Hospice provider AseraCare on Thursday said it settled a closely watched False Claims Act case with the federal government for $1 million.
The lawsuit hinged on whether a physician's medical judgment can be deemed false based only on another physician's conflicting opinion. The settlement will not require a corporate integrity agreement, the Plano, Texas-based company said in a statement.
The Justice Department and attorneys representing AseraCare on Wednesday filed joint stipulations of dismissal of the case in a federal court in Alabama.
The requests followed twin setbacks to the government's case last year. In September, the 11th U.S. Circuit Court of Appeals upheld the lower court's ruling that a False Claims Act action cannot be based solely on reasonable disagreement between the government's medical expert and the provider's medical expert, with no other evidence to prove the falsity of the claim.
Then in December, U.S. District Judge Karon Owen Bowdre in Alabama denied the government's motion to reopen discovery in the case, saying that simply bringing in another medical expert to question the AseraCare physicians' clinical judgment would essentially be futile.
The Justice Department's case was based on whistleblower claims filed in 2008 by three former AseraCare employees. They alleged that the hospice provider had filed Medicare claims for patients who did not meet the CMS' eligibility requirement of having no more than six months to live.
Privately held AseraCare operates 44 hospice facilities in 14 states.
Over the past several years, the government has pursued FCA lawsuits against several hospice companies as concerns have grown over rising rates of hospice admission and growing lengths of stay.
Some attorneys said the outcome of the case will make it harder for the government to bring FCA cases based solely on having physician experts challenge providers' medical decisions, and the impact could extend beyond just hospice cases.
"When dealing with medical necessity decisions, the government will have a little higher standard to prove falsity," said Jacinta Alves, a partner at Crowell & Moring who was not involved in the case.
The Justice Department did not issue a statement by deadline.
Jim Barger Jr., an attorney for the whistleblowers, said the settlement showed AseraCare would have lost the FCA lawsuit.
"It chose to pay rather than allow the case to proceed to a jury again," he said.
In its news release, AserCare said the settlement will give more clarity to the hospice industry in FCA cases. IT also said that the 11th Circuit opinion "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."
In 2016, a jury found 104 of AseraCare's hospice claims to be false or unsupported. But Judge Bowdre tossed that verdict, saying her jury instructions had been incorrect. She later issued a summary judgment in favor of AseraCare, which the government appealed.
In September, the 11th Circuit largely upheld her ruling but remanded the case to her to consider whether to allow the government to present broader evidence of false claims.