346 F. Supp. 3d 669
D.N.J.2018Background
- Relators (former Care Alternatives employees) sued under the False Claims Act alleging Care Alternatives routinely admitted and recertified ineligible hospice patients to obtain Medicare/Medicaid reimbursements (claims relate to 2006–Oct. 23, 2007); United States investigated for seven years and declined to intervene.
- Care Alternatives operated hospice programs with interdisciplinary teams (IDTs), independent/contracted certifying physicians, compliance/audit programs, and accreditation; payroll for medical directors was fixed, not per-referral.
- Relators identified 15 patients in the amended complaint as allegedly ineligible; Relators relied on depositions, internal investigation notes, and an expert (Dr. Jayes) who reviewed records for 47 patients and found many benefit periods under‑documented.
- Defendant produced extensive records and offered its own expert (Dr. Hughes) who disagreed with Dr. Jayes and opined certifying physicians reasonably could have certified the patients.
- District court denied defendant’s motion to dismiss under 31 U.S.C. § 3730(b)(2) (relators’ pre‑suit disclosure), finding no showing of government harm, severe violation, or bad faith; but granted summary judgment for defendant because relators failed to show objective falsity of submitted claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of pre‑suit §3730(b)(2) disclosure / dismissal | Relators contend they provided the government "substantially all material evidence" and dismissal is inappropriate | Care Alternatives argues relators withheld material facts (e.g., Druding’s alleged personal falsification) warranting dismissal | Denied — Court applied Lujan factors (harm, severity, bad faith) and found none sufficient to dismiss; government was not harmed and no evidence of bad faith |
| Falsity element under FCA (objective falsity) | Relators rely on expert opinion and employee testimony to show patients were ineligible and claims were false | Defendant argues disagreements among physicians and expert opinions do not establish an objective falsehood; no direct evidence certifying physicians knowingly lied | Granted for defendant — court held relators failed to produce objective falsity; expert disagreement insufficient where certifying physicians’ judgments were not shown to be knowingly false |
| Evidence of altered/falsified records | Relators alleged some employees were instructed to alter charts and cited internal inquiry (Kelton) and deposition statements | Defendant emphasizes lack of any specific, identified altered document tied to claims; key witnesses deny altering records | Court found no admissible evidence of actual document falsification tied to claims; prior dismissal of altered‑records theory remained relevant and relators did not cure it |
| Reliance on expert testimony to prove falsity | Relators rely primarily on Dr. Jayes’ review and conclusions about eligibility | Defendant counters that Dr. Jayes’ opinions reflect clinical judgment subject to reasonable disagreement and Defendant’s expert refutes those conclusions | Court held expert disagreement alone cannot establish FCA falsity; Dr. Jayes conceded reasonable physicians could differ, so his report did not create a genuine factual dispute |
Key Cases Cited
- United States ex rel. Wilkins v. United Health Group, 659 F.3d 295 (3d Cir. 2011) (FCA elements and qui tam framework)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (U.S. 2016) (implied‑false‑certification and materiality principles)
- United States v. AseraCare, Inc., 153 F. Supp. 3d 1372 (N.D. Ala. 2015) (expert disagreement insufficient to establish objective falsity; granted judgment for hospice defendant)
- United States v. AseraCare, Inc., 176 F. Supp. 3d 1282 (N.D. Ala. 2016) (reaffirming that mere differences of medical opinion do not establish FCA falsity)
- United States ex rel. Drakeford v. Tuomey, 792 F.3d 364 (4th Cir. 2015) (falsity requires objective falsehood)
- United States ex rel. Yannacopoulos v. General Dynamics, 652 F.3d 818 (7th Cir. 2011) (statements reflecting reasonable medical judgment are not "false" under FCA)