Tag Archives: Statistical Sampling

Home / Posts tagged "Statistical Sampling"

Life Care Seeks Sixth Circuit Review of Sampling Decision

We recently wrote about a federal district court decision allowing the government to use statistical sampling to prove liability in a False Claims Act case pending against Life Care Centers of America, Inc.  The government’s case stems from two whistleblower suits accusing Life Care of providing uncovered, unskilled, and medically unnecessary services. Life Care has more than 200 locations in about 30 states and much of its revenue comes from Medicare patients.

 

Life Care has asked the federal district court judge who issued the decision to certify his decision for an interlocutory appeal to the United States Court of Appeals for the Sixth Circuit before the case is tried in the district court.  In that decision, Judge Mattice ruled that 400 specific admissions involving roughly 1,700 claims could be extrapolated to roughly 55,000 admissions involving almost 155,000 claims. In essence, Life Care is hoping to require the government to separately prove the falsity of each of the 155,000 claims, an almost insurmountable burden.  In its motion, Life Care argues that the issue is novel and thus the Sixth Circuit should consider whether extrapolation can satisfy the government’s burden of proof under the FCA and whether constitutional due process rights would be violated if Life Care could not mount a claim-by-claim defense.

 

The Department of Justice opposed the motion for an interlocutory appeal, arguing among other things that the district court was following decades of precedent establishing the use of statistical sampling in a variety of types of litigation and thus there is no basis justifying Sixth Circuit review of the district court decision’s decision before trial.  “Although the court stated in its order that the use of sampling and extrapolation may have been one of first impression as applied specifically to the FCA, the court nonetheless emphasized that the use of sampling and extrapolation in litigation is hardly novel, and, in fact, is well established,” the government said.

 

We do not expect the federal district court judge to certify his well-reasoned and thorough decision for interlocutory appeal. Instead, Life Care will have to proceed through discovery, try to challenge the validity and reliability of the statistical sample and supporting expert testimony in the district court, and hope that it can make inroads to limit or exclude the extrapolation.  If done right, the extrapolation should withstand attack and not only help prove liability but also lay the foundation for a massive damages award if the judge or the jury finds Life Care liable of violating the False Claims Act.

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.