District Court: Government Need Not Provide Discovery on Allegedly False Claims Outside of the Government’s Selected Sample

Posted by Jaime L.M. Jones and Brenna Jenny

The Eastern District of Tennessee recently clarified the discovery implications of its September 2014 ruling (reported here) permitting the government to establish FCA liability based on a sampling of claims. See U.S. ex rel. Martin v. Life Care Centers of America, Inc., No. 08-cv-251 (E.D. Tenn. Feb. 18, 2015). In rejecting the defendant’s motion to compel discovery as to the allegedly false claims outside of the government’s sample, the court underscored the significance of its earlier ruling narrowing the evidence necessary to establish liability, and significantly constrained the government’s discovery obligations.

Well before the court’s September 2014 ruling, the defendant, a chain of skilled nursing facilities, had served on the government an interrogatory requesting that it “[i]dentify each false or fraudulent claim or false record or statement that you contend [defendants] knowingly presented or caused to be presented, or knowingly made, used, or caused to be made or used, in violation of the False Claims Act.” The government only provided claims information as to the ten patients identified in its complaint, and, following the court’s ruling, the government confirmed that it would only provide information relating to its sample of 400 patients. The defendant moved to compel the government to produce the information it had requested, arguing that, regardless of the government’s “trial strategy” to only present evidence as to a sample of patients, it was nonetheless entitled under the Federal Rules of Civil Procedure to “the foundational information on the claims it contends violated the FCA–and not just those that it has self-selected for proof at trial.”

The court denied the motion, ruling that the defendant was attempting to relitigate the same arguments regarding sampling that the court rejected in its September 2014 ruling and subsequent denial of the defendant’s motion to certify the decision for an interlocutory appeal. According to the court, allowing the defendant to conduct discovery as to claims outside of the government’s sample would require the very claim-by-claim review that the court previously determined to be unnecessary for establishing FCA liability. Thus, this court not only has lowered the government’s burden to establish liability for the submission of false claims but also has significantly lessened the government’s discovery obligations, particularly when alleging fraudulent schemes caused the submission of voluminous claims.

A copy of the court’s order can be found here.