153 F. Supp. 3d 1372
N.D. Ala.2015Background
- Government sued AseraCare under the False Claims Act alleging hospice certifications were false because patients lacked a ≤6‑month prognosis required for Medicare hospice payment. 42 C.F.R. § 418.22(b)(1).
- Government relied principally on expert Dr. Solomon Liao’s review of medical records (initially 124 of 233 sampled patients; 123 within date range) to show records did not support eligibility; it did not present direct evidence that certifying physicians forged signatures or billed for phantom patients.
- The court bifurcated trial: Phase One to decide falsity; Phase Two to address knowledge and damages. The Government represented during discovery it would rely on Dr. Liao and the medical records to prove falsity and would not tie relators’ testimonial evidence directly to specific patient claims.
- At trial the Government presented Dr. Liao’s opinions, patient medical records, and testimony from several former AseraCare nurses about general agency practices; the court excluded using many relator/employee statements to prove falsity for specific patients because of prior discovery representations and rules limiting propensity evidence.
- Jury returned findings that 104 of 121 patients had false claims. Post‑trial the court concluded its jury instructions omitted critical legal standards—specifically the requirement of an objective falsehood and that mere disagreement among physicians is insufficient—and granted AseraCare a new trial.
- The court announced it will consider sua sponte summary judgment under Fed. R. Civ. P. 56(f)(3) before re‑trial, because the Government’s Phase One evidence may amount only to differences of medical opinion, which cannot establish falsity as a matter of law without additional objective evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Legal standard for falsity where claim rests on physician prognosis | Gov: Claims are false if medical records objectively do not support hospice eligibility; Dr. Liao’s expert opinion plus records suffice | AseraCare: Government must show objective falsehood beyond mere disagreement; adopt a "no reasonable physician" or Geschrey standard requiring proof certifying physician could not have honestly believed eligibility | Court: Jury instructions were incomplete; court failed to instruct that FCA requires proof of an objective falsehood and that mere difference of opinion is insufficient; new trial granted |
| Admissibility/use of relators’ testimony to prove falsity for specific patients | Gov: Would rely mainly on Dr. Liao and records; earlier suggested pattern/practice evidence could link witnesses to patients | AseraCare: Government bound by discovery responses; cannot use relators to tie to specific claims if not disclosed | Court: Government repeatedly represented it would not tie relators to specific patients; court precluded such use at trial and will not permit back‑door use in re‑trial absent proper disclosure; limits Government’s proof to admissible record evidence |
| Whether jury instruction adequacy warrants new trial | Gov: Ask to recharge and permit deliberation to continue | AseraCare: Failure to instruct on objective falsity and difference‑of‑opinion doctrine prejudiced defendant | Court: Found substantial and ineradicable doubt the jury was properly guided; recharging insufficient to cure prejudice; granted new trial |
| Appropriateness of sua sponte summary judgment before re‑trial | Gov: Wants trial to proceed; believes record supports falsity findings | AseraCare: May move for judgment if evidence legally insufficient under correct standard | Court: Will consider Rule 56(f)(3) sua sponte, give parties notice and opportunity to respond, because record may show only expert disagreement insufficient to prove falsity as matter of law |
Key Cases Cited
- Urquilla‑Diaz v. Kaplan Univ., 780 F.3d 1039 (11th Cir. 2015) (False Claims Act requires submission of a false claim as sine qua non)
- Clausen v. Laboratory Corp. of America, 290 F.3d 1301 (11th Cir. 2002) (FCA liability requires submission of a false or fraudulent claim, not merely regulatory noncompliance)
- Corsello v. Lincare, Inc., 428 F.3d 1008 (11th Cir. 2005) (liability arises from submission of fraudulent claim, not internal procedure failures)
- Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370 (5th Cir. 2004) (expressions of opinion or medical judgments about which reasonable minds may differ cannot be false under FCA)
- Yannacopoulos v. General Dynamics, 652 F.3d 818 (7th Cir. 2011) (statement is "false" under FCA only if it represents an objective falsehood)
- Parato v. Unadilla Health Care Ctr., 787 F. Supp. 2d 1329 (M.D. Ga. 2011) (FCA requires proof of an objective falsehood)
- Lincare Holdings, Inc. v. United States ex rel. Phalp, 116 F. Supp. 3d 1326 (S.D. Fla. 2015) (medical opinions or scientific judgments about which reasonable minds may differ are not "false" under the FCA)