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Use of Statistical Sampling in False Claims Act Cases Endorsed by Court

Yesterday the federal district court handling the False Claims Act case U.S. ex rel. Martin v. Life Care Centers of America, issued two important decisions that endorsed the government’s proposed use of statistical sampling to prove Life Care’s liability under the FCA. The court denied Life Care’s summary judgment motion and upheld the government’s ability to use statistical sampling in a complex FCA case involving the provision of unnecessary therapy at 82 different skilled nursing facilities run by Life Care throughout the country.  The court also denied Life Care’s motion to exclude the testimony of the government’s expert statistician.  After conducting an extensive survey of the law in this area, the court concluded:

“The Court has reviewed the language and the legislative history of the FCA as well as the relevant case law and concludes that the use of statistical sampling, to the extent described infra, is a legally viable mechanism which the Government may employ in attempting to prove the FCA claims in this action. The purpose of the FCA as well as the development and expansion of government programs as to which it may be employed support the use of statistical sampling in complex FCA actions where a claim-by-claim review is impracticable. While Defendant may disagree with this conclusion, it is not without tools at its disposal to attack the weight to be accorded to any extrapolated evidence.” See Order Denying Motion for Summary Judgment above, at pp. 36-37.

The court went on to explain that it would be up to the jury to decide how much weight to give to the statistical evidence and expert testimony in deciding whether Life Care violated the FCA.  Id. at pp. 38-39.   These decisions will be critical not only in the government’s efforts to prevail against Life Care in two whistleblower cases, but in many other FCA cases being litigated across the country.  The court correctly recognized that statistical sampling, which has been used and accepted in many other types of cases, is an acceptable, indeed necessary, tool in certain FCA cases.  Of particular interest is that the court accepted sampling as a way to prove liability not just damages or penalties (i.e. number and amount of false claims).  The court’s reasoning may also strengthen the hand of the government and whistleblowers in settlement negotiations with FCA defendants although many defendants may prefer to litigate the issue.