Effective Use of Sampling and Extrapolation to Prove Liability in FCA Litigation
Statistical sampling is a method which selects a subset of individuals to estimate the characteristics of a whole population. Extrapolation, another statistical method, uses facts or observations in a present and known situation to draw inferences. In the context of litigation, these statistical methods are regularly used in mass torts, antitrust and employment discrimination cases. The use of sampling and extrapolation in False Claims Act cases, however, was usually limited to calculating liabilities until Martin v. Life Care.
In United States ex rel. Martin v. Life Care Centers of America, Inc., the United States District Court for the Eastern District of Tennessee arrayed with the government's request to utilize statistical sampling to extrapolate claims and establish FCA damages and liability. The court denied the defendant's motion to conduct a claim-by-claim review, stating that "limiting FCA enforcement to individual claim-by-claim review would open the door to more fraudulent activity because the deterrent effect of the threat of prosecution would be circumscribed.”
The district court's ruling has left several concerns on the use of sampling and extrapolation in FCA cases. Counsel and litigators must consider the use of statistical sampling in FCA cases involving liability issues. Also, employing the help of experts and understanding Daubert challenges is important when relying on these statistical methods.
The Knowledge Group has assembled a panel of key thought leaders that will help healthcare counsel and litigators understand the key aspects of this significant topic. They will provide an in-depth discussion of the Effective Use of Sampling and Extrapolation to Prove Liability in FCA Litigation.
In a two-hour LIVE Webcast, the speakers will discuss:
- The Use of Sampling and Extrapolation in FCA Cases
- Recent Rulings on Sampling:
- Martin v. Life Care
- Michales v. Agape
- The Role of Daubert Motion in FCA Cases
- Best Practices for Effective Use of Sampling and Extrapolating in Proving Liabilities
James E. Miller, Partner
Shepherd, Finkelman, Miller & Shah, LLP.
- General Description Of False Claims Act Litigation And Why The Use Of Statistical Extrapolation With Respect To Questions Of Liability And Damages Can Be So Important
- The relatively recent decision in United States ex rel. Martin v. Life Care Centers of America, Inc., No. 08-cv-251, 2014 WL 4816006 (E.D. Tenn. Sept. 29, 2014), finding that it was appropriate to use statistical extrapolation with respect to certain questions related to liability as a matter of practical necessity, has led to considerable discussion and debate among practitioners handling cases under the FCA.
- The Fourth Circuit Court of Appeals’ upcoming decision in United States ex rel. Michaels v. Agape Senior Community, et al., Record No. 15-2145 (4th Cir.), could have very important implications with respect to the use of statistical extrapolation to prove FCA liability in coming years. While courts have regularly permitted the use of statistical sampling to determine damages in FCA cases, the use of sampling to prove FCA liability is a relative rarity and the question has never been considered directly by a Circuit Court of Appeals.
- The relators in Michaels argue that the use of sampling beyond damages and directly with respect to the issue of FCA liability is appropriate, asserting that the question is not “whether statistical sampling and extrapolation, in and of itself, is appropriate, but whether the statistical sampling is conducted in a scientifically proven and accepted manner...,” which leads to important Daubert questions that will be discussed later in the presentation. The relators’ position throughout the case has been that the sheer volume of claims at issue—approximately 50,000–60,000 claims across 10,000–19,000-plus patients—could not be individually reviewed by an expert to determine medical necessity without incurring exorbitant costs that exceed the estimated damages in the case.
- The lower court’s decision in Michaels effectively rejected the use of statistical sampling, as was approved in the Life Care case, thereby setting the stage for the first federal Court of Appeals to address this important issue and emphasizing the importance of using appropriate statistical extrapolation best practices in any effort to establish liability through statistical proof, as will be discussed later in the presentation.
- Ironically, this important issue only is before the Fourth Circuit Court of Appeals in Michaels because the United States rejected a settlement between the parties that would have resolved the case without an appeal. Another issue before the Court of Appeals relates to the federal government’s ability to reject such a settlement - but that issue is unrelated to the core issue of whether a party can use statistical extrapolation to establish liability.
