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Life Care Seeks Sixth Circuit Review of Sampling Decision

January 20, 2015

We recently wrote about a federal district court decision allowing the government to use statistical sampling to prove liability in a False Claims Act case pending against Life Care Centers of America, Inc.  The government’s case stems from two whistleblower suits accusing Life Care of providing uncovered, unskilled, and medically unnecessary services. Life Care has more than 200 locations in about 30 states and much of its revenue comes from Medicare patients.

Life Care has asked the federal district court judge who issued the decision to certify his decision for an interlocutory appeal to the United States Court of Appeals for the Sixth Circuit before the case is tried in the district court.  In that decision, Judge Mattice ruled that 400 specific admissions involving roughly 1,700 claims could be extrapolated to roughly 55,000 admissions involving almost 155,000 claims. In essence, Life Care is hoping to require the government to separately prove the falsity of each of the 155,000 claims, an almost insurmountable burden.  In its motion, Life Care argues that the issue is novel and thus the Sixth Circuit should consider whether extrapolation can satisfy the government’s burden of proof under the FCA and whether constitutional due process rights would be violated if Life Care could not mount a claim-by-claim defense.

The Department of Justice opposed the motion for an interlocutory appeal, arguing among other things that the district court was following decades of precedent establishing the use of statistical sampling in a variety of types of litigation and thus there is no basis justifying Sixth Circuit review of the district court decision’s decision before trial.  “Although the court stated in its order that the use of sampling and extrapolation may have been one of first impression as applied specifically to the FCA, the court nonetheless emphasized that the use of sampling and extrapolation in litigation is hardly novel, and, in fact, is well established,” the government said.

We do not expect the federal district court judge to certify his well-reasoned and thorough decision for interlocutory appeal. Instead, Life Care will have to proceed through discovery, try to challenge the validity and reliability of the statistical sample and supporting expert testimony in the district court, and hope that it can make inroads to limit or exclude the extrapolation.  If done right, the extrapolation should withstand attack and not only help prove liability but also lay the foundation for a massive damages award if the judge or the jury finds Life Care liable of violating the False Claims Act.