Trial Court Delivers Stunning Defeat to DOJ In AseraCare

Today, the district court in the AseraCare case delivered the coup de grace to the Department of Justice, granting summary judgment for AseraCare after previously vacating a jury’s verdict in favor of DOJ.  In so doing, the court’s brief order emphasizes that disagreements over medical necessity, standing alone, provide no basis for an FCA claim.  See Order in United States v. AseraCare Inc., No. 12-cv-00245 (N.D. Ala. Mar. 31, 2016).  The district court’s holding that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law” buttresses potential defense arguments in suits involving issues of medical necessity or other judgment calls, including alleged upcoding.

This case first drew attention for several reasons.  The district court was one of the first to permit proof of liability through statistical sampling (as reported here).  Additionally, the court took the unusual step of bifurcating the trial into two phases, one relating to falsity and the other encompassing the remaining elements of the government’s burden of proof (discussed here).  The proceedings then garnered significant notice last November when the court vacated the jury’s verdict that most of the patient records in the government’s sample did not meet hospice eligibility (see here).  According to the court, its jury instructions were erroneous because they failed to clarify that “a mere difference of opinion, without more, is not enough to show falsity.”  The court then sua sponte considered summary judgment for AseraCare, inviting the government to direct the court to objective evidence of falsity, beyond the difference of opinion created through the testimony of each side’s expert.

Today, the court concluded that the government failed to prove falsity because it had only presented evidence of a difference of opinion among physicians.  As the court explained, when two clinicians “look at the very same medical 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.”  The court expressed concern over the implications of the government’s proposition that it can conjure up proof of falsity through the testimony of one medical expert who disagrees with a patient’s treating physician.  The result would be to subject hospice providers to potential FCA liability “any time the Government could find a medical expert who disagreed” with a treating physician, and the court “refuses to go down that road.”

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