BIRMINGHAM, Ala. (Legal Newsline) – The U.S. Department of Justice (DOJ) will appeal three orders in a lawsuit against a hospice chain that allegedly submitted fraudulent claims on the eligibility of patients needing hospice care.

The appeal follows the DOJ’s loss to AseraCare. The company is accused of producing false claims on eligibility for patients that were not terminally ill for hospice care.

U.S. District Judge Karen Bowdre, of the Northern District of Alabama, split the case into two parts. That decision, as well as a summary judgment ruling in favor of AseraCare, is being appealed, as well as a Bowdre ruling on jury instructions. 

“The Department of Justice likely decided to appeal the district court’s orders because it determined the district court’s novel approach — bifurcating the elements of the case, throwing out the jury’s verdict, taking up the summary judgment issue post-trial without the parties asking for it — is unlikely to withstand review,” Mary Inman, partner at Constantine Cannon who represents whistleblowers in False Claims Act cases, told Legal Newsline.

Bowdre was the first judge in the 150-year history of the FCA to bifurcate a trial.

She also said the wrong instruction was given to the jury on what the legal meaning for "falsity" is. 

“It was a very unusual choice given the way the judge chose to artificially carve up and unnecessarily narrow the case,” Inman said.

“Bifurcation is a tool that judges routinely use to manage complex cases and make them more digestible for juries. Bowdre took the very novel and unusual approach of bifurcating the liability determination itself and only having the jury consider the issue of falsity without also considering the related elements of materiality and scienter.

"In so doing, the jury was deprived of the ability to see the complete picture that is all of the evidence that relates to the False Claims Act liability (i.e., falsity, scienter and materiality) and was given an incomplete picture. It is the equivalent of being given only one piece of a three-piece puzzle.”

Whether AseraCare will settle with DOJ in light of the appeal remains to be seen. It may do so to avoid legal costs and a lengthy court case, but winning the first round may have given it motivation to continue on with hopes of becoming victorious in the end.

“Whether DOJ’s appeal will persuade AseraCare to settle is anyone’s guess,” Inman said.

“The company probably feels like it has the wind at its back, having won at the district court level, as well as the defense bar that represents accused fraudsters loudly cheering it on."

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