United States v. AseraCare, Inc.

• Citation: 938 F.3d 1278
• Decision Date: 09 September 2019
• Docket Number: No. 16-13004,16-13004
• Parties: UNITED STATES of America, Plaintiff - Appellant, v. ASERACARE, INC., GGNSC Administrative Services, d.b.a. Golden Living, f.k.a. Beverly Enterprises, Inc., Hospice Preferred Choice, Inc., Hospice of Eastern Carolina, Inc., Defendants - Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

938 F.3d 1278

UNITED STATES of America, Plaintiff - Appellant,

v.ASERACARE, INC., GGNSC Administrative Services, d.b.a. Golden Living, f.k.a. Beverly Enterprises, Inc., Hospice Preferred Choice, Inc., Hospice of Eastern Carolina, Inc., Defendants - Appellees.

No. 16-13004

United States Court of Appeals, Eleventh Circuit.

September 9, 2019

Abby Christine Wright, U.S. Attorney General's Office, WASHINGTON, DC, Michael B. Billingsley, Erin Massey Everitt, Don Boyden Long, III, Mary Lester Marshall, Jenny Lynn Smith, Lane H. Woodke, U.S. Attorney's Office, BIRMINGHAM, AL, Stacy C. Gerber Ward, U.S. Attorney's Office, MILWAUKEE, WI, Renee Brooker, Christina Davis, William Edward Olson, Holly H. Snow, Carolyn B. Tapie, Jeffrey Wertkin, U.S. Department of Justice, Civil Division, WASHINGTON, DC, Eva U. Gunasekera, U.S. Department of Justice, WASHINGTON, DC, Joyce White Vance, University of Alabama School of Law, BIRMINGHAM, AL, for Plaintiff - Appellant.

Matthew Howard Lembke, R. Aaron Chastain, Nicholas Adam Danella, Cameron W. Ellis, Jack W. Selden, Tiffany J. deGruy, Bradley Arant Boult Cummings, LLP, BIRMINGHAM, Kimberly Bessiere Martin, Bradley Arant Boult Cummings, LLP, HUNTSVILLE, AL, for Defendants - Appellees.

Colette G. Matzzie, Phillips & Cohen, LLP, WASHINGTON, DC, for Amicus Curiae TAXPAYERS AGAINST FRAUD EDUCATION FUND

Maame Gyamfi, AARP Foundation Litigation, WASHINGTON, DC, for Amici Curiae AARP, AARP FOUNDATION LITIGATION

James F. Segroves, Reed Smith, LLP, WASHINGTON, DC, for SAVASENIORCARE ADMINISTRATIVE SERVICES, LLC

Catherine Emily Stetson, Hogan Lovells US, LLP, WASHINGTON, DC, for AMERICAN MEDICAL ASSOCIATION, NATIONAL HOSPICE AND PALLIATIVE CARE ORGANIZATION, NATIONAL ASSOCIATION FOR HOME CARE AND HOSPICE, AMERICAN ACADEMY OF HOSPICE AND PALLIATIVE MEDICINE, HOSPICE AND PALLIATIVE NURSES ASSOCIATION

Before ROSENBAUM and JULIE CARNES, Circuit Judges, and SCHLESINGER,^* District Judge.

JULIE CARNES, Circuit Judge:

This case requires us to consider the circumstances under which a claim for hospice treatment under Medicare may be deemed "false" for purposes of the federal False Claims Act. Defendants comprise a network of hospice facilities that routinely bill Medicare for end-of-life care provided to elderly patients. In the underlying civil suit, the Government alleged that Defendants had certified patients as eligible for Medicare’s hospice benefit, and billed Medicare accordingly, on the basis of erroneous clinical judgments that those patients were terminally ill. Based on the opinion of its expert witness, the Government contends that the patients at issue were not, in fact, terminally ill at the time of certification, meaning that AseraCare’s claims to the contrary were false under the False Claims Act.

As the case proceeded through discovery and a partial trial on the merits, the district court confronted the following question: Can a medical provider’s clinical judgment that a patient is terminally ill be deemed false based merely on the existence of a reasonable difference of opinion between experts as to the accuracy of that prognosis? The district court ultimately answered this question in the negative and therefore granted summary judgment to AseraCare on the issue of falsity.

Upon careful review of the record and the relevant law, and with the benefit of oral argument, we concur with the district court’s ultimate determination that a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment. We do, however, think that the Government should have been allowed to rely on the entire record, not just the trial record, in making its case that disputed issues of fact, beyond just the difference of opinion between experts, existed sufficient to warrant denial of the district court’s post-verdict sua sponte reconsideration of summary judgment on the falsity question. We therefore affirm in part and remand in part.

