United States v. Care Alternatives

• Citation: 952 F.3d 89
• Decision Date: 04 March 2020
• Docket Number: No. 18-3298,18-3298
• Parties: UNITED STATES of America and State of New Jersey ex rel. Victoria Druding; Barbara Bain; Linda Coleman; Ronni O’Brien v. CARE ALTERNATIVES, Victoria Druding, Barbara Bain, Linda Coleman, and Ronni O’Brien Appellants
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

952 F.3d 89

UNITED STATES of America and State of New Jersey ex rel. Victoria Druding; Barbara Bain; Linda Coleman; Ronni O’Brien

v.CARE ALTERNATIVES, Victoria Druding, Barbara Bain, Linda Coleman, and Ronni O’Brien Appellants

No. 18-3298

United States Court of Appeals, Third Circuit.

Argued September 10, 2019

Opinion filed: March 4, 2020

Ross Begelman, Marc M. Orlow, Regina D. Poserina, Begelman Orlow & Melletz, 411 Route 70 East, Suite 245, Cherry Hill, NJ 08034, Russell D. Paul [ARGUED], Sherrie R. Savett, Berger Montague, 1818 Market Street, Suite 3600, Philadelphia, PA 19103, Counsel for Appellants

Charles W. Scarborough [ARGUED], United States Department of Justice, Appellate Section, Room 7244, 950 Pennsylvania Avenue, N.W., Washington, D.C. 20004, Counsel for Amicus Supporting Appellants

William H. Jordan, Jason Popp [ARGUED], Alston & Bird, 1201 West Peachtree Street, One Atlantic Center, Suite 4900, Atlanta, GA 30309, Counsel for Appellee

Before: HARDIMAN, GREENAWAY, JR. and BIBAS, Circuit Judges.

OPINION

GREENAWAY, JR., Circuit Judge.

This case requires us to consider whether and when clinical judgments can be considered "false" in the context of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 – 3733 (2009). It is a matter of first impression in this Court.

Victoria Druding, Linda Coleman, Barbara Bain, and Ronni O’Brien (collectively, "Appellants"), each of whom is a former employee of Appellee Care Alternatives, brought this FCA action alleging that Care Alternatives admitted patients who were ineligible for hospice care and directed its employees to improperly alter those patients’ Medicare certifications to reflect eligibility. In support of their position, Appellants retained an expert. The expert opined in his report that, based on the records of the forty-seven patients he examined, the patients were inappropriately certified for hospice care thirty-five percent of the time.

Care Alternatives’ expert disagreed and testified that a reasonable physician would have found all of the patients reviewed by Appellants’ expert hospice-eligible on each occasion that Appellants’ expert had deemed certification inappropriate. In considering Care Alternatives’ summary judgment motion, the District Court determined that a mere difference of opinion between experts regarding the accuracy of the prognosis was insufficient to create a triable dispute of fact as to the element of falsity. In fact, the District Court required Appellants to instead provide evidence of an objective falsehood. Upon finding Appellants had not adduced such evidence, the District Court granted summary judgment in favor of Care Alternatives.

Today, we reject the District Court’s objective-falsehood requirement for FCA falsity. Since we find that Appellants’ expert testimony created a genuine dispute of material fact as to falsity, we will vacate the judgment and remand to the District Court for further proceedings consistent with this opinion.

I. BACKGROUND

Care Alternatives provides hospice care to patients throughout New Jersey. It employs a team of clinicians known as "interdisciplinary teams," ("IDTs") consisting of registered nurses, chaplains, social workers, home health aides, and therapists working alongside independent physicians who serve as hospice medical directors. The IDTs meet twice a month to review patient care plans and to identify any particular needs as well as discuss patients who are up for recertification of their need for hospice care.

Appellants are former employees of Care Alternatives, many of whom were clinicians that participated in IDTs. They brought this action under the FCA alleging, among other things, that Care Alternatives admitted ineligible patients and directed its employees to alter Medicare certifications to increase the number of eligible patients.

Before reaching the essential question of whether expert testimony may suffice to generate a genuine dispute as to a Medicare claim’s falsity, we will review the requirements that hospice care providers must meet to qualify for Medicare reimbursement and the circumstances leading to this appeal.

