Hospice Provider AseraCare Wins Victory in False Claims Case

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By Eric Topor

April 1 — Hospice provider AseraCare won a major victory over the federal government March 31 after a federal district court granted the provider summary judgment on all remaining allegations that patients were falsely certified as eligible for hospice care under Medicare, closing the case.

The U.S. District Court for the Northern District of Alabama held that the disputed medical opinion of one expert witness about whether 123 patients were eligible for hospice care couldn't by itself prove the falsity of the claims.

The court said a medical expert's disagreement with the clinical judgment used to certify an AseraCare patient can't prove falsity “as a matter of law” without some additional “objective evidence of falsity.”

AseraCare counsel J. S. “Chris” Christie Jr. with Bradley Arant Boult Cummings LLP in Birmingham, Ala., told Bloomberg BNA April 1 that the court’s holding on the required falsity standard could be applicable to “many different health-care providers in different types of health-care settings,” in addition to those in the hospice industry.

He added that both whistle-blowers and the government have “numerous lawsuits pending” against hospices around the country that allege false claim submissions “based on a difference in physician opinion.”

Christie said the decision was “a great result for my client.” Christie said the court's opinion was “well-reasoned,” and “does not leave much for an appeal” from the government, though it “is likely to file one.”

Experts Weigh In

Latham & Watkins LLP attorney Daniel Meron told Bloomberg BNA April 1 the decision will have a “tremendous, long lasting effect” if it's affirmed on an expected appeal.

Meron said the government is pursuing FCA cases against providers based on an opinion from the government's “own medical expert” that treatments weren't medically necessary. This decision “established that disagreement between medical professionals can't establish falsity” of a claim, he said.

Meron said the court's reasoning was applicable to a “broad array of settings” beyond just hospice care.

Katie McDermott with Morgan, Lewis & Bockius LLP in Washington agreed, telling Bloomberg BNA on April 1 that “this particular decision by a well-regarded jurist is thoughtful and explains the issue with elegant and devastating simplicity.” McDermott added that the ruling “will have probable influence and may become a strong precedent for other courts considering these issues.”

McDermott said health-care providers have been dogged by differences in medical opinion being labeled as fraud “with no evidentiary nexus to actual false claims or any evidence of objective falsehood.” McDermott said she expected this theory of false claims liability “will increasingly be rejected by more courts.”

AseraCare said in a statement provided to Bloomberg BNA April 1 that it “believes strongly that hospice is an important aspect of the continuum of care and is pleased that this matter has been resolved in a way that will not create needless barriers for patients who elect the Medicare hospice benefit.”

A spokeswoman for the Department of Justice told Bloomberg BNA April 1 that the DOJ was reviewing the decision and declined to comment further.

McDermott said the DOJ “may continue to face rough sledding on its core legal strategy of asserting that retrospective clinical disagreement can alone establish falsity under the FCA.”

Falsity Evidence Lacking

The court granted AseraCare a new trial on Oct. 23, 2015, after announcing it committed a reversible error in instructing the jury on the standard for falsity, and asked the government to produce additional objective evidence that the hospice claims were false, which it failed to do.

Judge Karon O. Bowdre noted that even the government's expert medical witness (physician Solomon Liao) changed his opinion from 2010 to 2013 about the hospice eligibility of AseraCare patients based on the review of the same medical records.

Liao stated that he “was not the same physician in 2013 as I was in 2010,” though he maintained that both sets of medical conclusions were reasonably accurate.

Meron said this particular case was “a bad test case for the government,” because it involved a physician's prognosis (whether a patient isn't likely to live beyond six months and is therefore eligible for hospice benefits), rather than a more certain diagnosis. However, Meron said, the “logic of the opinion would also apply to a diagnosis” scenario.

Bowdre said allowing a “mere difference of opinion among physicians alone to prove falsity would totally eradicate the clinical judgment required of the certifying physicians.”

Bowdre noted that the government didn't dispute that each of the AseraCare patients at issue were certified for hospice care by a physician, and made no argument that the patients' medical records were false or that the certifications were in some way compromised.

Expert witness testimony was an issue in the court's December 2014 order in which it excluded the government's marketing expert witness because the witness didn't have any expertise in the hospice industry .

Bradley Arant Boult Cummings LLP and Whyte Hirschboeck Dudek SC represented AseraCare. The DOJ and the U.S. Attorney's Office for the Northern District of Alabama represented the government.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com