False Claims Act Medicare Extrapolation Statistical Sample

On October 10, 2014, Life Care Centers of America, Inc., owner and operator of over 200 “skilled nursing facilities,” filed a motion requesting that the trial court certify for interlocutory appeal its order ruling that the government may extrapolate from a significantly smaller statistical sample in order to prove the entirety of Life Care’s liability and damages under the False Claims Act (“FCA”).  This case is different than most FCA cases involving statistical sampling because here the trial court has allowed the use of this method to prove liability, instead of just the amount of damages.  In other words, the government will be allowed to extrapolate from a statistical sample and thereby establish that certain claims not included in the sample were false, that Life Care had knowledge of their falsity, and that those claims were material (i.e. that they had the tendency to influence payment of money).  As the trial court noted, “[u]sing extrapolation to establish damages when liability has been proven is different than using extrapolation to establish liability.” (italics added).  The certification of this ruling would allow the United States Court of Appeals for the Sixth Circuit to review this decision prior to the trial’s resolution.  Generally, trial courts will certify such a ruling where it “involves a controlling question of law as to which there is substantial ground for difference of opinion.” 

In its suit against Life Care, the government alleges that Life Care provided services to its patients that were not “medically reasonable or necessary” in order to maximize its receipt of Medicare reimbursement funds.  Because there are over 150,000 claims involving 54,396 patient admissions in the relevant time frame, the government sought to use a random sample of 400 patient admissions, and extrapolate this sample to the full amount of patient admissions (54,396), instead of conducting a “claim-by-claim review.”   

Continue Reading Sixth Circuit Could Soon Determine If FCA Liability and Damages May Be Proven By Statistical Sampling