The US Court of Appeals for the Eleventh Circuit has issued its much awaited decision in United States v. Aseracare, and for those who question how mere differences clinical opinion can ever support punitive False Claims Act (FCA) liability, the opinion is especially informative. The decision is significant for hospice providers and all healthcare providers that have battled government enforcers on its theory that evidence of subjective lack of medical necessity is fraud for the last decade. The decisions should be a bellwether for the US Department of Justice (DOJ), as well as an opportunity for DOJ to revisit its enforcement initiatives related to medical necessity, which have gone off the rails in recent years with the pursuit of cases that do not reasonably suggest fraud has actually occurred.
Rejecting DOJ’s signature theory of liability that falsity may be established by mere clinical disagreement divined from a cold retroactive review of the record, the court held that the trial court was right to grant a new trial to Aseracare based on erroneous jury instructions that allowed mere clinical disagreement to be the only evidence of falsity to find punitive FCA liability against the national hospice provider. The district court had granted a new trial on the basis that the instructions were wrong and the Eleventh Circuit agreed. The court further held that the summary judgment subsequently granted to Aseracare should be vacated and reconsidered to give the government an opportunity to present other falsity evidence related to the sample claims, if the government has such actual evidence to be considered. So, procedurally, the case stays alive, but is on thin ice at best.
The court noted that the trial record was devoid of any evidence that physicians had lied regarding their certifications of eligibility or that hospice services were not provided to the patient, and pointed out that much of the evidence showed Aseracare’s compliance with Medicare’s hospice regulatory scheme. The opinion noted that CMS and the Medicare contractor at trial supported the view that the Medicare hospice benefit was structured to consider good-faith, subjective clinical opinions based on the common sense reality that death is an inexact science, and that two physicians could hold different views of a patient’s prognosis and eligibility. Even the government’s expert changed his mind on patient eligibility over time—an incredible situation given that his testimony was the sole evidence to support the jury’s verdict and punitive liability in excess of $200 million.
There are many gems in this well-reasoned and scholarly opinion, the first at the appellate level to consider the government's FCA theory. Some key takeaways for practitioners include the following:
- To properly state a claim alleging hospice fraud under the FCA, the government must show facts surrounding a physician’s certification of eligibility that are inconsistent with the proper exercise of a physician’s clinical judgment. Mere differences of reasonable opinion concerning a patient’s likely longevity are not sufficient to allege FCA liability.
- Falsity evidence must be linked to the government’s actual samples of false claims. General anecdotal information of business practices untethered to the proffered false claims is not evidence of falsity for FCA purposes.
DOJ’s medical necessity initiatives over the last several years have focused on hospice and therapy providers, virtually all with the same playbook: cold record retrospective review, often by a nurse reviewer, to allege falsity based on alleged inadequate documentation conclusions as to clinical eligibility. There is often no evidence of actual fraud or material noncompliance. Often, the physicians who certify eligibility are not even interviewed regarding their certifications before catastrophic punitive liability is asserted. DOJ’s theory of liability does not require actually developing evidence of falsity, only evidence of clinical disagreement. Many of these investigation matters are founded on clinical disagreement, lightly sprinkled with general anecdotal complaints regarding business practices, or with C-suite emails that look bad but had no influence on the physician’s certification or were even known to the clinicians caring for the patient.
This opinion powerfully reasons why the government’s approach is inconsistent with the FCA statute and the Medicare hospice benefit regulatory scheme. Its reasoning applies with equal vigor to the medical necessity fraud initiative DOJ has developed over the years against other healthcare providers. The opinion also highlights the danger of not developing the right evidence to show fraud and relying on evidentiary shortcuts to assert liability under a highly punitive statute.
Finally, the opinion lays bare the reality that government enforcement practices sometimes ignore the regulations and rationale for the regulatory scheme at issue in order to fashion a more pliable account of how regulations are intended to work—even if that account is contrary to what has been legislated by Congress and implemented by the regulatory agency. In Aseracare, the government enforcers ignored the regulatory scheme as explained by its own Medicare agency witnesses to assert punitive liability under the FCA. This has a chilling and negative effect on all hospice providers, which is the exact opposite of what is right for the patients and their families who need this important benefit.