Providers Face ‘Giant Sledgehammer’ if Government Prevails in Hospice Case

Hospice and other health care providers charged with submitting false Medicare and Medicaid claims should not face stiff penalties based on only a sampling of claims, the nation’s largest long-term care provider association argues in a brief to the U.S. Fourth Circuit Court of Appeals.

The case in question involves Agape Senior Community Inc., which offers hospice services and other forms of long-term care at about half-a-dozen locations in South Carolina. In December 2012, two whistleblowers charged that Agape had perpetrated a wide-ranging scheme that involved filing false claims for hospice care and other services.

They argued that a statistical sampling method should be employed, in which a certain percentage of randomly selected claims would be analyzed from the time period in question. If a proportion of these claims were determined to be false, then that percentage would be extrapolated to the whole universe of potential false claims—in this case, between 50,000 and 60,000—to determine ultimate penalties against the provider.


The court rejected the statistical sampling method, and Agape subsequently agreed to a $2.5 million settlement. However, the U.S. government—which is not technically a party to the case—rejected this settlement, on the basis that the damages should be ten times higher.

It appears the government used a statical sampling/extrapolation method to determine this figure. While one question is whether the government has the right to veto the settlement, another is whether statistical sampling can be allowed as a way to prove liability or damages—and that question now is being considered by the appeals court.

If the appeals court upholds statistical sampling, it will be granting the U.S. government a “giant sledgehammer” to wield against providers, stated Mark Parkinson, president and CEO of the American Health Care Association/National Center for Assisted Living, in a prepared statement released Monday. AHCA/NCAL represents more than 12,000 long-term care providers. It submitted an amicus brief on March 24 in support of Agape.


“The government wants general sampling to replace specific proof as a shortcut to winning FCA cases,” Parkinson said. “That will also give big government a giant sledgehammer in forcing defendants into pretrial settlements irrespective of the merits of the case. Sampling cannot be a substitute for actual proof in an FCA case. None other than the U.S. Supreme Court has already labeled statistical sampling as Trial by Formula.”

Statistical sampling is not appropriate for False Claims Act charges because of the great variability in claims, which involve different patients and subjective medical judgments, AHCA/NCAL argues in its brief. To allow this method also would shift the FCA’s burden of proof from the plaintiff to the defendant; rather than whistleblowers having to prove the falseness of each contested claim, the defendant now would be forced to prove each claim’s validity. Only Congress, by rewriting the law itself, has the power to shift the burden of proof in this way, the association argues.

The stakes are particularly high for providers involved in FCA cases because they face triple damages if found guilty.

Written by Tim Mullaney

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