AseraCare Court Provides Guidance regarding the Objective Falsity Requirement in the False Claims Act

By Sarah Wirskye - On

On September 9, 2019, the Eleventh Circuit held that the False Claims Act (FCA) requires an objective falsity and that a difference of opinion between doctors is insufficient. While there is no dispute that the FCA requires falsity, there is little guidance interpreting the objective falsity requirement. United States v. AseraCare, No. 16-13004 (11th Cir. 2019), makes clear that a mere, reasonable difference of opinion between physicians does not satisfy this element.

The AseraCare Opinion
The defendants in this case were hospice facilities that billed Medicare for end-of-life care. In the FCA case, the Government alleged that defendants had certified patients as eligible for Medicare’s hospice benefit based on erroneous clinical judgments that patients were terminally ill. Based on its expert witness opinion, the Government contended that the patients were not terminally ill at the time of certification, and therefore, AseraCare’s claims were false under the FCA.

The district court found that a medical provider’s clinical judgment that a patient is terminally ill cannot be deemed false based merely on the existence of a reasonable difference of opinion between experts as to the accuracy of that prognosis. The district court, therefore, granted summary judgment to AseraCare on the issue of falsity. The Eleventh Circuit agreed and held that clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false under the FCA, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion with no other evidence to prove the falsity of the assessment. The appellate court did remand, however, to allow the Government to rely on the entire record, and not just the trial record, in making its case that disputed issues of fact, beyond just the difference of opinion between experts, existed sufficient to warrant denial of the district court’s post-verdict sua sponte reconsideration of summary judgment on the falsity question.

The AseraCare court recognized and provided examples of where an objective falsehood could be found in the context of a hospice certification. These include situations where a certifying physician fails to review a patient’s medical record or familiarize himself with the patient’s condition before asserting that the patient is terminally ill. Another example the court provided is where a physician did not subjectively believe that the patient was terminally ill at the time of certification. The final example was a case where evidence proves that no reasonable physician could have concluded that a patient was terminally ill given the relevant medical records. The court emphasized that in each of these examples, “the clinical judgment on which the claim is based contains a flaw that can be demonstrated through verifiable facts.”

In asserting that the falsity requirement was satisfied, the Government unsuccessfully relied on United States v. Paulus, 894 F.3d 267 (6th Cir. 2018). In distinguishing this case, the court found that the degree of a patient’s heart blockage was a fact capable of proof and that defendant in Paulus was “convicted for misrepresenting facts, not giving opinions.” Similar to some of the examples in the prior paragraph, the Paulus court stated that opinions may trigger liability for fraud when they are not honestly held by their maker, or when the speaker knows of facts that are fundamentally incompatible with his opinion. The Government also unsuccessfully relied on United States ex rel. Polukoffv. St. Mark’s Hospital, 895 F.3d730 (10th Cir. 2018), an FCA case in which the applicable Medicare statute authorized reimbursement only when the procedure at issue was reasonable and necessary based upon a confirmed diagnosis of a recurrent stroke. Therefore, in Polukoff, the court found that the defendant falsely represented that the procedure was being performed based on the indications set forth in the guidelines when in fact it was not.

In distinguishing these two cases, the court noted the hospice eligibility requirements. “Indeed, CMS has considered and expressly declined to impose defined criteria that would govern the physician’s exercise of judgment.” Instead, 42 U.S.C. §1395f(a)(7)(A) provides “that the individual is terminally ill … based on the physician’s or medical director’s clinical judgment regarding the normal course of the individual’s illness.” Therefore, in the hospice context, the plaintiff must show an objective falsity refuting the physician’s clinical judgement, which can be particularly challenging.

The AseraCare opinion is an important decision recognizing that differences in medical judgement do not rise to the level of false representations or fraudulent conduct. Overall, a plaintiff’s ability to allege or prove objective falsity will depend, in part, on the specific criteria at issue in a particular case. And significantly, a mere difference of opinion will not suffice.

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