- The U.S. Supreme Court’s very recent decision that it would not review a $188 million award to a class of Wal-Mart workers who alleged that they were denied rest breaks, even though the retailer argued that plaintiffs had used an unfair “trial by formula,” which the U.S. Supreme Court expressly barred in its 2011 Dukes v. Wal-Mart decision, and only six plaintiffs testified on behalf of the class, with the class’s experts using extrapolated evidence to calculate the total amount of damages suffered, demonstrates the increasing importance of these issues, which will be discussed in greater detail later in the presentation.
Chiharu Sekino, Attorney
Shepherd, Finkelman, Miller & Shah, LLP.
- Explanation Of What Statistical Sampling/Extrapolation Is In Practical Terms.
- History of Statistical Sampling/Extrapolation in FCA Cases (i.e., how it has been used in the past)
- From a historical perspective, statistical sampling has typically been used to determine damages, rather than liability
- United States v. Cabrera-Diaz, 106 F. Supp. 2d 234 (D.P.R. 2000) (after liability determined, court agreed to calculate trebled damages based on extrapolation of audited claims).
- United States v. Rogan, 517 F.3d 449, 453 (7th Cir. 2008) (“argument that the district judge had to address each of the 1,812 claim forms is a formula for paralysis. Statistical analysis should suffice.”)
- Only in rare circumstances, where evidence of specific false claims demonstrated systematic and widespread fraud did courts allow extrapolation as proof of FCA liability in the past:
- United States v. Krizek, 111 F.3d 934, 941 (D.C. Cir. 1997) (permitting extrapolation where it would be “virtually impossible for the [g]overnment to establish liability on any twenty-four-hour day that included private pay patients”).
- U.S. ex rel. Loughren v. UnumProvident Corp., 604 F. Supp. 2d 259, 266 (D. Mass. 2009) (After holding a “bellwether” trial on a sample number of alleged false claims, the court concluded that extrapolation was a reasonable method for determining the number of falsely-submitted claims so long as the expert’s statistical methodology satisfied the Daubert standard for reliability).
- From a historical perspective, statistical sampling has typically been used to determine damages, rather than liability
- Decisions Since Life Care Endorsing The Use Of Statistical Extrapolation To Establish Liability In FCA Cases
- U.S. ex rel. Guardiola v. Renown Health, No. 3:12-CV-0295-LRH, 2014 WL 5780426 (D. Nev. Nov. 4, 2014).
- U.S. v. AseraCare, Inc., Civ. Action No. 2:12-CV-245-KOB, 2014 WL 6879254 (N.D. Ala. Dec. 4, 2014).
- U.S. ex rel Ruckh v. Genoa Healthcare LLC, No. 8:11-CV-1303-T-23TBM, 2015 WL 1926417 (M.D. Fla. Apr. 28, 2015).
- Other Cases?
- How Relators And The Government Should Be Prepared Going Forward:
- Be prepared to support both the model they propose for analysis and extrapolation and the need for that model, through competent expert testimony.
- Include measures of “precision” that indicate the likelihood that the population characteristics will fall within a given range.
Katherine Raimondo, Senior Attorney
Fried, Frank, Harris, Shriver & Jacobson LLP
- Legal arguments against the use of statistical sampling to prove FCA liability
- Distinguishing those FCA cases where sampling has been permitted
- Distinguishing cases in other contexts where sampling has been permitted
- Procedural mechanisms to challenge the use of sampling
Amandeep S. Sidhu, Partner
McDermott Will & Emery LLP
- The changing course of damages versus liability
- Change from Daubert
Who Should Attend:
- Attorneys General
- Healthcare Lawyers
- In-house Counsel likely for Pharma and Manufacturing Companies
- Litigation Officers
- Healthcare Service Providers
- General Counsel
- Other Related/Interested Professionals and Organization
Katherine Raimondo is a senior associate in Fried Frank’s Washington, DC office and a member of the Firm’s False Claims Act and FIRREA practice group. Ms. Raimondo represents clients in a variety of complex civil litigation and international arbitration matters, with an emphasis on cases involving the financial and aerospace industries. Ms. Raimondo received her JD, with honors, from The George Washington University Law School in 2007, and her BA, cum laude, from Georgetown University in 2004. She is admitted to practice in the District of Columbia, Pennsylvania, the United States District Court for the District of Columbia, and the United States Court of Appeals for the District of Columbia and Ninth Circuits.
