New False Claims Act Statistical Sampling Opinion by Sixth Circuit

Adding to the growing body of law approving the use of representative or statistical samples to establish liability in False Claims Act cases is the recent Sixth Circuit decision, United States v. Robinson, 705 Fed.Appx. 458 (6th Cir. Dec. 11, 2017).

At trial, the United States successfully used statistical sampling evidence to establish the defendant’s False Claims Act liability and to prove damages for “submit[ing] more than 25,000 claims to Medicare seeking reimbursement for optometry services . . . to nursing home patients.” The United States argued many of these claims were for medically unnecessary services. Id. at 458–59.

The Sixth Circuit described the United States’ evidence as follows:

At trial, the government relied on statistical sampling and extrapolation to establish liability and to prove damages. A statistical expert testified that she used computer software to select a random 30-claim sample representative of the larger universe. A medical expert then identified 25 of those 30 claims as medically unnecessary. And the statistical expert testified that she could estimate the government’s damages by multiplying the average overpayment on each sample claim by the total claims. Because this method produced estimates, the statistical expert testified that she could conclude with a 90% degree of confidence (rather than with certainty) that the government’s damages were between $974,000 and $1.1 million.

Id. at 459. The jury returned a verdict for 11,085 false claims and awarded the Government $419,075.81 in damages. Id.

Challenging the damages verdict, defendant argued “that for the jury to conclude he submitted 11,085 false claims, it must have found that only 13 of the 30 sample claims were false” and due to the small sample size, “the average overpayment would have differed significantly from the figure the statistical expert used to estimate damages.” Id. According to the defendant, since the Government failed to give “the jury the individual reimbursement amounts,” the jury “lacked the numbers it needed to duplicate the government’s damages calculation in accordance with its own conclusion that fewer than 25 of the sample claims were false.” Id.

The Sixth Circuit affirmed the District Court’s refusal to overturn the jury verdict, holding that in actuality, “the government provided the jury with the individual reimbursement amounts” and that defendant’s “argument sidesteps the real issue” of “whether the district court abused its discretion by concluding the jury’s actual damages calculation was reasonable.” Id. at 460. The district court did not abuse its discretion just because the jury “determine[d] a damage finding by simply using a ratio of false sample claims over total sample claims.” Id. The Sixth Circuit also noted the district court’s reasons for denying the defendant’s motion for new trial was that the jury was instructed without objection that “damages need not be proven with mathematical certainty, but could be based on evidence supporting a reasonable estimate of loss” and that the Defendant “presented no damages evidence of his own.” Id. at 459. However, the defendant waived the argument that use of statistical sampling and extrapolation to determine damages was inappropriate in False Claims Act cases by failing to make it below. Id.

While we did not represent any of the parties in this case, our firm routinely represents whistleblowers in complex healthcare False Claims Act actions. If you are aware of fraud involving healthcare or government contracts, please contact us.