AseraCare FCA Ruling Is A Boon For Health Providers

31 January 2020 Law360 Publication
Authors: Christopher J. Donovan Lisa M. Noller Lori A. Rubin

This article originally appeared on Law360 and is republished here with permission.

All hospice providers routinely should assess risk exposure under the False Claims Act[1] — now with the benefit of the U.S. Court of Appeals for the Eleventh Circuit’s long-awaited decision in United States v. AseraCare Inc.[2] There, the Eleventh Circuit sketched the contours of when a physician certification of terminal illness — and resulting certification by the facility — may be considered false under the FCA.

Much has been written on AseraCare’s holding (first in the U.S. District Court for the Northern District of Alabama before being affirmed by the Eleventh Circuit) that a reasonable difference of opinion among physicians reviewing medical documentation ex post is not sufficient on its own to suggest those medical opinions — or any claims based on them — are false under the FCA.

Providers also are excited about the Eleventh Circuit’s correct holding that falsity cannot be inferred from general corporate practices (e.g., aggressive sales quotas) without a time and place nexus to specific alleged false claims. Health care providers of many types facing allegations that services billed were not medically necessary are clamoring to fall under the umbrella of AseraCare, which is a welcome tool for all.

This article focuses specifically on AseraCare’s takeaways for home health providers.

Medicare Hospice Benefits

We begin with a brief primer on the Medicare hospice benefit, for context. Medicare offers hospice benefits only to patients who are terminally ill. For a hospice claim to be eligible for Medicare reimbursement, the patient’s attending physician and the medical director of the hospice provider must certify, and then periodically recertify, in writing that the patient is terminally ill (among other requirements).

“Terminally ill” is defined to mean the patient’s life expectancy is six months or less. Moreover, there must be clinical information in the medical record to support the prognosis of a six-month-or-less life expectancy.[3]

Medicare administrative contractors issue guidance documents called local coverage determinations, or LCDs. AseraCare professionals relied in part on LCDs issued by the Medicare administrative contractor under whose jurisdiction most of AseraCare’s claims fell. That Medicare administrative contractor’s LCDs provide detailed lists of diagnostic guidance and clinical information that, if documented in a patient’s medical record, suggest the patient’s terminal illness.

The LCDs do not provide a checklist required for hospice eligibility; rather, they are guidance to help clinical staff understand what type of information to consider in assessing whether a patient is terminally ill. The LCDs are nonbinding guidance that may be subject to the 2018 Brand memo constraints on the use of agency guidance on affirmative civil enforcement cases.[4]

Case Details

In 2016, three former AseraCare employees brought suit under the FCA against AseraCare, a network of about 60 hospice facilities that routinely billed Medicare for end-of-life care provided to elderly patients.[5] The government intervened in the litigation, taking the case over from the former employees.[6]

The government may have thought, at the time, that it had a clear-cut theory of FCA liability: the hospice facilities certified patients as terminally ill despite allegations they were not. According to the government, the facilities’ bills to Medicare for those patients constituted false claims under the FCA.[7] Not so fast.

While the government had a potentially viable theory of liability, the devil was in the details. Each side’s experts disagreed as to whether patient records supported the terminal illness certifications. However, the government’s expert would not say that AseraCare’s experts were incorrect to conclude that patient records supported the certifications, nor did the government’s expert conclude that no reasonable physician could have found those patient records sufficient.

Indeed, the government’s expert changed his own opinion concerning the eligibility of certain patients over the course of the proceedings — deciding that some of the patients he had earlier concluded were not terminally ill were in fact terminally ill. He explained his change of position by stating that he “was not the same physician in 2013 at [he] was in 2010.”[8]

The government’s expert and AseraCare’s experts reviewed the same medical records, albeit using different methodologies to draw their conclusions. The government’s expert used a checklist approach, comparing patient medical records to medical guidelines, especially the aforementioned LCDs. AseraCare’s experts considered the LCDs, but did not formulaically apply them, instead considering the entirety of the patient’s history, the ailments of each patient, and the experts’ own experience with end-of-life care. As the court explained, either approach to terminal illness determination was acceptable.[9]

In the trial court, the jury was asked to determine which expert’s interpretation of the medical records was more persuasive, leaving the other expert’s opinion to be deemed false.[10] The jury sided with the government’s expert in large part, finding AseraCare had submitted false claims for 104 of the 123 patients identified by the government.[11]

However, after trial, the district court granted a new trial and, on its own motion, granted summary judgment to AseraCare. The district court found summary judgment was appropriate because the government’s only delineated evidence of falsity was its expert’s opinion, which did not itself show the certifications were false.[12]

The government appealed, asking the Eleventh Circuit to reject the legal standard for falsity set by the district court, reverse the grant of a new trial and grant of summary judgment, and reinstate the jury’s findings as to falsity.[13]

The Decision and its Significance

The Eleventh Circuit accepted the district court’s standard for falsity, holding that, when a hospice provider submits a claim that certifies that a patient is terminally ill based on the physician’s or medical director’s clinical judgment, the claim cannot be false under the FCA if the underlying clinical judgment does not reflect an objective falsehood.[14]

The Eleventh Circuit further held that a reasonable difference of opinion among physicians reviewing medical documentation ex post is not sufficient on its own to suggest that those judgments — or any claims based on them — are false under the FCA.[15]

The Eleventh Circuit placed significance in the fact that AseraCare possessed accurate and comprehensive documentation of each patient’s medical condition and that each certification of terminal illness was signed by appropriate medical personnel.[16] If home health providers take appropriate steps, they can take comfort in knowing that at least one U.S. appellate court has recognized appropriate deference to physicians in the context of hospice certifications.

