Court finds extrapolation permissible to prove liability under False Claims Act

By Kelline R. Linton,
Associate.

 

On Monday, a Tennessee federal judge ruled that government attorneys can extrapolate from a small sample of billing statements to prove liability under the False Claims Act (“FCA”) in a closely watched whistleblower case—Life Care Centers of America Inc.

 

In Life Care Centers, the government accused a nursing home operator of billing for unnecessary care from 2006 until 2012. To prove the billing was fraudulent, the government wanted to individually examine a random sample of 400 patient admissions and then extend its findings of falsity to more than 50,000 additional admissions. The Judge approved this extrapolation because the FCA did not specifically bar the practice. However, the Judge did note that Life Care Centers could still attack the government’s methods and experts for this extrapolation at trial.

 

This decision is important for federal contractors because little case law exists on the question of whether such sampling is permissible under the FCA. Without the need for individualized proof, this ruling may dramatically increase the number of claims deemed fraudulent. We caution federal contractors to review their billing procedures to ensure compliance and accuracy, and are available to assist if you have any questions.

 

(The consolidated cases are USA ex rel. Martin et al. v. Life Care Centers of America Inc., case number 1:08-cv-00251, and U.S. ex rel. Taylor v. Life Care Centers of America Inc., case number 1:12-cv-00064 in the U.S. District Court for the Eastern District of Tennessee).

 

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