UNDERSTANDING THE ASERACARE CASE & MEDICAL NECESSITY
In September 2019, the U.S. Court of Appeals for the Eleventh Circuit issued its decision regarding a recent whistleblower lawsuit. The case in question was United States v. AseraCare. The court ruled that the claim was not false under the False Claims Act because of a difference in clinical judgment. Their ruling was that there must be objective proof of falsehood and fraud before winning a qui tam claim.
This case was important for numerous reasons. The main reason was that in ruling on False Claims Act cases based on lack of medical necessity, the court provided an outline for winning those cases. Proving fraud needed more than just proof of clinical disagreements – the specific fraudulent activity must be present.
In order to understand the impact this case has on future qui tam FCA cases, it is important to understand the case itself.
UNDERSTANDING THE LAWSUIT AGAINST ASERACARE
AseraCare is a hospice provider that is a subsidiary of Plano, Texas-based Golden Living. The for-profit, multi-state hospice and palliative care chain provides care to terminally ill patients. In 2008, 2009, and 2010, former employees of AseraCare accused them of engaging in Medicare fraud.
Three former AseraCare admission nurses alleged that AseraCare knowingly overbilled Medicare for hospice services. They alleged that the hospice care provider hid information from physicians in an attempt to obtain certifications of hospice eligibility for patients who were not terminally ill. They also accused AseraCare of encouraging staff to aggressively target terminally ill patients to help offset their numbers and further evade the detection of fraudulent billing practices.
The U.S. government joined the whistleblower lawsuit in 2012. The three lawsuits were consolidated and transferred to U.S. District Court for the Northern District of Alabama. They sought more than $200 million in fines and penalties.
The lawsuit accused AseraCare of knowingly submitting false Medicare claims. The Department of Justice gathered information and evidence that they believed would help prove falsity. The information they gathered relied on a medical expert who reviewed the patient files and disagreed with AseraCare’s patient eligibility certifications.
In 2015, Judge Karon Owen-Bowdre was overseeing the trial. She decided to split the trial into two separate phases in order to reduce jury confusion. The first phase focused specifically on the proving falsity as required by the FCA. Proving medical necessity fraud requires proof of falsity. The jury examined the medical records of 121 patients and determined that AseraCare submitted false claims for 104 of them.
Despite these findings, the court never proceeded to the second phase of the trial. The Judge granted AseraCare a new trial on the grounds that she did not provide complete instructions to the jury. The lawsuit was tossed out of court in the spring of 2016.
The Justice Department appealed the case and the case went to the 11th Circuit Court of Appeals, where they vacated the district court’s grant of summary judgment to AseraCare. They determined that a difference in clinical judgment was not enough to prove the falsity of the assessment. They also concluded, however, that the government should have been allowed to rely on the entire record to prove otherwise. When the district court broke the case into two phases, the government was not allowed to rely on the entire record.
The Eleventh Circuit’s ruling will make it more challenging for an FCA plaintiff to present evidence of fraud in hospice cases. However, a more rigid set of criteria for Hospice eligibility determination may help reduce the importance of clinical judgment in these cases. As of now, there are numerous places in our healthcare system that rely on physician judgment for Medicare reimbursement. This creates avenues for fraud. However, plaintiffs must prove falsity and knowledge in order to win FCA cases. This proof must be more substantial than disagreements in clinical judgment between two physicians.
CONTACT OUR FALSE CLAIMS ACT ATTORNEYS TODAY
At Price Armstrong, we have extensive experience litigating Medicare fraud cases under the False Claims Act. We help maximize recovery for whistleblowers and offer confidential and complete legal services every step of the way. We work on a contingency basis, further helping whistleblowers expose Medicare fraud without the risk. Call us today at (2015) 208-9588 for a free initial consultation and review of your case.