Taryn Phaneuf May 27, 2016, 11:24am


BIRMINGHAM, Ala. (Legal Newsline) — After meandering through the legal system and attracting a lot of attention, a lawsuit alleging a national chain of hospice providers made false Medicare claims has been dismissed.

The federal government’s case against AseraCare, which it filed in 2012, involved allegations that the provider certified patients as eligible for hospice who weren’t terminally ill, violating the False Claims Act. The government sought $200 million in fines and penalties.

After dividing the case into two phases, holding a trial, granting a new trial and reopening summary judgment, the court granted summary judgment to AseraCare because the government based its argument regarding the claims’ alleged falsity on the testimony of an expert witness. But differing opinions among physicians isn’t enough to prove false claims, the judge ruled.

Some aspects of the procedural history were uncommon, Laura McLane, an attorney at McDermott, Will & Emery in Boston, told Legal Newsline. McLane represents health care and other companies in government investigations and litigation based on the False Claims Act.

“But the actual legal principles underlying the court’s decision are grounded in a lot of pre-existing case law,” she said.

The U.S. Department of Justice will likely appeal the decision, she added.

Before going to trial, U.S. District Judge Karon Bowdre, of the Northern District of Alabama, bifurcated the case. Each phase would be tried separately — the first phase would address the “falsity element” of the government’s claims and the second would address all other claims.

During a trial, the government called an expert witness who reviewed the patient files and concluded they weren’t eligible for hospice. The jury found that AseraCare submitted false claims for 104 patients during some or all of their stay in hospice.

Soon after, AseraCare moved for a new trial because the jury had not been instructed that differing opinions by physicians aren't sufficient to prove claims were false. Bowdre then agreed to reconsider summary judgment and ultimately dismissed the suit.

“It’s really correct when you step back and look at it,” McLane said. “The fact that (the expert witness) disagreed … how can that be fraud?”

She said the case is important for health care defendants in FCA lawsuits.

“It strongly reinforces what is an existing proposition: If the entire case presented by the government or whistleblower is predicated on one doctor saying one thing and another doctor saying another thing, it just does not give rise to fraud under the FCA,” she said.

More News