I. BACKGROUND ¹

Each year, more than a million Americans make the difficult decision to forgo curative care and turn instead to end-of-life hospice care, which is designed to relieve the pain and symptoms associated with terminal illness. See 79 Fed. Reg. 50452, 50454–55 (Aug. 22, 2014). The federal government’s Medicare program makes such care affordable for a significant number of terminally ill individuals. Defendants, collectively referred to as AseraCare, operate approximately sixty hospice facilities across nineteen states and admit around 10,000 patients each year. Most of AseraCare’s patients are enrolled in Medicare. In fact, from 2007 to 2012, Medicare payments composed approximately ninety-five percent of AseraCare’s revenues. As such, AseraCare routinely prepares and submits claims for reimbursement under Medicare.

This case began when three former AseraCare employees alleged that AseraCare had a practice of knowingly submitting unsubstantiated Medicare claims in violation of the federal False Claims Act. We begin by setting out the requirements hospice providers like AseraCare must meet in order to be entitled to hospice reimbursement and identifying the tools the Government uses to police compliance with these requirements.

A. The Medicare Hospice Benefit

In order for a hospice claim to be eligible for Medicare reimbursement, the patient’s attending physician, if there is one, and the medical director of the hospice provider must "each certify in writing at the beginning of [each] 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(7)(A). "Terminally ill" means that the individual "has a medical prognosis that the individual’s life expectancy is 6 months or less." 42 U.S.C. § 1395x(dd)(3)(A). Under the statute’s implementing regulations, a claim for hospice reimbursement must conform to several requirements in order to be payable. Most notably for purposes of this appeal, the certification must be accompanied by "[c]linical information and other documentation that support the medical prognosis," and such support "must be filed in the medical record with the written certification." 42 C.F.R. § 418.22(b)(2).

An initial certification conforming to these requirements is valid for a period of ninety days. 42 U.S.C. § 1395f(7)(A). The patient must be recertified in a similar manner for each additional sixty- or ninety-day period during which he or she remains in hospice. Id. While a life-expectancy prognosis of six months or less is a necessary condition for reimbursement, regulators recognize that "[p]redicting life expectancy is not an exact science." 75 Fed. Reg. 70372, 70488 (Nov. 17, 2010). Accordingly, the Medicare framework does not preclude reimbursement for periods of hospice care that extend beyond six months, as long as the patient’s eligibility is continually recertified. This framework also recognizes that, in some cases, patients with an initial prognosis of terminality can improve over time, and it allows such patients to exit hospice without losing their right to Medicare coverage to treat illness. Id . Thus, there is no statutory limit to the number of periods for which a patient may be properly certified. 42 U.S.C. § 1395d(d)(1) (establishing that hospice providers may collect reimbursement for an unlimited number of recertification periods).

The Medicare program is overseen by the Centers for Medicare and Medicaid Services ("CMS"), a division of the Department of Health and Human Services. CMS operates locally through so-called Medicare Administrative Contractors ("MACs"), which process claims from healthcare providers and make payment for eligible services. A majority of AseraCare’s Medicare claims are processed by a MAC called Palmetto GBA ("Palmetto"), which operates in the southeast United States.

In preparing its claims for hospice reimbursement, AseraCare employs interdisciplinary teams of skilled staff—including physicians, nurses, psychologists, social workers, and chaplains—that render services directly to patients and collectively make eligibility determinations. To guide this review, AseraCare professionals rely in part on documents called Local Coverage Determinations ("LCDs"), which are issued by Palmetto’s medical directors. LCDs provide detailed lists of diagnostic guidance and clinical information that, if documented in a patient’s medical record, suggest that the patient has a life expectancy of six months or less. LCDs are not clinical benchmarks or mandatory requirements for hospice eligibility, however. Rather, they are designed to help clinical staff understand the type of information that should be considered prior to concluding that a patient is terminally ill. The LCDs themselves explicitly state that they are non-binding.

Once AseraCare physicians reach a clinical judgment that a patient is eligible for hospice care, AseraCare may begin providing treatment. It submits claims to Palmetto for reimbursement only after care has been rendered. The trial testimony of Mary Jane Schultz, a registered nurse and former director of Palmetto’s medical review team, clarified at trial the process by which Palmetto reviewed and paid claims for hospice coverage during the relevant time period of 2007 to 2012. As Ms. Schultz described, the first round of claim review was conducted by an automated claim-processing system designed to ensure that no critical information, such as a patient’s Medicare identification number, was missing or invalid. If no critical information was missing, the system would then check for any "red flags" that might require further review of the claim—such as the involvement of a particular provider, patient, or type of care that Palmetto staff...