Fourth Circuit May Address Use of Statistical Sampling in False Claims Act Actions

Court has the opportunity to assess the use of statistical sampling/extrapolation as a method to prove FCA liability or damages.

Courts require that plaintiffs prove each element of a legal claim with evidence — mere suggestion is not enough. Extrapolation suggests what damages or liability may be based on a statistical sample but does not tell anyone what damages or liability actually are. Not surprisingly, therefore, extrapolation is a controversial issue for the civil False Claims Act (FCA) bar because extrapolation allows government authorities and whistleblowers alike to prove damages, or even liability, without the claim-by-claim proof typically required in highly fact-dependent civil cases. On June 25, 2015, in United States ex rel. Michaels v. Agape Senior Community, Inc., the District of South Carolina certified an interlocutory appeal to the Fourth Circuit to answer two questions related to a qui tam action brought under the FCA: (1) does the Government have a right to reject a settlement in a qui tam action to which it has not intervened; and (2) can a relator use statistical sampling to prove liability or damages in an FCA action? This Client Alert discusses the second question, which will be addressed for the first time by an appellate court if the Fourth Circuit accepts the appeal petition.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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