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District Court Rejects Use of Sampling to Establish Liability under False Claims Act

A U.S. district court recently refused to permit a qui tam relator to extrapolate findings from sampling to establish liability under the federal False Claims Act (FCA).  Such evidence was not reliable in proving the alleged false claims were actually submitted.  Acknowledging that a representative sample is sometimes the only practicable means to present evidence about liability, the district court concluded that sampling evidence was not sufficiently reliable, nor the only practicable means to establish Defendants’ liability.

In United States ex rel. Wall v. Vista Hospice Care, Inc., No. 07-cv-00604 (N.D. Tex. June 20, 2016), the relator alleged that Vista, a hospice care provider, knowingly submitted false claims for services provided to patients who were ineligible for hospice care.  Relator’s expert testified that an “ineligibility rate,” determined from a 291 patient sample from a universe of more than 12,000 patients who received hospice care from Vista, could be applied to the 12,000 patient universe to ascertain a statistically valid number of false claims submitted by Vista.

Relying on the Supreme Court’s recent ruling in Tyson Foods v. Bouaphakeo—which upheld the use of sampling but did not involve the FCA—the district court explained that “the permissibility of statistical sampling turns on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”  Applying this standard, the district court ruled that sampling could not establish liability for fraud in submitting these claims for allegedly ineligible patients.  The court explained that the underlying determination of eligibility for hospice was “inherently subjective, patient-specific, and dependent on the judgment of involved physicians.”

The district court noted that sampling might be “appropriate” where the evidence “establishes that a defendant’s objective approach was similar in all cases.”  In this lawsuit, though, the court concluded this expert’s sampling analysis was deficient.  His methodology was fundamentally flawed, and was not sufficiently random.

The court was also not swayed by the argument that statistical sampling was the only means of assessing liability.  The Relator could make ineligibility assessments for each of the 12,000 claims made.  The court gave little weight to the Relator’s argument that such efforts would be too burdensome, noting wryly that the relator had “voluntarily” taken on such a broad FCA action.

The district court’s lengthy 53-page opinion is one of only a handful of opinions which may shape the current debate over the use of sampling for establishing liability under the FCA.

Weiner Brodsky Kider PC regularly represents mortgage lenders and servicers throughout the United States against False Claims Act investigations and actions.