By Andy Liu, Robert Rhoad, and Jason Lynch
Most False Claims Act (“FCA”) watchers have known that AseraCare was coming. The case addresses a common question in health care fraud cases: when, if ever, can a doctor’s clinical judgment regarding a patient’s prognosis be “false”? After a tortured procedural history, we have a thoroughly reasoned answer from the Eleventh Circuit: “a reasonable difference of opinion among physicians reviewing medical documentation ex post is not sufficient on its own to suggest that those judgments—or any claims based on them—are false under the FCA.”[1]
The case concerns the hospice benefit under Medicare. The requirements for that benefit can be summarized as follows.[2] A patient is eligible for the benefit if she is terminally ill, meaning that she has six months or less to live. That prognosis must be made by a physician, who certifies as much in writing. That certification must be included in the patient’s medical record, along with supporting documentation. Once admitted to the hospice, the patient must be re-certified periodically. The Medicare framework recognizes that physicians’ judgments will not be perfect: it will not deny benefits merely because the patient lives longer than six months, or even if the patient is ultimately discharged (alive) from hospice care.
The relators alleged that AseraCare, the owner and operator of some 60 hospices across 19 states, was knowingly claiming hospice benefits for patients who were ineligible. The government intervened and mostly based its case on a statistical sampling model, which, while hotly contested in district court, was not addressed on appeal.
Seeking summary judgment, AseraCare put a straightforward question to the district court: is the Government’s medical expert opinion enough, on its own, to establish falsity of AseraCare’s claims? The district court denied AseraCare’s motion and set the case down for trial.[3]
That is where the case took a curious turn. The district court granted AseraCare’s motion to bifurcate the trial: Phase I for falsity and Phase II for knowledge.[4] That way, the jury would not be prejudiced by evidence of AseraCare’s knowledge as the jurors tried to determine whether the claims were false to begin with. This led, predictably, to heated disputes over whether certain evidence went to falsity or knowledge. With regard to “pattern and practice” evidence, in particular, the government argued strenuously that it went to both knowledge and falsity.[5] But the district court disagreed and kept the evidence out of Phase I.
Phase I took eight weeks to try. The government’s medical expert testified at length about how 123 of the 223 patients sampled (from a universe of 2,180) were not, in fact, terminally ill and thus, were ineligible for hospice benefits. Nevertheless, the expert expressly stopped short of opining that AseraCare’s medical expertwas “wrong.”[6] The jury was thus presented with “a fundamental difference of professional opinion” and had its role reduced to reviewing medical records and deciding which expert’s testimony was more persuasive.[7] Importantly, there was never any dispute that each patient’s certifications were supported and documented; the only dispute was whether the certifying physicians were correct in their diagnoses.
After the jury found overwhelmingly for the government, the district court began to have second thoughts. Observing the trial itself left the court “convinced” that “a difference of opinion is not enough,” and that it had committed reversible error by failing to instruct the jury as such.[8] The court set aside the jury’s verdict and ordered a new trial with new jury instructions.
But it also went one step further. After ordering a new trial, the district court (sua sponte) ordered summary-judgment briefing on the question whether the evidence adduced in Phase I could, as a matter of law, establish falsity. The court granted summary judgment to AseraCare, holding that the government had “presented no evidence of an objective falsehood for any of the patients at issue.”[9] The government appealed both summary judgment and the grant of a new trial.
The legal issue prompting a new trial is the more consequential issue, and it was addressed first by the Eleventh Circuit. Canvassing the statutory and regulatory framework for hospice benefits under Medicare, the court found that the “framework signals, and CMS itself has acknowledged, that no [] certitude can be expected of physicians in the practice of treating end-of-life illness.”[10] Because the certification implicates the physician’s clinical judgment, that certification cannot be false unless it reflects an “objective falsehood.”[11] Thus, “the mere difference of reasonable opinion between physicians, without more,” is not enough.[12]
That left the question of what “more” would suffice. The Eleventh Circuit offered three examples:
- Where a certifying physician fails to review a patient’s medical records or otherwise familiarize himself with the patient’s condition before making the diagnosis.
- Where a plaintiff proves that a physician did not, in fact, subjectively believe that his patient was terminally ill at the time of certification.
- Where expert evidence proves that no reasonable physician could have concluded that a patient was terminally ill given the relevant medical records.[13]
Going forward, plaintiffs will likely try to fit their claims into one or more of these buckets. This is the principal teaching of AseraCare.
While agreeing that a new trial was warranted, the Eleventh Circuit reversed the grant of summary judgment. Remember the evidence that was excluded, over the government’s objections, from Phase I? The court of appeals agreed that at least some of it was probative of falsity, as well as knowledge. Thus, the district court should have considered summary judgment, if at all, based on the whole record—not just the record admitted in Phase I of the trial.
The primary holding is undoubtedly that mere disagreement of medical experts, without more, will not suffice to prove falsity. This will resonate throughout federal health care cases, many of which turn on physician certifications of medical judgment, of the sort in AseraCare. Secondarily, while not forbidding the kind of bifurcation that occurred in the district court, the resulting confusion over the proper record—and the Eleventh Circuit’s intimation that evidence is not so easily bifurcated between falsity and knowledge—defendants are unlikely to see such bifurcation again in the future.
[1] United States v. AseraCare, Inc., — F.3d. –, 2019 WL 4251875, at *15 (11th Cir. Sept. 9, 2019).
[2] For the applicable statutes and regulations, see id. at *2-3 (citing 42 U.S.C. §§ 1395f(7)(A) (requiring physician certification that patient is “terminally ill”), 1395x(dd)(3)(A) (defining “terminally ill,” as a life expectancy of six months or less); 42 C.F.R. § 418.22(b)(2) (requiring accompanying “[c]linical information and other documentation that support the medical prognosis” to be included “in the medical record with the written certification)); see also id. at *10-13.
[3] The district court found AseraCare’s proposed “reasonable doctor” standard “appealing and logical,” though unprecedented in the Eleventh Circuit, and even certified the question for interlocutory appeal. Id. at *5. Unfortunately for all involved, the court of appeals declined to step in at that time. Id. Had it done so, years of ultimately futile litigation might have been avoided.
[4] The bifurcation issue was not raised on appeal. See id. at *6 n.5 (“The Government continues to complain on appeal that bifurcation of the trial was ‘fundamentally unfair’ and confused the issues, albeit it does not expressly challenge on appeal the district court’s decision.”).
[5] Id. at *6.
[6] Id. at *6.
[7] Id. at *7.
[8] Id. at *8.
[9] Id. at *9.
[10] Id. at *14.
[11] Id. at *14.
[12] Id. at *18 (emphasis added).
[13] Id. at *15.
