Last week, the 11th Circuit Federal Court of Appeals reversed summary judgment given to AseraCare in its hospice false claims case, setting up more litigation on the question whether AseraCare’s certifications were made in good faith. But, the appeals court also affirmed a critical trial court ruling on the standard to be applied to review of hospice claims for “falsity,” holding that a mere difference of opinion among physicians is insufficient to establish that a claim is false; and, holding that, a “physician’s clinical judgment dictates eligibility as long as it represents a reasonable interpretation of the relevant medical records.”

At issue were services to 2,180 patients who received at least 1 year of hospice services; if all of these services were denied, after the fact, as much as $200 million in payments would be at stake. There were no allegations that the patients were not real patients, nor that certifications were forged, nor that there was a false or even insufficient medical records for any patient. From a sample of 223 patients, the government’s expert witness (a physician) opined that 123 were not eligible (over half). AseraCare’s expert (also a physician), by contrast, defended the eligibility certifications for these patients.

As a result, the AseraCare trial featured the spectacle of two physicians giving differing opinions on whether 123 specific AseraCare patients were sufficiently “terminally ill” so as to justify hospice services. The jury was asked to choose which doctor they believed.

The government’s physician conceded that he was “not in a position to discuss whether another physician was wrong.” In fact, he reversed his own negative opinion on many patients, explaining only that he “was not the same physician [in 2013 when testifying at trial] as he was in 2010 [when opinions first rendered].” And, Palmetto’s Mary Jane Schultz (medical review lead) conceded that two physicians could disagree, with neither being wrong.

And, still, AseraCare was subject to years of high stakes litigation over its hospice certifications and, initially, a negative jury verdict (witness the power of the government in court). After the verdict against AseraCare, the trial court concluded that it had erred in allowing the government to try to prove falsity merely by criticizing a doctor’s good faith certification; and, when the government could point to no evidence from trial to show that the original certifications had not been reasonably given, the trial court dismissed the government’s case. On this last point, the appeals court reversed, holding that the government should have been allowed to offer any additional evidence it had to prove that the opinions were not reasonably given.

The more important point, generally, is that going forward, absent obvious fraud (fake patients, forged certifications), if the government wants to saddle providers with false claims act liability for hospice services, it must show some objective falsehood, not merely a disagreement among experts. To overcome a physician certification, the government will have to show that the physician lacked a reasonable belief in his or her opinion (for instance, due to failure to review the medical record at all).

This holding should be the death knell for most hospice false claims cases. Indeed, the Court itself noted that the “FCA is an inappropriate instrument to serve as the government’s primary line of defense against questionable claims for reimbursement of hospice benefits.” DOJ’s recent penchant for prosecution of false claims cases against hospice providers should end.

Of course, false claims cases are not the only tools available to a government eager to recover and reuse Medicare funds. CMS’ deputized private auditors have the power to conduct probe edits, pre- and post- pay audits, and the like. But, just as the AseraCare case provides relief from false claims act liability, so too it lends providers good arguments for use in audit contexts as well.

Hospice facing regular audits should note these points in unison:

  • CMS itself concedes that predicting the course of a terminal illness is “not an exact science;”
  • CMS has repeatedly declined to exercise its own authority to take over the certification process, for instance by pre-authorization or even by promulgating binding and objective National Coverage Determinations. Despite its unparalleled access to data, CMS does not want to pay the political price for defining hospice eligibility.
  • Deference is due to real-time hospice physician certifications. Deference means that certifications should not be disturbed by auditors absent proof of objective falsehood or objectively unreasonable conduct (no medical record). The government itself enjoys deference on its executive findings; hospice providers asked to predict terminal illness and care for our fellow citizens should be given at least the same respect.

Instead of deference, far too often hospice eligibility determinations (in all contexts, not just false claims) are second-guessed, not by other physicians, but by faceless staff employed by private auditors; payments are recovered without material explanation, with no deference to certifications.

In proceedings reviewing these findings, ALJs and courts should be encouraged to defer to providers absent objective evidence that the original certifications were not reasonably given.