United States District Court, N.D. Alabama, Southern Division
KARON OWEN BOWDRE, District Judge.
Few decisions are more difficult for a family to make than decisions about the health of elderly relatives. This case raises questions about hospice care for terminally ill people. We rely on physicians to guide us through the complexity of our healthcare system, expecting them to make both objective and subjective determinations about our health. What happens, however, during a retrospective review when two physicians cannot agree whether a claim for the Medicare Hospice Benefit, based on a physician's certification that a patient is terminally ill, is supported by the patient's medical records? Is that claim false under 31 U.S.C. § 3729, the False Claims Act ("FCA")?
Plaintiff United States of America, in coordination with Relators Deborah Paradies, London Lewis, and Roberta Manley, sued defendants GGNSC Administrative Services, LLC; Hospice Preferred Choice, Inc.; and Hospice of Eastern Carolina, Inc. (collectively, "AseraCare") under the FCA. The Government alleges that AseraCare schemed to defraud Medicare by coercing its employees to interpret medical records liberally so that AseraCare could submit hospice claims for borderline patients. The consequences of that dispute will not deprive patients of hospice care, but could deprive AseraCare of the money it received from the Government for providing hospice care to patients now deemed ineligible and could result in treble damages.
The Government points to information in patient medical records that it claims is objective evidence that AseraCare falsely certified certain patients as eligible for hospice care whose medical records did not support that they qualified. Further, the Government points to documents and testimony that AseraCare employees throughout the company knew about the false certifications. Finally, the Government points to statistical evidence to show that AseraCare had a widespread problem with falsely certified claims, entitling the Government to a large recovery. The court does not determine whether AseraCare falsely certified patients or submitted false claims, however, because questions about the facts of the case and the credibility of witnesses exist that must be determined by the jury.
The parties have filed the following motions:
AseraCare's "Motion for Summary Judgment." (Doc. 225);
AseraCare's "Motion for Partial Summary Judgment." (Doc. 229);
AseraCare's "Motion to Exclude Testimony of Dr. Klaus Miescke." (Doc. 231);
AseraCare's "Motion to Exclude Testimony of Dr. Solomon Liao." (Doc. 233);
AseraCare's "Motion to Exclude Testimony of Dr. Matthew Perri." (Doc. 235);
The Government's "Motion for Partial Summary Judgment." (Doc. 237);
The Government's "Motion in Limine to Exclude at Trial Expert Opinions of Three of AseraCare's Seven Designated Expert Witnesses." (Doc. 239); and
AseraCare's "Motion to Exclude Dr. Perri's Untimely Supplemental Report." (Doc. 262).
The court held a hearing on all the motions on November 17, 2014. For the reasons stated at the hearing and discussed below, the court GRANTS AseraCare's motion to exclude Dr. Perri, (Doc. 235); GRANTS AseraCare's motion to exclude Dr. Perri's supplemental report, (Doc. 262); GRANTS the Government's motion for partial summary judgment, (Doc. 237), only as to AseraCare's statute of limitations and laches defenses; and DENIES all the other motions. (Doc. 225; Doc. 229; Doc. 231; Doc. 233; Doc. 237; Doc. 239).
I. Procedural Posture
This case began when the Relators filed a complaint against AseraCare on May 2, 2008, in the Eastern District of Wisconsin, alleging that AseraCare engaged in improper practices in its hospice business. (Doc. 1). The Relators moved to transfer the case to the Northern District of Alabama on December 16, 2011, and the district court for the Eastern District of Wisconsin agreed on January 23, 2012. (Doc. 62; Doc. 99; Doc. 100). This court consolidated the case with other litigation originating in the Northern District of Georgia and the Northern District of Alabama. (Doc. 131; Doc. 145). The Government then intervened and filed a new complaint, which replaced the complaint filed by the Relators. (Doc. 156).
The court has subject matter jurisdiction over the Government's FCA claims pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1345, and supplemental jurisdiction over the Government's common law claims pursuant to 28 U.S.C. §1367(a). The court has personal jurisdiction over AseraCare pursuant to 31 U.S.C. § 3732(a). No party disputes subject matter or personal jurisdiction. (Doc. 156; Doc. 161). AseraCare disputed venue, but the Eastern District of Wisconsin resolved venue in favor of the Northern District of Alabama when it transferred the case. (Doc. 99).
In its complaint, "[t]he United States alleges that AseraCare, through its reckless business practices, admitted and retained individuals across the United States who were not eligible to receive Medicare hospice benefits, because it was financially lucrative." (Doc. 156, 3, ¶ 3). The Government's complaint contains four counts: (1) Violation of the FCA by presenting a false claim for payment; (2) Violation of the FCA by using a false record or statement to obtain payment of a false claim; (3) Payment under a mistake of fact; and (4) Unjust enrichment. (Doc. 156, 25-9, ¶¶ 78-90).
