Courts are continuing to grapple with whether relators can use statistical sampling to prove liability in False Claims Act (FCA) cases.  As demonstrated by two recent cases, courts remain skeptical that relators can meet their burden by relying on sampling instead of proving liability as to each false claim allegedly submitted for payment. 

In United States ex rel. Wollman v. The General Hospital Corporation et al., the relator, a former anesthesiologist at Defendant Massachusetts General Hospital (“MGH”) brought suit under the FCA alleging that defendants fraudulently billed Medicare and Medicaid for “overlapping” surgeries in which a teaching physician concurrently performed multiple surgical procedures.  The relator contended, in particular, that defendants violated Medicare and Medicaid billing standards relating to overlapping surgeries, the administration of anesthesia, and informed consent.  Defendants moved to dismiss the relator’s claims on the grounds that her allegations did not meet the heightened standards for pleading fraud under Rule 9(b) of the Federal Rules of Civil Procedure.  In ruling on the motion to dismiss, the U.S. District Court for the District of Massachusetts noted that the relator provided “notable detail” with respect to the alleged facts surrounding the overlapping surgeries at MGH, including dates of the surgeries, surgeons, start times, duration, and types of surgeries.  The court also noted that the relator alleged statistical data related to the percentage of total knee replacements and total hip replacements for which Medicare was the primary payor, and inferred that MGH’s orthopedic surgeons performed concurrent surgeries that involved Medicare patients in violation of the FCA. 

However, the Wollman court found that the relator did not plead specifics as to the actual submission of claims.  To overcome the lack of specifics relating to the actual submission of claims, the relator asked the court to apply a pleading standard set forth in the First Circuit’s United States ex rel. Duxbury v. Ortho Biotech Products, 579 F.3d 13 (1st Cir. 2009), in which the First Circuit held that in cases where the defendant allegedly induced a third party to file false claims, a relator can satisfy Rule 9(b) by providing “factual or statistical evidence to strengthen the inference of fraud beyond possibility without necessarily providing details as to each false claim.”  Id. at 29 (emphasis added).  The Wollman court rejected the relator’s argument and granted defendants’ motion to dismiss without prejudice, noting that the case was not a third-party inducement case and so the more relaxed Duxbury standard did not apply.

In United States v. Conroy v. Select Medical Corporation, et al., a U.S. Magistrate Judge in entering an Order Concerning Discovery expressly stated that statistical “sampling is not an appropriate cure for oppressive, burdensome, and expensive discovery.”  No. 3:12-cv-00051-RLY-DML (S.D. In. Apr. 2, 2018).  The case involved allegations that a long-term acute care hospital extended or shortened patient stays depending on whether the stay would maximize payment under the relevant Medicare reimbursement methodology, without regard to the medical necessity of the stay or service.  The relators sought to use statistical sampling to determine “the number of fraudulent Medicare claims and the damages flowing from them . . . without ever having to examine medical information . . . .”  In a detailed discussion regarding sampling, the court noted that the relators “cite no authority for the proposition that providing that a particular Medicare reimbursement claim was fraudulent based on a theory of lack of medical necessity can be done by a random-sampling method that does not evaluate whether each particular claim for which the plaintiffs seek relief was actually knowingly false within the meaning of the FCA.”  The court went on to state that “plaintiffs have the burden to prove each false claim.”  (Emphasis in original.)

Together, these opinions reflect courts’ apparent continued hesitation to allow relators free rein to use statistical sampling to prove FCA liability.  The Wollman opinion is available here, and the Conroy opinion is available here.