task of prognostication squarely within physicians' clinical judgment. For the first time, a Circuit court has considered the question of falsity in the context of the Medicare hospice benefit, where the controlling condition of reimbursement is a question of physician's clinical judgment of likely future events. And the Court's answer is clear: a mere difference of reasonable opinion between physicians, without more, as to the prognosis for a patient seeking hospice benefits does not constitute an objective falsehood under the FCA.16

Footnote

1           United States v. AseraCare Inc, 176 F. Supp. 3d 1282, 1286 (N.D. Ala. 2016).

2           United States v. AseraCare Inc., No. 16-13004, slip op. at 3 (11th Cir. Sept. 9, 2019) (published).

3           Id. at 10.

4           42 U.S.C. § 1395f(a)(7)(A).

5           42 U.S.C. § 1395x(dd)(3)(A).

6           75 Fed. Reg. 70372, 70448 (Nov. 17, 2010).

7           Id.

8           AseraCare, 176 F. Supp. 3d at 1285.

9           AseraCare, No. 16-13004, at 33.

10          Id. at 38.

11          Id. at 39.

12          Id. at 38.

13          Id. at 48.

14          Id. at 51.

15          Id. at 56.

16          Id. at 48.

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