Health Care Law Blog

District Court Awards Summary Judgment to AseraCare in $200 Million Hospice False Claims Act Case

On March 31, 2016, the United States District Court for the Northern District of Alabama granted summary judgment for AseraCare in one of the largest False Claims Act (FCA) lawsuits against a hospice provider. In this whistleblower case, the government sought over $200 million, alleging that defendant AseraCare overbilled Medicare for hospice services by falsely certifying that patients were eligible for hospice care.

The litigation began when six AseraCare employees in Alabama, Wisconsin and Georgia (the "relators") filed whistleblower cases under the FCA. The employees alleged that AseraCare knowingly submitted false claims to Medicare by falsely certifying that patients met the Medicare eligibility requirements for the hospice benefit. In order to be eligible for the Medicare hospice benefit, a patient's physician must certify that "the individual's prognosis is for a life expectancy of 6 months or less if the terminal illness runs its normal course." 42 C.F.R. § 418.22(b)(1). The Department of Justice (DOJ) intervened in January 2012.

In court filings, the DOJ alleged that it brought this case "based on evidence that AseraCare marginalized doctors, systematically pressured its own clinical staff to admit and keep ineligible patients, submitted false hospice claims for patients who were not terminally ill, and was put on notice from internal and external audits and employee complaints that this was occurring.”

Further, the DOJ argued that AseraCare is liable under the FCA “because it caused non-terminally ill patients to prematurely give up curative or rehabilitative care so that the company could bill Medicare for hospice payments.”

This case has involved several unique procedural elements. On June 25, 2015, the district court granted AseraCare's motion to bifurcate the trial into two phases: one phase relating to the "falsity" element of FCA liability ("Phase One"), and a second phase relating to the other elements of FCA liability ("Phase Two"). After the government prevailed in Phase One of the trial, the district court granted a new trial, concluding that it incorrectly instructed the jury on the falsity element. The court concluded that, to prove falsity, the government "would have to provide more evidence than just the opinion of a medical expert who disagrees with the certifying physicians and other medical experts regarding whether the medical records support hospice eligibility. A mere difference of opinion between physicians, without more, is not enough to show falsity." The court also gave notice that it would consider summary judgment for AseraCare on its own accord without a motion from the parties.

In granting summary judgment for AseraCare, the court concluded that the government cannot prove the falsity element of FCA liability based on one medical expert’s disagreement with AseraCare’s certification of hospice eligibility. The court further noted that "[i]f the court were to find that all the Government needed to prove falsity in a hospice provider case was one medical expert who reviewed the medical records and disagreed with the certifying physician, hospice providers would be subject to potential FCA liability any time the Government could find a medical expert who disagreed with the certifying physician's clinical judgment. The court refuses to go down that road."

Aside from the unique procedural elements of this case, it is a stark reminder of the risks that health care providers face from whistleblower lawsuits. Given the amount of money at stake in these cases, it’s likely that whistleblower litigation will increase. Congress and states have passed numerous new whistleblower protection statutes in recent years, and there have been a number of high profile and widely reported whistleblower awards resulting from employee allegations. In this environment, the risks of exposure and liability for health care companies and organizations have grown.

Additionally, this case illustrates the need for hospice providers to exercise diligence in making hospice eligibility determinations.

If you have any questions regarding hospice eligibility or the False Claims Act, please contact Jennifer Van Regenmorter or Julie Hamlet.

Categories: Audits, Billing/Payment, Medicare/Medicaid, Providers