District Court Refuses to Reconsider Bifurcation of Trial between Proof of Falsity and Other FCA Elements

Posted by Kristin Graham Koehler, Monica Groat, and Marina Romani (Summer Associate)

As we have previously discussed on this blog, a court in the Northern District of Alabama last month granted AseraCare’s motion to bifurcate its trial. On June 25, 2015, the court refused the Government’s request to reconsider that decision.

On May 20, 2015, the court bifurcated AseraCare’s trial into two phases—the first on the “falsity” element of the Government’s FCA claim, and the second on all other elements and claims—to avoid prejudice to AseraCare and jury confusion. Three weeks later, the Government moved for reconsideration, arguing that bifurcation is inappropriate because it is “an extraordinary and unprecedented action.” According to the Government, a bifurcated trial would require the court to “pars[e] each piece of evidence on a document-by-document (potentially line-by-line) basis,” resulting in “jury confusion, unnecessary delay, significant duplication, and disruption to witnesses.” The Government also maintained that evidence regarding AseraCare’s knowledge of falsity is “not prejudicial or confusing.”

In denying the motion to reconsider, Judge Bowdre rejected the Government’s argument that bifurcation is inappropriate because it is novel, reasoning that “[j]ust because a trial technique has never been done does not preclude the court from using its discretion to do so,” and that an FCA trial involving Medicare hospice benefits is also unprecedented. With regard to the Government’s suggestion that a bifurcated trial would result in duplication and confusion, the court referred to a May 25, 2015 status conference during which Judge Bowdre clarified that evidence used in phase one to determine the falsity of specific claims “must have time and place connection to the alleged false claim.” According to the Court, this distinction between the two phases will therefore be clear and not lead to document-by-document analysis or jury confusion. Finally, the court reiterated that “a claim is either false or not without evidence of corporate practices related to that claim,” and bifurcation is necessary to avoid undue prejudice.

This litigation is the first instance of a bifurcated FCA trial, and much remains to be seen in terms of how the trial actually will play out. Depending on how it goes, future defendants, armed with the possibility of bifurcation, may be more confident during settlement talks and in proceeding to trial.

Copies of the Government’s motion and the court’s memorandum opinion can be found here and here.