The U.S. Court of Appeals for the Eleventh Circuit upheld a district court’s finding that a reasonable difference of medical opinion about the defendants’ claims for reimbursement, by itself, was not sufficient to demonstrate falsity. The defendant had certified terminally ill patients for hospice care and billed Medicare accordingly. The government argued that its expert witness found the patients were not terminally ill and therefore these claims for payment were false, but the appeals court agreed with the district court that claims could not be rendered false solely on the argument that two medical experts disagreed about a diagnosis. The court affirmed the lower court’s decision to void the result of the first trial—which was favorable to the government—and order a new trial.
However, the appeals court reversed the lower court on its grant of summary judgment to the defendant in a post-trial hearing. The appeals court held the government should have been allowed to rely on the whole record, not just the trial record, in making its case that the dispute extended beyond the difference of medical opinion to include corporate directives pressuring employees to certify patients for more expensive care.
The case began when three former AseraCare employees filed a qui tam suit alleging that AseraCare knowingly submitting unsubstantiated Medicare claims in violation of the False Claims Act. The government intervened, arguing that AseraCare knowingly certified patients for hospice care that they did not need, because it was financially lucrative. The government argued the defendants pressured sales and clinical staff to meet aggressive monthly quotas for patient intake, and discouraged meaningful physician involvement in eligibility determinations. In support, the government noted that its medical experts found that AseraCare submitted documentation claiming certain Medicare recipients were terminally ill, when in fact they were not. Of a sample of 223 patients AseraCare recommended for hospice care, the government identified 123 who were not terminally ill at the time of the certification.
The court noted the government’s case was entirely based on this difference of medical opinion. There were no allegations that AseraCare billed for phantom patients, that certifications or medical documentation were forged, or that AseraCare employees lied to certifying physicians or withheld critical information regarding patient conditions.
Before the district court, AseraCare moved for summary judgment on the grounds the government failed to demonstrate falsity. The defendants asked the court to decide whether the government’s medical-opinion evidence was sufficient to establish the threshold element of falsity. This motion was denied, and AseraCare then moved to bifurcate the trial into one phase to consider the falsity element, and a second phase to consider the remaining elements and the government’s common law claims.
The district court granted this motion over the government’s strong objection. The court explained that “pattern and practice” evidence showing deficiencies in AseraCare’s admission and certification procedures could help establish AseraCare’s knowledge of the alleged scheme to submit false claims, but could confuse the issue of falsity. The court explained that the falsity of the claims could not be inferred by reference to AseraCare’s general corporate practices unrelated to specific patients. With this rationale, the court limited the admissibility of certain evidence during the falsity phase of the trial.
A jury decided against AseraCare on the question of falsity for 104 of the 123 patients identified by the government, largely based on the testimony of the government’s expert witness. However, AseraCare successfully argued the court articulated the wrong legal standard to the jury. The court concluded that it should have instructed the jury: (1) that the FCA’s falsity element requires proof of an objective falsehood; and (2) that a mere difference of opinion between physicians, without more, is not enough to show falsity.
The court held that a new trial was necessary to cure the prejudice caused by the error. However, the court also decided to consider summary judgment sua sponte under Federal Rule of Civil Procedure 56(f)(3). Specifically, the court informed the parties that it intended to consider whether the government, under the correct legal standard, had sufficient admissible evidence of more than just a difference of opinion to show that the claims at issue are objectively false as a matter of law. After a hearing, the court granted summary judgment to in AseraCare’s favor on the basis of the newly-adopted legal standard.
On appeal, the government argued that the district court’s initial instructions to the jury—that a claim is ‘false’ if it is an assertion that is untrue when made or used and that claims to Medicare may be false if the provider seeks payment, or reimbursement, for health care that is not reimbursable—were correct. The government argued it could demonstrate falsity by providing its own expert witness testimony about a patient’s eligibility for hospice care.
In its analysis, the appeals court noted that none of the relevant language states that the documentary record underpinning a physician’s clinical judgment must prove the prognosis as a matter of medical fact. Indeed, CMS recognized in crafting the implementing regulations that predicting life expectancy is not an exact science. The framework also does not suggest that a patient’s medical records must unequivocally demonstrate to an unaffiliated physician, reviewing the records after the fact, that the patient was likely to die within six months of the time the certifying physician’s clinical judgment was made. Rather, the framework allows the responsible physician to make a reasonable judgment about care.
The government argued that the physician’s decision must be supported with relevant documentation, but the court found that while the record must contain documentation of the patient’s health, the medical prognosis itself was based on the physician’s judgment and interpretation of the record, not the paperwork itself.
Next, the appeals court considered whether a physician’s clinical judgment regarding a patient’s prognosis be deemed “false.” The court agreed with the district court that two physicians could reasonably arrive at different conclusions about a patient’s life expectancy, and that neither would be considered wrong. The court again noted that the regulations to not establish that a clinical judgment could be rendered false if a post-hoc review by an unaffiliated decision suggested a different conclusion. The regulations acknowledge that physicians cannot be certain when death might occur, and therefore a claim for hospice cannot be rendered false merely because a physician erroneously concluded that the patient had a life expectancy of less than six months.
In short, a claim cannot be false unless the underlying clinical judgment reflects an objective falsehood. The court held that a reasonable difference of clinical opinion did not meet this standard. The appeals court agreed that the government had to demonstrate something more than a difference of opinion to establish falsity. In the end, the court agreed that the district court’s initial instructions to the jury were lacking and affirmed its decision to grant a new trial.
Next, the appeals court considered whether the district court’s grant of summary judgment was correct. As noted, the district court found that the government’s evidence of falsity was insufficient to allow it to proceed further, and granted summary judgment.
The government argued that it should have been allowed to present its additional evidence of wrongdoing during the summary judgment hearing, which it had intended to present during the second phase of the original trial. The appeals court agreed that the district court should have considered all the evidence before granting summary judgment. The appeals court noted the government had prepared additional evidence that it was not allowed to introduce during phase 1 of the trial. For example, the government had witnesses who testified that AseraCare had a deliberate practice of not giving physicians relevant, accurate, and complete information about patients whose certifications for hospice the doctors were being asked to sign.
However, because the government had not denominated this evidence as proof of falsity during this first phase—but instead as evidence of context—the district court refused to consider it as evidence of falsity in this post-verdict summary judgment phase. Similarly, the district court declined to consider evidence from AseraCare’s internal and external auditors criticizing the company because the certifying medical directors were not adequately involved in making initial eligibility determinations and did not consistently receive medical information prior to the initial certification.
The district court held the government had failed to disclose that it would use this evidence to prove falsity, but the appeals court found that the government had disclosed this evidence during the initial discovery period, when it had no idea the trial would be bifurcated and clearly assumed that all of its evidence would be heard by the jury in one proceeding.
While the appeals court agreed with the district court’s decision to grant a new trial based on the incorrect standard for proving falsity, it disagreed with the court’s decision barring the government from presenting evidence during the summary judgment proceedings. Therefore, the appeals court remanded the matter back to the district court for further consideration of the summary judgment motion.
