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DOJ Drops ManorCare Lawsuit over disgraced expert
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DOJ Drops ManorCare Lawsuit over disgraced expert

11.15.17

In what can only be described as a crushing blow, the Department of Justice has been forced to drop a long-running False Claims Act prosecution against HCR ManorCare, Inc. , a short-term post-acute and long-term care provider, over the failure to disclose notes of its medical necessity expert that contravened her deposition testimony. 

The government’s abandonment of its case comes after two separate rulings relating to its medical necessity expert, Dr. Rebecca Clearwater.  The first of these came on October 27, when the Magistrate Judge, assigned to the case granted ManorCare’s Motion for Sanctions related to expert discovery.  In doing so, the Magistrate Judge found that Dr. Clearwater “was untruthful” when she stated, under oath, that she had no handwritten notes of her review of the medical records of ManorCare patients on behalf of the DOJ.  Despite her testimony to the contrary, Dr. Clearwater had created notes, which the DOJ disclosed on the eve of trial.  The magistrate judge also took issue with this disclosure as well, calling the month long delay to produce the notes “inexcusable,” and ordered the government to pay ManorCare’s costs associated with bringing the motion. 

Unfortunately for the government, this wasn’t the end of the government’s expert troubles.  On November 6, District Judge Claude Hilton, put the final nail in the coffin.  Ruling on a motion, to exclude Dr. Clearwater’s testimony, the court found that she did “not have the expertise to testify as to the reasonableness and necessity of the medical treatment the patients received” which would allow her to at best . . . testify [only] to obvious mistakes in the billing” not medical treatment.  The court took particular issue with her lack of qualifications, honing in on the fact that she “is not a medical doctor, an occupational therapist, [or] a speech language pathologist and did not personally examine any of the ManorCare patients.”  As a result of the exclusion of Dr. Clearwater, the court also threw out the government’s expert on statistical extrapolation, since the medical review underpinning the extrapolation was no longer admissible. 

A couple of important take always:

First, defendants, targets of government investigations, and entities being investigated by program safeguard contractors (such as the new UPICs) would be well served to challenge and question the opinions of government “experts.”  Dr. Clearwater was well known to the government and CMS.  She, and her company, had provided medical review services to AdvanceMed, a ZPIC (and now UPIC) contractor.  Despite her medical opinion presumably serving as the basis of attempted recoupments in the past, when challenged, a court rejected Dr. Clearwater’s qualifications.  

Second, this decision demonstrates a new, and perhaps more effective, way of attacking the use of statistical extrapolation in FCA cases predicated on medical necessity.  Recent decisions, such as Life Care Centers of America  have upheld the use of statistical sampling in response to facial challenges.  This isn’t surprising.  As the Life Care court noted, courts have used statistical sampling in numerous contexts, and to demand thousands of mini-trials is unrealistic.  Rather than challenge the mere use of sampling or statistical extrapolation, a better route may be to attack the underlying medical review, on which he extrapolation is based.  While the government is likely to respond with more robust experts, this attack may be something to consider for defendants faced with similar situations. 



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