Eleventh Circuit Rules In AseraCare Case That Disagreements In Clinical Judgment, Without Objective Falsity, Do Not Prove Fraud Under The FCA

On Monday, the U.S. Court of Appeals for the Eleventh Circuit issued its long-awaited and closely watched decision in United States v. AseraCare Inc.. The court ruled that a claim cannot be deemed false under the False Claims Act (FCA) based on a difference in clinical judgment. Instead, there must be proof of an objective falsehood. More than three years have passed since the U.S. District Court for the Northern District of Alabama issued the series of rulings that gave rise to the Eleventh Circuit case.

For at least two reasons, this case has captured the attention of both the FCA defense and the relators' bars and triggered legal attacks on the part of DOJ. First, the rulings followed a peculiar procedural path, as discussed below. Second, the district court weighed in on the closely followed question of whether, in FCA cases based on allegations of lack of medical necessity, physicians' clinical disagreements are sufficient to allege falsity and found that, absent objective falsity, they were not.

AseraCare is a qui tam FCA case filed by three former AseraCare employees who alleged that AseraCare, a hospice care provider, knowingly overbilled Medicare for hospice services by hiding information from physicians in order to obtain certifications of hospice eligibility for patients who were not in fact terminally ill. DOJ intervened and amassed a variety of evidence that it intended to use to prove falsity and knowledge, each of which is a required element of an FCA claim.

To establish falsity (i.e., that AseraCare had falsely certified patients as eligible for hospice care), DOJ relied at trial upon a medical expert who reviewed the patient files and determined that those records did not support AseraCare's patient eligibility certifications. Following trial, the jury reached a verdict against AseraCare on the issue of falsity as to 104 of the 123 patients it reviewed.

After deciding to grant AseraCare a new trial, the district court reconsidered, sua sponte, and granted AseraCare's motion for summary judgment. The district court judge explained that "this case boils down to conflicting views of physicians about whether the medical records support AseraCare's certifications that the patients at issue were eligible for hospice care. When hospice certifying physicians and medical experts look at the very same records and disagree about whether the medical records support hospice eligibility, the opinion of one medical expert alone cannot...