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FCA Relators Relying on Statistical Sampling Receive More Bad News: DOJ Agrees to $275,000 Settlement in Agape, Just Years After Rejecting $2.5 Million Resolution

In February 2017, we wrote about how the Fourth Circuit sidestepped the question of whether a relator bringing suit under the False Claims Act (“FCA”) may use statistical sampling and extrapolation to establish FCA liability when it held in United States ex rel. Michaels v. Agape Senior Community, Inc. that an appeal on that point had been improvidently granted.  The Fourth Circuit would have been the first appellate court to provide guidance on this hotly contested issue.  We noted at the time that the FCA bar would need to continue to await guidance from the appellate courts and contend with inconsistent decisions emanating from federal district courts.

When Agape returned to the district court—which had held that statistical sampling was not appropriate—the relators found themselves unable to afford to continue prosecuting their case and ultimately did not contest the court’s granting of summary judgment on 99 percent of their claims.  Unsurprisingly, the parties announced late last month that they had settled the remainder of the claims for $275,000.

What is surprising, however, is that the Department of Justice has approved this settlement, despite rejecting a $2.5 million amount just two years ago, after the district court already had ruled that it would not accept statistical sampling as evidence to establish liability, and after arguing in its brief in the appeal to the Fourth Circuit that the court did not need to rule on that issue (which, as noted above, it did not).  The relators thus are left with a considerably smaller sum than what they may have expected in a case where DOJ had previously estimated damages at $25 million.

The amount of the Agape settlement in conjunction with the lack of guidance from appellate courts sends a signal to the relator bar that FCA cases that would require the use of statistical sampling to establish liability simply may not be worth bringing.  Given the patchwork of law on this point, healthcare providers nevertheless must continue to be prepared for statistical sampling arguments and monitor for new developments.

© Copyright 2017 Cadwalader, Wickersham & Taft LLP

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About this Author

Stephen Weiss, Cadwalader Law Firm, White Collar Defense Attorney
Associate

Stephen Weiss is an associate in the White Collar Defense and Investigations Group in Cadwalader’s Washington, D.C., office. His practice concentrates on advising clients in a variety of criminal and regulatory matters, focusing primarily on government enforcement actions and internal corporate investigations. 

A graduate of Dickinson College, Stephen received his J.D. from American University, Washington College of Law and served on The American University Business Law Review. He is admitted to practice in the District of Columbia.

202-862-2347
Keith M. Gerver, white collar criminal defense and complex civil litigation attorney. Cadwalader law firm
Associate

Keith Gerver focuses on white collar criminal defense and complex civil litigation, especially as it relates to corporate internal and government investigations. He also works on national security issues related to export controls and conducting business in the classified arena. Prior to pursuing a legal career, Keith served as an intelligence analyst for the U.S. Department of Defense.

Keith received his J.D., cum laude, from Harvard Law School, where he served as a founding member and later Co-Editor-in-Chief of the Harvard National Security Journal. He earned his M.A. in Security Studies and his B.S. in Foreign Service, summa cum laude, from Georgetown University. Keith is admitted to practice in the State of New York and the District of Columbia.

202 862 2381