North Carolina Lawyers Weekly
U.S. ex rel. Brianna Michaels v. Agape Senior Community Inc. v. U.S. (Lawyers Weekly No. 001-037-17, 27 pp.) (King, J.) No. 15-2145, Feb. 14, 2017; USDC at Rock Hill, S.C. (Anderson, J.) 4th Cir.
Holding: In this qui tam action alleging defendant elder care facilities fraudulently billed Medicare and other federal health care programs, the 4th Circuit affirms a district court ruling that the Attorney General, who did not intervene in the FCA suit, has unreviewable authority under 31 U.S.C. § 3730 to veto relators’ proposed settlement with the facilities; however, the relators’ appeal of the district court’s rejection of their request to use statistical sampling in their case is dismissed as improvidently granted.
Fraudulent Billing
Relator alleged defendant Agape Senior Community Inc. fraudulently billed federal programs for services to thousands of patients – services that were not actually provided, or that were provided to patients who were not eligible for them. The U.S. declined to intervene.
To establish liability and damages, relators sought to rely on statistical sampling. The district court determined, however, that using statistical sampling to prove their case would be improper. Also, the court rejected a proposed settlement agreement between relators and Agape, because the U.S. Attorney General objected to it. The court concluded that the government – despite not having intervened in a False Claims Act qui tam action – possesses an unreviewable veto authority over the action’s proposed settlement. The district court certified both its statistical sampling and unreviewable veto rulings for these interlocutory appeals under 28 U.S.C. § 1292(b). We affirm the unreviewable veto ruling and dismiss as improvidently granted relators’ appeal as to the statistical sampling ruling.
District Court Rulings
Although relators and Agape dispute the exact numbers, they agree that Agape admitted more than 10,000 patients to its facilities in South Carolina and submitted more than 50,000 claims to federal health care programs during the relevant time period. Relators sought to use statistical sampling to prove their case in order to avoid the cost of reviewing each patient’s chart to identify which claims were fraudulent – a task that relators said would take their experts four to nine hours per patient, at a rate of $400 per hour, potentially totaling more than $36 million. Agape opposed the use of any evidentiary form of statistical sampling. The district court held that statistical sampling would be improper.
Veto Ruling
In objecting to the subsequent proposed settlement, the Attorney General protested in part that the settlement amount was appreciably less than $25 million, the government’s estimate of total damages based on its own use of statistical sampling. The district court rendered its unreviewable veto ruling and sustained the AG’s objection to the proposed settlement.
The question presented – the extent of the AG’s power under 31 U.S.C. § 3730(b)(1) to veto the voluntary settlement of an FCA qui tam action in which the government declined to intervene – is not one that we have heretofore squarely confronted.
We agree with the district court, and with the 5th and 6th Circuits, that the AG possesses an absolute veto power over voluntary settlement in FCA qui tam actions. We rely on the plain language of § 3730(b)(1). Simply put, nothing else in § 3730 lead us to doubt that Congress meant exactly what it said in the statute – that a qui tam action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.
On appeal, neither relators nor Agape advocate the 9th Circuit’s theory that the consent-for-dismissal provision applies only during the initial 60-day (or extended) period in which the government must decide whether to intervene in a qui tam action. Further, the AG’s absolute veto authority is entirely consistent with the statutory scheme of the FCA. Instead of freeing relators to maximize their own rewards at the public’s expense, Congress has granted the AG the broad and unqualified right to veto proposed settlements of qui tam actions.
We reject Agape’s interpretation of § 3730 and conclude today that, under the plain language of § 3730(b)(1), the AG possesses an absolute veto power over voluntary settlements in FCA qui tam actions. We affirm the district court’s unreviewable veto ruling.
Statistical Sampling
In its sampling ruling, the district court determined that the use of statistical sampling evidence can sometimes be permissible, but is not appropriate here based on the particular facts and evidence in this case. Relators insist the issue is whether their proposed statistical sampling is conducted in a scientifically proven and accepted manner pursuant to the Supreme Court ruling in Daubert. Relators’ appeal raises the question of whether the district court may, in its discretion, allow relators to use statistical sampling to prove their case.
In these circumstances, we are satisfied that, as to the statistical sampling ruling, relators’ appeal does not present a pure question of law that is subject to our interlocutory review under 28 U.S.C. § 1292(b). We dismiss that aspect of relators’ appeal.
Affirmed in part, dismissed in part.
