The DOJ’s theory of falsity based on clinical disagreement alone fails as a matter of law.
In a closely watched False Claims Act (FCA) proceeding by the healthcare industry and FCA practitioners, the US District Court for the Northern District of Alabama ruled in favor of a national hospice provider and dismissed the action, rejecting the US Department of Justice’s (DOJ’s) legal position that falsity can be established solely by retrospective clinical disagreement.[1] Chief Judge Karon Bowdre’s seven-page opinion explains and resolves this important FCA legal issue with elegant and devastating simplicity, ensuring that the decision will be a strong and influential precedent for pending and future cases focused on asserting FCA liability for mere clinical disagreements or subjective interpretations of medical record documentation.
The DOJ alleged that AseraCare provided hospice services to Medicare beneficiaries who did not satisfy hospice eligibility criteria based on a retrospective review of the medical record. To show that AseraCare’s claims were objectively false, the DOJ relied solely on its medical expert’s review of patient medical records. AseraCare offered its own experts to testify that the records did support hospice eligibility. The case then boiled down to clinical disagreements between medical professionals. Following an initial favorable jury verdict for the DOJ, the court realized that it had incorrectly instructed the jury on the element of falsity and granted a new trial. The court concluded that the DOJ was required to show objective falsehood by something more than mere clinical disagreement and provided the DOJ with an opportunity to support its fraud theory against the hospice provider with evidence beyond mere clinical disagreement. The DOJ could not make this crucial evidentiary showing. Accordingly, on March 31, the court granted summary judgment in favor of AseraCare, concluding that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the [FCA] as a matter of law.”[2]
The decision is consistent with longstanding FCA precedent that requires an objective falsehood to give rise to liability under the FCA.[3]
The court reasoned that “[w]hen hospice certifying physicians and medical experts look at the very same medical records and disagree about whether the medical records support hospice eligibility, the opinion of one medical expert alone cannot prove falsity without further evidence...
