Qui Tam Quarterly | June 2022 | Data on Defense: Invalidating FCA Allegations Based on Statistical Sampling and Extrapolation 1
Statistical sampling and extrapolation have become accepted tools for establishing damages in
health care administrative proceedings and False Claims Act (FCA) litigation over the past 30years.
DATA ON DEFENSE: INVALIDATING FCA ALLEGATIONS
BASED ON STATISTICAL SAMPLING AND EXTRAPOLATION
By: Stephen Bittinger, Ashley Davis, and Melissa Yates
QUI TAM QUARTERLY
Statistical sampling and extrapolation have become
accepted tools for establishing damages in health care
administrative proceedings and False Claims Act (FCA)
litigation over the past 30 years. In the last decade,
statistical sampling transitioned from being a mechanism
primarily utilized to calculate damages to a means to
support the core elements of FCA liability.1 However, the
law surrounding both the application and the limitations
of asserting and supporting a demand against a property
interest has evolved dramatically and remains hotly
contested. This article examines the origins of statistical
sampling and extrapolation, the shift of statistical
sampling to a core element of FCA suits, the need for
proper application of the process to data analysis in
litigation based on health care claims, and the growing
body of law regarding procedural and constitutional
limitations in FCA litigation. Finally, this article analyzes
some successful legal challenges and provides practical
guidance on strategies for invalidating improper statistical
samplings and extrapolated demands.
Sampling and Extrapolation:
A Necessary Tool
Origin of Sampling and Extrapolation
In 1986, the Health Care Financing Administration
(HCFA), the predecessor to the Centers for Medicare &
Medicaid Services (CMS), determined that a contract
auditor was permitted to use sampling and extrapolation as
opposed to a claim-by-claim review because:
• The government has a significant interest in
cost-effective recovery of improper payments;
• Even though there was no express authorization, there
was also no express prohibition; and
• Providers were not denied due process because of
their ability to appeal extrapolated findings through
the administrative appeals process.2
Despite citing no statutory or regulatory authority within
the ruling, CMS Ruling 86-1 asserted that the use of
sampling and extrapolation grew out of the government’s
“federal common law right” to recover property. CMS has
relied on this decision to justify the use of statistics to
support a demand for repayment of claims billed to federal
health care programs and has set off a dramatic evolution
of how data analytics could be used across the legal
spectrum of administrative, civil, and criminal law.
Similar to CMS administrative proceedings, statistical
sampling has historically been used in FCA litigation to
determine damages when it is impractical to undertake
