Middle District of Florida Affirms Use of Statistical Sampling in Qui Tam Actions

Allegations of fraud against Medicare, a frequent impetus for qui tam actions under the False Claims Act, often involve an enormous number of false claims as part of a larger scheme of fraud committed by an entity. These large numbers of claims present a practical problem in determining liability and calculating damages. In a recent case, United States ex rel. Angela Ruckh v. Genoa Healthcare, et al., the United States District Court for Middle District of Florida affirmed the use of statistical sampling to demonstrate liability in a qui tam action.

In Ruckh, the Relator alleges that a number of health care facilities defrauded the U.S. government by “upcoding” (billing for higher level services than the facility actually performed). The Relator alleges that the Defendants submitted false claims from fifty-three different health care facilities. Given the impracticality of analyzing each and every claim from the various facilities, the Relator sought to use statistical sampling, as well as expert testimony, to extrapolate the amount of overpayment and assess liability. The Defendants in Ruckh relied on a footnote in a 1993 district court case from Massachusetts, United States v. Friedman, No. 86-0610-MA, 1993 U.S. Dist. LEXIS 21496 (D. Ma. Jul 23, 1993), for the proposition that statistical sampling cannot be used to demonstrate liability and calculate damages.

The Ruckh Court rejected the Defendants’ argument, stating that the argument relied upon a footnote in an unpublished district court opinion. The Ruckh Court then noted that the Friedman case was distinguishable because, in Friedman, a “limited universe” of potentially fraudulent claims was at issue. The Court held that in cases like Ruckh, where there is a much larger universe of claims, individual analysis of each claim is impractical, and statistical sampling may be used. The Ruckh Court also pointed out that the footnote relied upon in Friedman actually recognized the value of statistical sampling in cases with a larger universe of potentially false claims. The Ruckh Court, relying on a similar holding from the U.S. District Court for the Eastern District of Tennessee, stated that the impracticalities of holding otherwise would weigh against judicial economy and “consume an unacceptable portion of the Court’s limited resources.”

This case is important because it provides persuasive reasoning to allow statistical sampling in large-scale qui tam actions. Qui tam actions that proceed all the way through the judicial process are rarely small or trivial. Requiring relators or the government to individually analyze each and every claim in a large-scale complex fraudulent scheme would impose burdens that may deter relators or the government from pursuing qui tam actions at all. Such a result would undermine the purpose of the False Claims Act and allow fraud against the government to continue.

Tagged: False Claims Act (FCA), Whistleblower Laws (Federal)