In September, the District Court for the Eastern District of Tennessee issued an order denying Defendants’ motions for summary judgment and permitting the government to use statistical sampling to determine liability in a False Claims Act case. The decision – a first in FCA jurisprudence – was immediately the subject of a motion for interlocutory appeal by the Defendants. This week, the District Court issued an order permitting the case to move forward and allowing the government to demonstrate liability for nearly 155,000 allegedly false claims by extrapolation from a sample of just 1,700 claims. The court agreed with Defendants that this was a matter of first impression for FCA cases, but supported its decision by pointing to other areas of complex litigation where “extrapolation . . . has become commonplace.” (Order at 7). For now, the case moves forward to either a settlement or trial.

Practical Takeaway

This is a district court decision with little precedential value outside of the Eastern District of Tennessee. However, FCA litigation is a national playing field where courts frequently look to their fellow district courts and circuit courts for persuasive caselaw to help determine the issues before them. As a first-of-its-kind decision, the order permitting sampling to prove liability under the FCA will undoubtedly attract attention from commentators and counsel. For now, health care providers must not only wait to see if this case eventually makes it to the Sixth Circuit on appeal after final judgment but if other courts, facing similar pressure from the government and whistleblowers, agree or disagree with the court’s analysis.

Should you have any questions regarding the False Claims Act or defense against whistleblower actions, please contact:

• David B. Honig at dhonig@hallrender.com or (317) 429-1447;
• Drew B. Howk at ahowk@hallrender.com or (317) 429-3607; or
• Your regular Hall Render attorney.