A. Medicare Hospice Benefit

In 1983, Congress established the Medicare Hospice Benefit ("MHB"). See 48 Fed. Reg. 56,008 (Dec. 16, 1983) (codified at 42 C.F.R. pts. 400, 405, 408, 409, 418, 420, 421, 489). This regulation expanded the Health and Human Services Secretary’s statutory authority to reimburse contractors that provide hospice care to eligible persons. 42 U.S.C. §§ 1395h (2006), 1395kk-1 (2015). Hospice care is considered palliative care, meaning it is "patient and family-centered care that optimizes quality of life by anticipating, preventing, and treating suffering." 42 C.F.R. § 418.3 (2019). It aims to "mak[e a terminally ill] individual as physically and emotionally comfortable as possible." 48 Fed. Reg. at 56,008. A patient who has been certified as eligible for hospice care and elects to receive the MHB waives the right to Medicare payment for "curative" care that is designed to help improve the individual’s condition. See 42 U.S.C. § 1395d(d)(2)(A) (2005) ; 42 C.F.R. § 418.24(e) (2019) ; 72 Fed. Reg. 50,452, 50,452 (Aug. 22, 2014).

The Medicare provisions that set forth the conditions for payment of the MHB require that an individual be certified within a ninety-day period by one or more physicians as terminally ill. 42 U.S.C. § 1395f(a)(7)(A)(i). The patient must also be recertified in a similar manner for each additional sixty-or ninety-day period during which he or she remains in hospice care.¹ Id . § 1395f(a)(7)(A)(ii). An individual is considered "terminally ill" when the individual has a medical prognosis that the individual’s life expectancy is six months or less, if the illness runs its normal course. Id . § 1395x(dd)(3)(A) (2018); 42 C.F.R. § 418.3.

Regulations promulgated by the Secretary add another requirement. See 42 C.F.R. § 418.20. The regulations provide that, "[i]n order to be eligible to elect hospice care under Medicare, an individual must be ... (b) Certified as being terminally ill in accordance with § 418.22." Id . Section 418.22, in turn, imposes certain obligations on hospices regarding the timing, content, and source of a certification, in addition to a maintenance-of-records requirement. Among these is the requirement that

[c]linical information and other documentation that support the medical prognosis must accompany the certification and must be filed in the medical record with the written certification as set forth in paragraph (d)(2) of this section. Initially, the clinical information may be provided verbally, and must be documented in the medical record and included as part of the hospice’s eligibility assessment.

§ 418.22(b)(2) (2011).

Therefore, in order for a patient to be eligible to receive the MHB and for a hospice provider to be entitled to bill for such benefits, an individual’s certification of terminal illness must be signed by at least one physician, and be accompanied by "[c]linical information and other documentation that support the medical prognosis" of terminal illness in the medical record. Id. Indeed, while the Center for Medicare & Medicaid Services, the agency responsible for administering health benefits, has recognized that "making a prognosis is not an exact science," it has explained that this inexactitude "does not negate the fact that there must be a clinical basis for a certification[:] [a] hospice is required to make certain that the physician’s clinical judgment can be supported by clinical information and other documentation that provide a basis for the certification of 6 months or less if the illness runs its normal course." 79 Fed. Reg. at 50,470 (emphasis added); see also 70 Fed. Reg. 70,532, 70,534 –35 (Nov. 22, 2005) ("A hospice needs to be certain that the physician’s clinical judgment can be supported by clinical information and other documentation that provide a basis for the certification of 6 months or less if the illness runs its normal course. A signed certification, absent a medically sound basis that supports the clinical judgment, is not sufficient for application of the hospice benefit under Medicare.").

B. Factual and Procedural Background

Appellants brought this suit under the qui tam provision of the FCA, which encourages actions by private individuals, called relators, who are entitled to a portion of the amount recovered, subject to certain limitations. See 31 U.S.C. § 3730(b), (d). Pursuant to the qui tam provision, Appellants filed their complaint under seal and provided the Government with the information upon which they intended to rely so that the Government could make an informed decision as to whether it should intervene and take over the case. Id. § 3730(b)(2). Appellants alleged that Care Alternatives submitted false hospice-reimbursement claims to Medicare and Medicaid between 2006 and 2007, in violation of the FCA, which finds liable any person who knowingly submits to the United States a false claim for payment or approval. 31 U.S.C. §§ 3729(a)(1)(A), 3730(b)(1).

Seven years after the complaint was filed, the Government notified the District Court of its decision not to intervene in this action. Appellants opted to proceed independently and served the First Amended Qui Tam Complaint upon Care Alternatives.

During discovery, the parties produced extensive evidence addressing whether Care Alternatives admitted ineligible patients. This included dueling expert opinions. Appellants’ expert, Dr. Jayes, prepared a report as to whether patient certifications were accompanied by supporting documentation. He examined the records of forty-seven patients and opined that the documents did not support a certification of need for hospice in thirty-five percent of these patients’ hospice certification periods. In his view, for those periods, any reasonable physician would have reached the conclusion he reached. He also found that the medical records were incomplete for at least...