The Eleventh Circuit — analyzing statute, regulations and the rulemaking record — properly decided to respect the judgment of the physician responsible for the patient’s care, so long as it was reasonably supported by the patient’s sufficient medical records.[17] The Eleventh Circuit noted the statement by the Centers for Medicare & Medicaid Services that

We believe that the certifying physicians have the best clinical experience, competence and judgment to make the determination than an individual is terminally ill.[18]

The Eleventh Circuit found the jury should not be put “in the position of evaluating, and second-guessing, the clinical judgment of the certifying physician.”[19]

The opinion contrasted the case with other scenarios, not presented in the AseraCare case, reflecting an objective falsehood in other cases:

  • The certifying physician failed to review the patient’s medical records or otherwise familiarize himself with the patient’s condition before asserting the patient was terminally ill.
  • The medical record relied upon was too thin, vague or lacking in detail to reasonably substantiate the physician’s clinical judgment.
  • The physician did not subjectively believe the patient was terminally ill at the time of the certification.
  • Expert evidence proves that no reasonable physician could have concluded that a patient was terminally ill given the medical records.
  • The provider forged certifications or medical documentation.
  • The provider lied to certifying physicians.
  • The providers withheld information from certifying physicians.
  • The provider billed for services not provided. [20][21]

These indicators of falsity should not come as a surprise; home health providers would do well implement measures to avoid falling into one of these categories.

At a basic level, they should ensure paperwork is in order and certifications are signed by appropriate medical personnel. They should provide physicians the time and information needed for a careful review of patient medical records. They should implement measures to identify and follow up on any red flags related to the sufficiency of a physician’s review or foul play such as forged certifications or information withholding.

Of course, a detailed medical record, signed by a reputable provider, is always the best practice. In the rare FCA trial, treating physicians likely will continue to stand by their own clinical judgment, a practice now endorsed by the Eleventh Circuit. Finally, it is important to note that the AseraCare case involved a highly subjective clinical judgment (the timing of the end of human life) which by its nature can generate different yet equally plausible opinions.

Other areas of clinical care such as skilled home care provided to homebound seniors (as required under Medicare conditions of participation) may arguably be less subjective, especially as to homebound status for example. The extent to which AseraCare can prove valuable precedent outside of hospice remains to be seen and may be heavily dependent on facts.

In any case, it provides a solid foundation for clinical judgment when in dispute and clarifies that the government must always tie objective falsity to specific medical records and patients, not merely a corporate culture that suggests wrongdoing.

In the end, the Eleventh Circuit affirmed the district court’s grant of a new trial, but vacated the grant of summary judgment to AseraCare because the district court did not consider evidence that AseraCare had a deliberate practice of not providing relevant, accurate and complete information about patients to certifying physicians.[22]

The district court had refused to consider this evidence because the government had not initially labeled it as proof of falsity.[23] For example, one former medical director testified that she typically did not provide the certifying physician with any clinical information, instead merely seeking the physician’s signature.[24]

Moreover, the government had additional evidence possibly demonstrating falsity, not yet offered because the trial had been bifurcated.[25] Notably, the district court on remand has refused to reopen discovery, leaving the government with the present record.[26]

And while vacating the district court’s grant of summary judgment, the court noted that, at trial, the government must “link [its] evidence of improper certification practices to the specific 123 claims at issue in this case” because “[s]uch linkage is necessary to demonstrate both falsehood and knowledge.”[27]

All in all, AseraCare is a welcome tool for providers defending against meritless accusations that medical judgments by their practitioners were fraudulent and against allegations about corporate practices not linked to specific claims. The AseraCare decision helps place medical judgment back in the hands of practitioners, ushering medical judgment away from ex post allegations of fraud in the courtroom.

At the same time, the decision provides guidance as to what practices may subject that medical judgment to second-guessing in the courtroom.


[1] 31 U.S.C. § 3729 et seq.

[2] 938 F.3d 1278 (11th Cir. 2019).

[3] Id. at 1292-93.

[4] Id. at 1283; Rachel Brand, Limiting Use of Agency Guidance Documents in Affirmative Civil Enforcement Cases, U.S. Dep’t of Justice (Jan. 25, 2018).

[5] 938 F.3d at 1282.

[6] Id. at 1284.

[7] Id.

[8] Id. at 1287-88.

[9] Id. at 1288.

[10] Id. at 1288-89.

[11] Id. at 1289.

[12] Id. at 1290.

[13] Id. at 1290-91.

[14] Id. at 1296-97.

[15] Id. at 1297.

[16] Id. at 1285.

[17] Id. at 1293-95.

[18] Id. at 1295 (quoting 78 Fed. Reg. 48,234, 48,247 (Aug. 7, 2013)).

[19] Id. at 1299.

[20] Id. at 1297.

[21] Id. at 1285, 1288, 1297.

[22] Id. at 1303.

[23] Id. at 1303-04.

[24] Id. at 1303.

[25] Id.

[26] United States v. AseraCare, No. 2:12-cv-245-KOB, slip op. at 12 (S.D. Ala. Dec. 4, 2019), ECF No. 581.

[27] 938 F.3d at 1305.

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