As you can likely imagine, the sheer volume of evidence that emerges during the investigation and discovery phases of a False Claims Act case can quickly overwhelm the court and create logistical difficulty for the party tasked with presenting such evidence to support an assertion of liability. For instance, if a widespread, national pharmacy services organization or hospital management company is engaging in fraud as part of its regular business practice, the number of potential false claims–which include any submission for repayment on behalf of any Medicare, Medicaid, or TRICARE enrollee–could quickly reach the hundreds of thousands. For this reason, courts have begun to consider the use of statistical sampling to allow plaintiffs (i.e., the relator and federal government) the opportunity to expose the breadth of the fraudulent activity while still presenting a manageable sample case to the court.
Details of U.S. ex rel. Martin v. LifeCare Centers of America
The most recent case involving statistical sampling is known as U.S. ex rel. Martin v. LifeCare Centers of America and involves widespread, long-term allegations of healthcare fraud. The defendant is a corporation owning over 200 long-term care facilities across the United States, many of which serve elderly Medicare patients in need of skilled nursing services. From 2006 through 2011, the Medicare program paid over $4.2 billion to LifeCare for services including “inpatient services at its nursing facilities.” LifeCare also employs a gamut of therapists, including physical therapists and assistants, speech-language pathologists, and occupational therapists. Under Medicare guidelines, a patient in need of skilled nursing or therapy treatments is eligible for coverage for only a certain number of days, generally 100. Allegedly, LifeCare directed its centers to maximize patient time in the facility in order to increase profits and payouts from government healthcare programs, thereby triggering liability under the False Claims Act.
The government set forth several examples of medically unnecessary, unrealistic therapy treatments–many of which targeted extremely elderly, ill, dying, or non-ambulatory patients. Moreover, the government’s complaint reveals that LifeCare centers were pushing excessive, unnecessary rehabilitation sessions with little or no physician oversight. The government’s complain includes the following examples:
- Frail, 78-year old male patient subjected to 807 minutes of therapy within the first week of his stay at a Life Care center, including 269 minutes of therapy during a time in which the patient was admitted for palliative care only.
- 85-year old female patient with a history of obesity and blindness was subjected to 77 consecutive days of repetitive arm movements.
- “Extremely frail” 88-year old patient, noted as “very lethargic, difficult to arouse,” was placed in a standing frame and subjected to 42 minutes of therapy. The patient died five days later.
- 92-year old patient dying of metastatic cancer, spitting up blood, and participating in palliative radiation was subjected to 30 minutes of rigorous therapy per day, including the day he died.
In preparing for this False Claims Act case, the government estimated that the universe of false claims pertaining to LifeCare’s medically unnecessary treatments was over 154,000. For this reason, the government sought to present a random sample of 400 admissions across 82 facilities. In its motion for summary judgment, the defendant claimed that the government could not possibly satisfy its burden of proof by simply setting forth a sample and that statistics and extrapolation are insufficient to establish liability.
The court began its analysis with a brief historical review of the False Claims Act, highlighting its intended purpose to stop “the massive frauds perpetrated by large contractors during the Civil War.” The court then discussed the fact that not much has changed since the Civil War era, and rampant fraud continues to plague the federal government–particularly within healthcare programs.
From there, the court examined the use of statistical sampling in other types of cases, noting that statistical samples are generally used to provide a “means of determining the likelihood that a large sample shares characteristics of a smaller sample.” The court explained that this method has proven successful for many years, across many types of cases, including antitrust, employment discrimination, toxic torts, and voting rights cases. With regard to the False Claims Act, however, case law is scarce, and sampling is generally used to determine damages, not actual liability.
In tomorrow’s post, we will continue to explore the court’s analysis of statistical sampling within the context of False Claims Act litigation, as this development could significantly impact the success of larger, more pervasive claims.
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