Specifically, the Government alleges:
AseraCare falsely certified on electronic claim forms submitted to Medicare that hospice care provided to Medicare recipients across the United States was medically indicated and necessary for the health of the patient.' AseraCare created and/or submitted documentation that falsely represented that certain Medicare recipients were terminally ill, ' meaning that the individual has a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course.' Many of the Medicare recipients were not eligible for hospice care paid for by the Medicare Program because they did not have a prognosis of six months or less to live if the illness runs its normal course.
(Doc. 156, 10, ¶ 36). The Government argues that employees throughout the company knew that AseraCare submitted false claims.
The Government seeks damages for two universes of patients. The first universe consists of all AseraCare patients for whom AseraCare submitted claims to Medicare for at least 365 days of continuous hospice care between January 1, 2007 and December 31, 2008. The second universe consists of all AseraCare patients for whom AseraCare submitted claims to Medicare for at least 365 days of continuous hospice care between January 1, 2009 and February 28, 2011. The two universes total 2, 181 patients. The Government's expert reviewed a sample of 233 patients from the 2, 181 claims and found around half (124 out of 233) to be false. (Doc. 251, 23-4, ¶¶ 41-2). The Government seeks to extrapolate that finding to all 2, 181 claims using statistical evidence. (Doc. 251, 37-38, ¶ 12).
AseraCare filed a motion for summary judgment on April 25, 2014 arguing that the Government cannot show AseraCare knowingly submitted any false claim, and filed a motion for partial summary judgment on April 30, 2014, arguing that the Government failed to provide any proof at all for the allegedly false claims outside of the 233 claim sample. AseraCare also filed Daubert motions to exclude Government experts Dr. Klaus Miescke, Ph.D.; Dr. Solomon Liao, M.D.; and Dr. Matthew Perri, Ph.D. Finally, AseraCare filed a motion to exclude Dr. Perri's supplemental report. (Doc. 225; Doc. 229; Doc. 231; Doc. 233; Doc. 235; Doc. 262).
The Government filed a motion for summary judgment on AseraCare's affirmative defenses. The Government also filed Daubert motions to exclude AseraCare experts Dr. Bo Martin, Ph.D.; Dr. Chester Palmer, Ed.D.; and Ms. Leslie Norwalk. (Doc. 237; Doc. 239).
Hospice care is a benefit under Medicare Part A, which is a 100 percent federally-subsidized health insurance program. The Medicare Hospice Benefit is administered by the Centers for Medicare and Medicaid Services ("CMS") on behalf of the Department of Health and Human Services. The Medicare Hospice Benefit pays a predetermined fee, based on the type of care provided by the hospice provider, for each day an eligible patient receives hospice care.
To be eligible for hospice care under Medicare, "an individual must be... (a) [e]ntitled to Part A of Medicare; and (b) [c]ertified as being terminally ill in accordance with § 418.22." 42 C.F.R. § 418.20.
Hospice care is designed to help terminally ill people continue life without disruption to normal activities while remaining in the home. Hospice facilities provide all the care needed by terminally ill patients. "A hospice uses an interdisciplinary approach to deliver medical, social, psychological, emotional, and spiritual services through the use of a broad spectrum of professional and other care-givers with the goal of making the individual as physically and emotionally comfortable as possible." 48 Fed. Reg. 56008, 56008 (Dec. 16, 1983). In choosing hospice care, patients forgo curative options in exchange for palliative care and hope for a better quality to the end of their lives. AseraCare patients receive hospice care in outpatient settings, usually at home or in a skilled nursing facility.
AseraCare operates about 60 hospice facilities in 19 states, including Alabama, with around 10, 000 patient admissions each year. Most AseraCare patients receiving hospice care do not have private insurance and are enrolled in the Medicare program. An Executive Director is the highest level employee at each AseraCare hospice facility. A Director of Clinical Services and a Medical Director report to the Executive Director.
AseraCare receives referrals for hospice patients from a variety of sources, such as hospitals, individual physicians, or skilled nursing facilities. AseraCare employs sales staff, called Provider Relations Managers, to generate patient referrals for hospice care. Provider Relations Managers are expected to generate a certain number of hospice referrals each month. AseraCare's medical personnel are also trained to "sell" hospice to generate referrals. (Doc. 251, 49, ¶ 12).
C. Physician Certification
Patients must be certified as terminally ill before CMS will pay AseraCare for the hospice care it provides. To qualify for the Medicare Hospice Benefit, "the individual's attending physician... and... the medical director... of the hospice program providing... the care, each certify in writing at the beginning of the period, 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." 42 U.S.C. § 1395f(a)(7)(A)(I). A patient is considered to be terminally ill' if the patient has a medical prognosis of life expectancy of six months or less. 42 U.S.C. § 1395x.
The physician certification must contain certain information. The CMS regulations provide:
(b) Content of certification. Certification will be based on the physician's or medical director's clinical judgment regarding the normal course of the individual's illness. The certification must conform to the following requirements:
(1) The certification must specify that the individual's prognosis is for a life expectancy of 6 months or less if the ...