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United States ex rel. Paradies v. GGNSC Administrative Services, LLC

United States District Court, N.D. Alabama, Southern Division

October 26, 2015

UNITED STATES OF AMERICA, ex rel. DEBORA PARADIES, et al., Plaintiff,
v.
GGNSC ADMINISTRATIVE SERVICES, LLC, et al., Defendants.

          BENJAMIN C. MIZER PRINCIPAL DEPUTY ASSISTANT ATTORNEY GENERAL JOYCE WHITE VANCE UNITED STATES ATTORNEY LANE HINES WOODKE DON B. LONG III MARY LESTER Assistant United States Attorneys

          MICHAEL D. GRANSTON RENÉE BROOKER JEFFREY A. WERTKIN CAROLYN B. TAPIE WILLIAM E. OLSON EVA U. GUNASEKERA HOLLY SNOW CHRISTINA DAVIS Attorneys, Civil Division Commercial Litigation Branch Counsel for the United States

          MOTION FOR RECONSIDERATION OF ORDER TO GRANT A NEW TRIAL

         On October 19, 2015, after eight weeks of trial and nine days of deliberations, the jury completed its Phase One deliberations and identified 104 patients for whom AseraCare submitted false claims for hospice services. See ECF No. 465. These findings were consistent with the facts and governing law.

         Nevertheless, on October 23, 2015, the Court sua sponte revisited the instructions that were provided to the jury. The Court announced: “I have realized that I committed major reversible error in the jury instructions, because I do not believe that I properly instructed the jury as to the legal standard they had to apply in making that determination.” Trial Tr. 7304-05.

         Defendants orally moved for a new trial, and the Court granted Defendants' motion on the ground that the Court failed to provide the jury with a “sufficient legal standard for evaluating the case.” Trial Tr. 7311.

         The United States respectfully moves the Court to reconsider its decision to order a new trial on the grounds that the Court's jury instructions were correct as a matter of law. Because the Court instructed the jury on the correct legal standard - the same legal standard that the Court applied at the summary judgment stage - the Court's decision to grant a new trial should be reconsidered to avoid clear and reversible error and to prevent manifest injustice.

         In the twelve weeks since Phase One of the trial began on August 10, 2015, the United States and the Court have expended considerable taxpayer resources to try Phase One before a jury of 4 men and 7 women. The jury was provided with instructions that this Court had previously and correctly determined were proper and legally sufficient. It would be grossly inefficient and unprecedented at this stage to empanel a second jury and force the taxpayers to bear the expense of a second twelve-week trial in Phase One, especially because there is a great risk that the Court will commit reversible error in the second trial by instructing the jury in the manner that it now contends is required. Reversible error in a second trial would likely result in a remand for a third trial. Rather than risk the possibility of three trials each spanning several months at taxpayer expense, the Court should proceed with the current verdict, which AseraCare may then appeal in due course should it elect to do so.

         Because the court's proposed change in the jury instructions is contrary to the overwhelming weight of authority and would risk substantial waste of resources, the United States moves the Court to reconsider its Order for a new trial.

         I. BACKGROUND

         A. Factual Background

         The Medicare hospice benefit is a unique, critically important healthcare benefit for a very specific population of Medicare patients - those who are terminally ill with a life expectancy of only six months or less. See 42 U.S.C. § 1395x. When these terminally ill patients are admitted to hospice, they give up their rights to Medicare coverage for care intended to cure or rehabilitate, and instead receive hospice care designed to bring them comfort and dignity at the end of their lives. See 42 C.F.R. § 418.24(d).

         The United States contends that AseraCare put the hospice benefit at risk by defrauding the Medicare program. Specifically, the United States alleges that AseraCare operated its for-profit hospice business without regard to whether it complied with Medicare rules or provided the right care at the right time to Medicare beneficiaries. See ECF No. 156 at ¶¶ 35-64 (Complaint in Intervention). As a result, the United States alleges that AseraCare claimed and received tens of millions of dollars from Medicare that it was not entitled to receive because the patients were not terminally ill and did not need end-of-life hospice care.

         Details of AseraCare's fraudulent scheme were initially brought to the United States' attention in three separate qui tam lawsuits that were filed independently by six former AseraCare employees. The United States intervened in this False Claims Act (“FCA”) lawsuit against AseraCare based on evidence that AseraCare marginalized and circumvented doctors, systematically pressured its own clinical staff to admit and keep ineligible patients, submitted false hospice claims for patients who were not terminally ill, and was put on notice from internal and external audits and employee complaints that this was occurring. In short, the United States alleges that AseraCare committed fraud on the Medicare program, and the United States brought suit to recover taxpayer funds that AseraCare wrongfully appropriated as a result of its unlawful activity.

         B. Procedural Background

         The United States filed its Complaint in Intervention against AseraCare on November 2, 2012. After years of discovery, the Court heard cross-motions for summary judgment. AseraCare moved for summary judgment challenging the United States' evidence regarding the falsity element of its FCA claims. On December 4, 2014, the Court denied AseraCare's motion after finding that the testimony of the United States' medical expert “creates issues of material fact regarding whether clinical information and other documentation in the medical record support the certifications of terminal illness, a pre-requisite for payment of a Medicare Hospice Benefit claim.” ECF No. 268 at 15 (Order on Summary Judgment).

         On May 20, 2015, over the United States' continuing objection, the Court took the extraordinary and unprecedented step of bifurcating the trial by splitting elements of FCA liability so that the trial would proceed in two phases: the first phase would address the falsity element of the United States' FCA claim, and the second phase would address the other elements of the United States' FCA claim and all other claims. ECF No. 298 at 4-5 (Order on Bifurcation). The Court found that evidence that AseraCare actually knew it was submitting false claims could unduly prejudice AseraCare when a jury evaluated the question of whether the claims it submitted were, in fact, false. Id. at 2-4. To avoid this “undue prejudice” to AseraCare, the Court adopted an approach that required the United States to prove the falsity of hospice claims while at the same time prevented the United States from presenting otherwise admissible evidence about how and why AseraCare carried out its fraudulent scheme. Id. at 3.

         Phase One of the bifurcated trial began with jury selection on August 3, 2015. Over the course of several months, the United States introduced approximately 200 exhibits and presented the testimony of a medical expert as well as former AseraCare employees who testified about AseraCare's improper clinical practices, including its instructions to staff to admit ineligible patients to hospice.

         The jury began Phase One deliberations on September 30, 2015. The jury was asked to determine whether AseraCare submitted false claims for any of the 121 patients discussed at trial and, if so, for what time period. After nine days of deliberations, the jury returned a verdict on October 15, 2015, concluding that AseraCare submitted false claims for 104 of the 121 patients listed in the Special Interrogatories. ECF No. 445.

         On October 19, 2015, the Court asked the jury to clarify its interrogatory responses with regard to 6 patients. ECF No. 445. The same day, the jury deliberated and returned with only minor modifications to its interrogatory responses concerning periods of ineligibility for those 6 patients. ECF No. 465.

         II. LEGAL ARGUMENT

         A. The Legal Standard Identified by the Court at Summary Judgment ...


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