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FCA Sampling Case Left Undetermined

In September 2015, the Fourth Circuit agreed to hear the United States ex rel. Michaels v. Agape Senior Community, Inc., cv-15-2147, case in which Agape Senior Community, Inc. ("Agape") allegedly improperly billed Medicare and Medicaid for certain hospice services, thereby violating the False Claims Act ("FCA"). When oral arguments were held on October 26, 2016, the Fourth Circuit was unlikely to determine whether statistical sampling can provide evidence of FCA liability, which has been a decision many lower courts hoped would offer guidance.

Plaintiffs relied on statistical sampling to establish their claims that Agape committed fraud. Statistical sampling has been controversial because it examines a subset of claims and extrapolates any fraud findings to the larger universe of claims, which helps streamline litigation but may also interfere with the defendants' due process protections. Although most district courts have allowed statistical sampling, there has not been any firm legal decision on the matter. Even the Department of Justice ("DOJ") has let the district courts make the decision on a case-by-case basis.

The three-judge panel of the Fourth Circuit admitted that they may have acted hastily in deciding to hear the case. The panel suggested that the sampling issue is an evidentiary matter within the discretion of the district judge, and not a matter of law. Plaintiffs insisted that a denial of the use of sampling is in fact a matter of law, however Judge Robert B. King rebuked that saying, "It looks to me like it's an evidentiary ruling that's committed to the discretion of the district judge."

Another issue discussed was whether or not the DOJ had the unreviewable right to veto settlements in FCA cases it had not joined. The DOJ previously rejected a $2.5 million settlement offer. Although the DOJ rarely vetoes settlements in FCA cases, the whistleblowers and Agape asserted that the DOJ's unreviewable power was an important discussion. However, the Fourth Circuit appeared likely to uphold the DOJ's ability to reject the settlement without review. Judge King noted the court may not have the ability to guide the U.S. Attorney General's action regarding settlements. In the end, neither of the issues discussed were officially decided.

The legal team at SFMS has significant experience litigating FCA matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier ([email protected]) or Chiharu Sekino ([email protected]). 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, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (, 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

Source: Overley, Jeff. "Big FCA Sampling Case Looks Like A Dud At 4th Circ." Law 360. Portfolio Media, Inc. 27 Oct. 2016. Web.

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