Health Law Blog - Healthcare Legal Issues

Statistical Sampling in False Claims Act Cases

A case currently pending in the federal courts may have a significant impact on the federal government’s ability to use the False Claims Act as an enforcement tool.  One of the central issues in the case of U.S. ex rel. Martin v. Life Care Centers of America, Inc. involves the ability of the government to use statistical sampling to estimate damages in False Claims Act cases.

The case against Life Care Centers of America, Inc. (“Life Care”) alleges that Life Care routinely provided a generic care program rather than tailoring individualized programs to the specific needs of patients.  Allegedly, this resulted in Life Care billing for more days of rehabilitation than were necessary for patients receiving its care.  The government claims that overbillings resulted in False Claims to federal health care programs.

The government’s case alleged that Life Care utilized higher levels of Resource Utilization Groups (“RUG”) than were appropriate across its patient population.  The government alleged that Life Care utilized a number of practices to pressure providers to increase the level of service and corresponding RUG classification in order to increase the reimbursement that it claimed under government health programs.

The central issue now pending in the case involves the extent to which the government can use statistical sampling techniques to determine liability in False Claim Act cases.  The government’s case involves a systematic practice by Life Care with a potential impact on a very large population of claims.  Obviously, this would make it very difficult for the government to prove damages if each claim had to be individually addressed.  Use of statistical sampling in a case of this magnitude is crucial to the government’s case.

Statistical sampling involves analysis of a statistically valid random sample of cases.  Chosen cases are audited to determine the rate and amount of overpayment or damages.  The results from the audit of the sample are then extrapolated to the entire population of potential claims to estimate the total obligation.  The use of statistical sampling is common in the health care industry.  However, the courts have not provided a conclusive decision on the extent of its use for estimating damages in the context of fraud prosecutions.

The issue of statistical sampling in this case is currently before the U.S. Supreme Court who is determining whether it will hear argument on the case.

We will keep our readers posted on the outcome of this important case.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
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