In a long-awaited decision, a federal appeals court said Sept. 9 that it takes more to prove false claims than a physician disputing the eligibility of patients for Medicare services after the fact.
With this caveat, the U.S. Court of Appeals for the 11th Circuit is giving the Department of Justice (DOJ) another chance to take AseraCare Inc., a hospice provider, to trial in a False Claims Act (FCA) case. But DOJ needs to do more than expert armchair quarterbacking.
The ruling is pretty good news for providers on the medical necessity and FCA fronts. “Providers have always been comfortable with the statement that if clinicians make good-faith judgments about the eligibility of a patient for a particular service, as long as that judgment was in good faith, it wouldn’t be second guessed afterward. The court agreed with that,” says attorney Christopher Donovan, with Foley & Lardner in Boston. “You can’t just roll out another expert who disagrees with your certification.” But the appellate court also ruled that hospice claims could be false if there’s evidence that physicians rubber-stamped certifications, as a witness alleges in the AseraCare case, says attorney Jesse Witten, with Drinker Biddle in Washington, D.C. “It’s a difficult decision to sort out because there’s something for everybody,” he says.
Where the chips ultimately fall is up to a jury, unless the two sides settle. However it turns out, the message is that “the government can’t demonstrate falsity just because there are two physicians having a good-faith disagreement,” Witten says.
AseraCare operates about 60 hospices in 19 states and admits around 10,000 patients, most enrolled in Medicare. For patients to be eligible for the Medicare hospice benefit, a physician must certify that the patient is terminally ill, with a life expectancy of six months or less. Physicians certify patients for hospice care for 90 days, with recertification every 60 or 90 days.
The FCA lawsuit against AseraCare was set in motion by three former AseraCare employees, and DOJ intervened, filing its own complaint. It alleged that AseraCare submitted documentation that supported Medicare claims for hospice patients who were not terminally ill.
In making its case, DOJ focused on a sample of 223 patients whose medical records and clinical histories were reviewed by its primary expert witness, Dr. Solomon Liao. He identified 123 who allegedly were ineligible for the hospice benefit when AseraCare was paid for their care, according to the appeals court decision.
There were no allegations, however, that AseraCare billed for fake patients or forged certifications, or that its employees lied to certifying physicians or withheld key information on patient conditions. In fact, AseraCare has comprehensive documentation of the patients’ medical conditions, and its certifications of terminal illness were signed by the right medical staff. “Rather, the Government asserted that its expert testimony—contextualized by broad evidence of AseraCare’s improper business practices—would demonstrate that the patients in the sample pool were not, as a medical fact, terminally ill at the time AseraCare collected reimbursement for their hospice care,” the appeals court decision stated.
But things got a little strange. The judge agreed to bifurcate the trial, with one phase to decide on falsity under the FCA and the second phase to determine knowledge of the falsity.
It Was a Battle of the Experts
At trial, Liao testified that the medical records of the relevant AseraCare patients didn’t support the terminal illness certifications because they didn’t show a life expectancy of six months or less, although he said his testimony reflected his after-the-fact review of supporting documentation. AseraCare then offered rebuttal testimony from its physicians. “The question before the jury was instead which doctor’s interpretation of those medical records sounded more correct,” the appellate court decision explained.
The jury found that AseraCare submitted false claims for 104 of the 123 patients.
Before moving on to the second phase of the trial, AseraCare asked the district court to throw out the jury’s findings as a matter of law because it had made a mistake in its jury instructions, and the district court agreed to order a new trial. Also, on its own, the district court decided to consider whether DOJ had enough admissible evidence, aside from a difference of medical opinions, “to show that the claims at issue are objectively false as a matter of law.” The district court warned that “the Government’s proof under the FCA for the falsity element would fail as a matter of law if all the Government has as evidence of falsity in the second trial is Dr. Liao’s opinion based on his clinical judgment and the medical records that he contends do not support the prognoses for the 123 patients at issue in Phase One.”
After a hearing, the district court granted summary judgment to AseraCare, throwing out DOJ’s FCA lawsuit. DOJ appealed to the 11th Circuit, which affirmed the district court’s decision to grant a new trial and vacated the post-verdict grant of summary judgment for AseraCare.
The 11th Circuit said the appeal “requires us to consider how Medicare requirements for hospice eligibility—which are centered on the subjective ‘clinical judgment’ of a physician as to a patient’s life expectancy—intersect with the FCA’s falsity element.” The question is whether AseraCare’s certifications that patients were terminally ill met Medicare’s statutory and regulatory requirements for reimbursement. If not, the claims could be false under the FCA.
The appeals court reviewed the legal standard for the falsity of hospice claims, including the hospice eligibility framework, and concluded that “none of the relevant language states that the documentary record underpinning a physician’s clinical judgment must prove the prognosis as a matter of medical fact. Indeed, CMS has recognized in crafting the implementing regulations that ‘[p]redicting life expectancy is not an exact science.’” CMS indicated that as long as clinical judgments are “well-founded,” they should be deferred to.
The appeals court also considered the falsity in this case under the FCA. There are two “species”: the legitimacy of the physician’s clinical judgment and “the legitimacy of AseraCare’s statement that a clinical judgment has been properly made.”
There isn’t anything in the statutory or regulatory framework to indicate that a clinical judgment about a patient’s prognosis is invalid because an unaffiliated physician reviewing the records later disagrees, and there isn’t necessarily Medicare noncompliance if the only flaw is an absence of certainty the patient will die in six months.
Other Ways to Show Objective Falsity
But there are other ways to show objective falsity, such as physicians signing certifications without reviewing the medical records. Without showing objective falsehood, “the FCA is an inappropriate instrument to serve as the Government’s primary line of defense against questionable claims for reimbursement of hospice benefits,” the appeals court stated.
The appeals court remanded the case to the district court for a new trial, and said it has to consider all the evidence. Some had been excluded because of the bifurcated trial. DOJ has witnesses who will testify that AseraCare physicians allegedly signed hospice certifications without reviewing documentation. A “former employee testified that signing certifications had become so rote for one physician that he ‘would nod off’ while signing,” the appeals court decision said.
When the case goes back to trial, the government has a “substantial burden of proof,” Donovan says. It has to show not just that the hospice patient was ineligible but that the physician who signed the certification knew it or that the medical records weren’t reviewed.
Witten says “the message for hospice providers is they need to ensure the physician is certifying patient life expectancy is not longer than six months and that they truly reviewed the clinical information before they made that judgment.”
Contact Donovan at cdonovan@foley.com and Witten at jesse.witten@dbr.com. View the decision at http://bit.ly/2lSLazQ.