Katherine Raimondo is a senior associate in Fried Frank’s Washington, DC office and a member of the Firm’s False Claims …
Amandeep S. Sidhu is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, DC, office. He focuses his practice on complex commercial disputes involving regulated industries, including defense, agriculture and health care-related investigations and litigation. He represents companies in domestic and international investigations and in defense of qui tam whistleblower litigation involving the federal False Claims Act, Stark laws, and the Anti-Kickback Statute in federal district courts throughout the United States. Aman regularly supports settlement negotiations with the US Department of Justice for clients in multiple jurisdictions, including negotiation of corporate integrity agreements with the US Department of Health and Human Services Office of Inspector General. Aman also represents health care and life sciences companies in the navigation of state and federal investigations, including responding to Congressional inquiries. Aman serves on the Firm’s Diversity/Inclusion Committee, Pro Bono and Community Service Committee and Associate Development Committee.
Previously, Aman was a judicial clerk for Chief Judge Walter S. Felton, Jr., of the Court of Appeals of Virginia. While clerking, he was a member of the National Association of Appellate Court Attorneys and was appointed by Supreme Court of Virginia Chief Justice Leroy R. Hassell, Sr., to serve as a task force member of the Commission on Virginia Courts in the 21st Century: To Benefit All, To Exclude None. Prior to law school, he was a business analyst for the Federal Defense Group of American Management Systems, Inc. While in law school, Aman was an associate editor of the Richmond Journal of Law and the Public Interest, vice president of the Moot Court Board and president of the Student Bar Association.
Aman is also a co-founder of the Sikh Coalition, a civil/human rights non-profit organization, and in that capacity has led lobbying efforts in US Congress regarding hate crimes, profiling, and workplace and public accommodation discrimination.
Aman is admitted to practice in the District of Columbia, Virginia, the US District Courts for the Eastern and Western Districts of Virginia and the District of Columbia, and the US Court of Appeals for the Ninth Circuit.
Amandeep S. Sidhu is a partner in the law firm of McDermott Will & Emery LLP and is based in …
James E. Miller is one of the founding partners of Shepherd Finkelman Miller & Shah, LLP.
He is admitted to practice law in the States of California, Connecticut and New Jersey, as well as the Commonwealth of Pennsylvania and numerous federal courts, including the Southern, Central and Northern Districts of California, District of Connecticut, Eastern District of Pennsylvania, District of New Jersey, Eastern District of Wisconsin, the United States Court of Appeals for the Third Circuit and Ninth Circuit and the United States Supreme Court.
Mr. Miller earned his undergraduate degree from Cornell University (B.S. 1988) and his law degree from the University of Pennsylvania School of Law (J.D. 1991). While at Penn Law School, he was awarded the Edwin R. Keedy Cup and was Editor of the Comparative Labor Law Journal. Following graduation, he served as Law Clerk to the Honorable Daniel H. Huyett, 3rd, United States District Judge for the Eastern District of Pennsylvania.
Mr. Miller concentrates his practice on securities, corporate governance and employee benefirs litigation, as well as significant employment, defamation and wage/hour cases. He also serves as outside general counsel for certain select clients of the Firm, most of which are subsidiaries of corporations based in Europe and India. During his career, he has supervised a number of internal corporate investigations and has litigated numerous whistleblower and False Claims Act cases, both on behalf of plaintiffs and defendants. Mr. Miller has tried over twenty (20) cases to successful verdict or judgment during his career, including class action, defamation, employee benefits, employment and whistleblower matters. In proceedings on behalf of plaintiffs and whistleblowers, Mr. Miller has secured a number of multi-million dollar verdicts and arbitration awards.
James E. Miller is one of the founding partners of Shepherd Finkelman Miller & Shah, LLP. He is admitted to …
Chiharu Sekino joined Shepherd Finkelman Miller & Shah, LLP (the “Firm”) in 2008 as a legal assistant. She became an associate at the Firm in 2015. She is admitted to practice law in the State of California.
