As expected after oral arguments, the Fourth Circuit Court of Appeals declined to decide whether parties may use statistical sampling to prove False Claims Act liability in United States ex rel. Michaels v. Agape Senior Community, Inc., Nos. 15-2145 and 15-2147, by finding that the issue was fact-driven and thus not appropriate for interlocutory review. The ruling leaves intact the district court’s decision finding that statistical sampling was inappropriate in this case because evidence of the alleged false claims was still present, making it possible for the relators to determine whether the defendants had submitted improper claims to the government. As a result of the decision, counsel and defendants involved in FCA suits are left without guidance from any circuit court regarding whether statistical sampling may be used to prove liability or damages in FCA cases and will have to continue to rely on district court case law to make arguments for or against the use of statistical sampling and extrapolation.
In addition, the Fourth Circuit found that the federal government has the absolute authority to veto any proposed settlement in FCA actions, even when the government has declined to intervene. Although both parties had argued that the government’s veto decision should be at least held to a “reasonableness” standard, the court declined to impose any such standard and instead followed the Fifth and Sixth circuits, which had previously ruled that the DOJ has “an absolute veto power over voluntary settlements in FCA qui tam actions.” In doing so, the court noted that the plain language of the FCA provides the government this authority by requiring a court and the government to give written consent to any dismissal. In addition, the court found it “enlightening” that congress did not include “reasonableness” language when referring to the government’s veto power in the statute, particularly because a separate section of the FCA provides that the government may settle a case without regard to the relator’s wishes as long as the settlement is “fair, adequate and reasonable.”
