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Showdown Looming Over Whether Whistleblowers Can Use “Statistical Sampling” To Prove Fraud Claims And Increase Damages Award

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The Fourth Circuit Court of Appeals is poised to decide an issue that could dramatically affect the amount in damages that the U.S. Government and a whistleblower can prove and collect in a successful False Claim Act case.

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In particular, the court is set to decide whether the amount of allegedly false claims filed with the government can be “extrapolated” to prove liability.  In other words, in cases where the whistleblower and the government have evidence proving only a small portion of the potential fraud, they have attempted to use that small portion as a “statistical sample” to prove liability for the entire amount.  This typically requires the use of an expert witness, who uses mathematics and data to extrapolate the sample throughout the defendant’s entire submission of claims to the government. 

In this case, United States ex rel. Michaels v. Agape Senior Community, Inc., Case No. 12-CV-03466-FJA, 2015 U.S. Dist. LEXIS 82379 (D.S.C. June 25, 2015), the trial court ruled that the government and the whistleblowers cannot use “statistical sampling” to prove liability against the defendant, which is a large health care provider.  The whistleblowers and the government are appealing the decision, which has reportedly drawn considerable interest from the health care community.  Within the last two weeks, the American Health Association and the Catholic Health Association have filed amicus briefs on behalf of the defendant, arguing against the use of “statistical sampling.”

The government and whistleblowers claim that the use of statistical sampling “has been endorsed” by numerous courts, including one within the Second Circuit, arguing that “in view of the enormous logistical problem of Medicaid enforcement, statistical sampling is the only feasible method available.”  (Quoting United States v. Cabrera-Diaz, 106 F. Supp. 2d 234, 235 (D.P.R. 2000)).  According to the government and whistleblowers, statistical sampling “is the only feasible method available in this case in order to avoid a year-long trial of “monumental proportions. . . .”

The case could be argued before the Fourth Circuit before the end of 2016.

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