In United States ex rel. Glenda Martin and ex rel. Tammie Taylor v. Life Care Centers of America (2014 U.S. Dist. LEXIS 142660), Federal Judge Harry Mattice of the Eastern District of Tennessee found that the Government is permitted to extrapolate from a sample of fraudulent claims to attempt to show larger liability under the False Claims Act ("FCA"). The United States argued that the history and purpose of the FCA support the use of statistical sampling in attempting to prove that an entity is defrauding the Government. Life Care Centers of America ("LCCA"), based in Cleveland, Tennessee, is now appealing to the Sixth Circuit, arguing that statistical sampling cannot satisfy the Government's burden of proof and that its due process rights are negatively affected by such statistical extrapolation.1
The case was initially brought in 2008 and it merged with a similar 2012 lawsuit. The Government reimburses nursing facilities the most money for claims submitted under its "Ultra High" level, which require the facilities to perform a minimum of 720 minutes/week of rehabilitation on a beneficiary. Relators and the United States allege that LCCA has illicitly extracted excess reimbursement payments from the Government's TRICARE and Medicare programs2, and that LCCA provided "Ultra High" rehabilitation services to beneficiaries that did not require them and that the services "were completely unrelated to beneficiaries' actual conditions, diagnoses, or needs."3 Moreover, Relators and the Government allege that corporate leaders at LCCA pressured its therapists to perform unnecessary (and, at times, harmful), additional rehabilitation to ensure that the maximum amount of patients reached the "Ultra High" level in order to secure maximum reimbursements from the Government.4
Judge Mattice, in issuing his decision allowing statistical sampling, noted that the method had been used in cases since the 1920s. He held that while it has usually been used to determine damages, because of Medicare's growth and the large amount of claims, it is acceptable for the United States to utilize statistical sampling in determining the magnitude of the liability against LCCA. Judge Mattice also held that the number of claims makes it impractical to review each claim individually and that the Court believes in reducing the administrative burden on the Government when it is reasonable to do so. LCCA argued that statistical sampling is not proper in this case because the claims are too different, but Judge Mattice held that statistical sampling would be unnecessary if the claims were identical.5 LCAA is expected to appeal to the Sixth Circuit.
The legal team at SFMS has significant experience in litigating FCA claims. If you have any questions regarding this subject or this posting, please contact James E. Miller (email@example.com) or Michael Ols (firstname.lastname@example.org). We can also be reached toll-free at (866) 540-5505.
Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains an affiliate office in London, England and is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.