Judge Endorses Extrapolation Techniques for False Claims Act Whistleblowers

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In a lawsuit brought under the False Claims Act ("FCA") a federal district judge in Florida recently rejected a defendant's challenge to a statistical sampling and extrapolation methodology advanced by a qui tam plaintiff's expert witness in order to avoid offering into evidence each and every one of the allegedly false claims that were at issue in the case. In the court's opinion, Judge Steven D. Merryday recognized that "no universal ban on expert testimony based on statistical sampling applies in a qui tam action." The key takeaway for providers is the potential for expanded FCA liability, because courts may permit plaintiffs to use a sampling of claims – as opposed to the entire universe of claims at issue – in order to meet their burden of proof.

Case Summary

The qui tam plaintiff/relator, brought claims under the FCA and the Florida False Claims Act, alleging that his former employer, a nursing and rehabilitation center, "flagrantly upcoded" and "upcharged" for services at 53 Florida facilities. Because the evidence supporting the claims submitted by those 53 facilities was so voluminous, the qui tam plaintiff/relator sought to avoid a claim by claim approach and, instead, offered expert testimony based on a sampling of claims from which it would extrapolate the total amount of claims that were allegedly overpaid by Medicare and Medicaid.

The defendants argued that the expert testimony was inadmissible and that statistical sampling is impermissible in a FCA lawsuit. The court held that no such ban on this sort of evidence exists in FCA cases -- but stated that other defects in the expert's methods could result in exclusion, indicating that a Daubert hearing would best resolve any such issues/defects.

Last week's decision is not the first time that a court has permitted the use of statistical sampling as evidence in an FCA case. In fact, the court relied heavily upon a 2014 federal court decision in Tennessee, United States ex. Rel. Martin v. Life Care Centers of America, Inc. 2014 BL 276533 (E.D. Tenn. Sept. 29 2014), in which the court allowed the plaintiff's sampling and extrapolation methodology, and held that limiting the use of statistical sampling would restrict the effectiveness of the FCA to combat fraud.

At the onset of any FCA case, providers should be aware of the trend in federal FCA actions in which qui tam plaintiffs may have leverage in utilizing extrapolation techniques to prove FCA liability. Providers should begin to arm themselves with facts, as well as their own statistical experts, who can undermine the validity and reliability of the sampling approach and disqualify through a Daubert hearing a qui tam relator's expert witness.

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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