Jack Selden

In March 2016, NAFUSA member Jack Selden and his firm, Bradley Arant Boult Cummings LLP, won summary judgment on behalf of AseraCare, Inc. in an important False Claims Act case. At the end of the eight week first phase of the trial, Judge Karon Bowdre sua sponte struck down a $200 million FCA case against the hospice provider, holding that the government’s second guessing of physicians’ medical judgment alone cannot prove false claims.

The Government appealed the summary judgment to the Eleventh Circuit Court of Appeals, and the Appellate Court in September 2019 issued an important opinion with potentially broad application on the issue of medical necessity in FCA cases, adopting all of the legal standards set forth by AseraCare and ultimately by the District Court.  The Eleventh Circuit held that a claim cannot be false “if the underlying clinical judgment does not reflect an objective falsehood,” and that “the mere difference of reasonable opinion between physicians, without more, as to the prognosis for a patient seeking hospice benefits does not constitute an objective falsehood.”   Nonetheless, the Eleventh Circuit vacated the summary judgment and remanded the case with a narrow mandate that the District Court reconsider its summary judgment, ensuring that it considered all evidence proffered by the Government.  In so doing, the Court stated that though it was giving the Government “the green light to once again try to persuade” the district court that a triable issue exists, “we emphasize that we do not know that this effort will succeed.”

Before the submission of summary judgment briefing on the remand, the case settled on February 27, as reported by Law 360:

 AseraCare announced Thursday that it would pay just $1 million to settle the hospice chain’s high-profile and lengthy Medicare billing dispute with the U.S. Department of Justice, which once sought more than $200 million worth of claims under the False Claims Act.

 

AseraCare unveiled the terms of the settlement, which also doesn’t require a corporate integrity agreement, one day after the parties lodged a pair of dismissal stipulations in Alabama federal court. The closely watched case has dragged on since 2008, when three AseraCare employees accused the company of overbilling Medicare for its services.

 

Jack Selden, counsel for AseraCare, told Law360 on Thursday, “When a case settles for $1 million where the claims have been for over $200 million, I think that speaks for itself.”

 

“I’m certainly quite pleased with that outcome,” he said.

Selden added that he believes the settlement reflects “that the law and the evidence was in complete support of AseraCare.”

 

AseraCare initially beat the DOJ’s claims in March 2016, but the Eleventh Circuit vacated the district court’s decision last September. In its order, the appellate court held that U.S. District Judge Karon O. Bowdre had wrongly overlooked evidence that the company withheld crucial information about patient health from doctors who certified eligibility. However, the Eleventh Circuit also agreed with AseraCare and the district court that a difference of reasonable physician’s opinions on a terminal patient’s prognosis alone doesn’t constitute falsity under the False Claims Act.

 

The government must provide evidence linking any allegedly shady practices to specific patients, the appellate panel ruled.

 

In Thursday’s announcement, AseraCare praised that opinion, saying it “provides comfort for the physicians who are making these difficult determinations related to terminally ill patients as well as the hospice providers who are reimbursed by Medicare for services for these patients.”

 

“AseraCare is grateful to have reached this settlement with the Department of Justice and is proud that perseverance produced a benefit to the hospice industry that provides more clarity under the False Claims Act,” the company said.

 

The settlement also comes about two months after Judge Bowdre declined to reopen discovery in the case, a move the DOJ had pushed for, arguing it would allow its medical expert to determine whether a “reasonable physician” could have reached the same conclusions that any of the patients at issue in the trial were terminally ill based on medical records.

 

The case also garnered attention because the government’s lead attorney on the case used to be Jeffrey Wertkin, who left the DOJ for Akin Gump Strauss Hauer & Feld LLP only to be arrested months later for stealing a sealed FCA suit and trying to sell it. Wertkin eventually pled guilty and got 2½ years in prison.

 

Notably, the litigation also involved a split trial, the use of statistical sampling and an unsuccessful effort to expel an attorney for speaking with the media, plus the fact that it went to trial in the first place, which is rare for FCA matters.

 

The case is U.S. ex rel. Paradies v. AseraCare Inc. et al., case number 2:12-cv-00245, in the U.S. District Court for the Northern District of Alabama.