Ms. Sekino earned her Bachelor of Arts degree from the University of California, San Diego in 2007, where she double-majored in Political Science and Japanese Studies. While working for the Firm, she concurrently received a law degree from California Western School of Law, graduating cum laude, and a Masters in Social Work from San Diego State University in 2015. She is a member of The California Western Law Review and served as a Law Clerk for the San Diego Public Defender’s Office, Juvenile Division and San Diego Volunteer Lawyer Program. She also provided individual counseling to students as a social work intern at Monroe Clark Middle School.
Chiharu is Bilingual (Japanese/English), resides in San Diego and is active in community affairs. She was a CASA (Court Appointed Special Advocate) for a program called Voices for Children, an organization that advocates for children who have been abused and/or neglected and are under the protection of the court system. Currently, she volunteers with Reading Legacies, a nonprofit organization that empowers children through inter-generational shared-reading experiences.
Ms. Sekino concentrates her practice on complex commercial, employment, and wage/hour cases. She has also assisted in numerous complex consumer class action, ERISA, whistleblower, and False Claims Act cases.
Chiharu Sekino joined Shepherd Finkelman Miller & Shah, LLP (the “Firm”) in 2008 as a legal assistant. She became an …
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About Fried, Frank, Harris, Shriver & Jacobson LLP
From offices located in the world's principal financial centers, Fried Frank, Harris, Shriver & Jacobson LLP’s lawyers provide advice to clients regarding their most critical legal and business needs. Fried Frank’s False Claims Act and FIRREA attorneys have extensive experience in every facet of the civil False Claims Act, and have been on the cutting edge of litigation and debate about the FCA's interpretation and scope. The Firm regularly represents financial industry, defense, health care, and other government contractors in high stakes cases. The Firm’s False Claims Act and FIRREA practitioners also assist and represent entities not normally associated with federal and state fraud investigations, such as municipal airport authorities, computer manufacturers, private and state universities, academic medical centers, import and export companies, major accounting and consulting firms, magazine publishers, and oil and gas exploration companies.
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McDermott Will & Emery is a premier international law firm with a diversified business practice. Numbering more than 1,100 lawyers, McDermott has offices in Boston, Brussels, Chicago, Dallas, Düsseldorf, Frankfurt, Houston, London, Los Angeles, Miami, Milan, Munich, New York, Orange County, Paris, Rome, Seoul, Silicon Valley and Washington, D.C. and has a strategic alliance with MWE China Law Offices in Shanghai.
McDermott has 80 years of serving a broad range of client interests. The expansion of McDermott’s international platform has supported numerous cross-border transactions and litigation matters, while providing the experience necessary to offer corporate and commercial, international and domestic tax, labor and benefits, competition, intellectual property and regulatory counsel to clients across all industries. McDermott is also the undisputed leading law firm in health care as evidenced by the fact that it is the only firm to receive Tier 1 rankings in health care nationally by all of the industry’s top legal directories: Chambers USA, The Legal 500 USA, U.S. News–Best Lawyers and Law360. For the sixth consecutive year, Chambers USA ranked McDermott’s health practice as the only firm in Tier 1 in the United States (2010–2015). Chambers USA noted that McDermott “has the longest reputation in history as being the pinnacle healthcare firm.” McDermott’s health practice also received Tier 1 recognition in California, Florida, Illinois, Massachusetts, New York and Washington, D.C.
About Shepherd, Finkelman, Miller & Shah, LLP.
Shepherd, Finkelman, Miller & Shah, LLP is an established law firm with an international reach and reputation. Founded by alumni of large firms, SFMS began as a litigation boutique over ten years ago and has grown into a full-service firm with offices located strategically throughout the United States and strong international affiliations. Since SFMS was founded in 2002, the Firm’s lawyers have recovered more the $1 billion for clients in securities arbitrations, class action litigation, qui tam lawsuits and other matters. The Firm’s client base is diverse and eclectic, and includes small and midsize business entities, multinational corporations, institutional investors, broker-dealers, benefit funds and plan administrators, financial institutions, governmental entities, labor unions and individuals, including corporate executives, employees, consumers, retirees and whistleblowers. SFMS maintains offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin, as well as an affiliate office in London, England. The Firm also is an active member of Integrated Advisory Group (iaginternational.org), a highly respected network of attorneys, fiduciary trust and tax advisors that provide the firm's clients with access to high quality advice at reasonable costs in almost any jurisdiction around the world.