Fourth Circuit Declines to Review Issue of Statistical Sampling Use in FCA Case

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On February 14, 2017, the U.S. Court of Appeals for the Fourth Circuit issued a long-awaited opinion in the case U.S. ex rel. Michaels v. Agape Senior Community, Inc. et al. (case number 15-2145 and 15-2147).  In this FCA case, the district court had ruled that the use of statistical sampling by the relators to prove FCA liability or damages was improper under the circumstances.  On interlocutory appeal, the case was poised to be the first ruling from a Federal appeals court on the issue of the use of statistical sampling in FCA cases.  However, the Fourth Circuit declined to review the statistical sampling issue, stating that it was not a pure question of law, and therefore interlocutory appeal had been “improvidently granted” by the court. Thus, the issue of the use of statistical sampling in FCA cases remains governed by currently-split opinions from Federal district courts. 

As we reported in the October 15, 2015 issue of Health Headlines, in Agape, two whistleblowers sued several elder care facilities, alleging that the facilities fraudulently billed Medicare and other Federal health care programs for services that were not actually provided or that were provided to patients who were not eligible for the services.  During discovery, the parties clashed over the issue of whether the relators should be able to prove liability or damages by using statistical sampling.  In June 2015, the district court held that statistical sampling should not be allowed in the case, since (i) the evidence (i.e., medical records) was available for review, and (ii) the medical necessity determination for each patient in the case involved a “highly fact-intensive inquiry involving medical testimony after a thorough review of the detailed medical chart.”  In reaching its conclusion, the district court acknowledged that “the cases are legion on each side of the issue [of statistical sampling use in FCA cases], and ultimately it is [the court’s] responsibility to determine the fairest course of action based upon the facts presented.” 

While the Fourth Circuit initially agreed to hear this issue on interlocutory appeal, it became evident during oral arguments that the court was reviewing whether the issue was appropriately reviewable.  As we reported in the March 8, 2016 issue of Health Headlines, the Government argued against the court’s review of the statistical sampling question.  Ultimately, the court therefore sided with the Government that this issue was not appropriately reviewable on interlocutory appeal.    

The Fourth Circuit’s opinion is available here.  The district court’s opinion is available here.  

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