A hospice claim built on a physician's honest clinical judgment survives a False Claims Act falsity challenge in the Eleventh Circuit unless the government shows more than a reasonable disagreement between physicians. The Third Circuit rejected that 2019 rule the following year, so the circuit where a provider is sued, not just what the medical record shows, can decide whether a physician's contrary opinion alone reaches a jury. For a compliance officer facing a civil investigative demand or a qui tam complaint, knowing which standard controls is the first step in building a defense.
What Falsity Means Under the False Claims Act
The civil False Claims Act imposes liability on anyone who knowingly presents a false or fraudulent claim for payment to the government, 31 U.S.C. § 3729(a)(1)(A). Falsity and knowledge are separate elements. Under 31 U.S.C. § 3729(b)(1), knowing means actual knowledge, deliberate ignorance, or reckless disregard; an honest mistake in clinical judgment does not meet that standard. Falsity is the threshold question, decided before a court reaches knowledge: was the certification actually untrue. For a Medicare hospice claim, that means whether the certifying physician's clinical judgment reflects what the medical record actually supported, not whether a reviewing physician would certify the same way later. For more on the knowledge element, see The FCA Knowledge Standard After SuperValu.
The Eleventh Circuit's AseraCare Standard
In United States v. AseraCare, Inc., the Eleventh Circuit held that a clinical judgment of terminal illness supporting a hospice claim cannot be deemed false under the False Claims Act when the only evidence of falsity is a reasonable disagreement between physicians. 938 F.3d 1278 (11th Cir. 2019). The court explained that a certification can still reflect an objective falsehood where the certifying physician never actually reviewed the patient's records, did not sincerely hold the prognosis certified, or where no reasonable physician could have reached that conclusion on the same record. Short of one of those showings, the government's physician's disagreement with the certifying physician's prognosis is not enough on its own to reach a jury. The court also sent the case back for the trial court to weigh the full record, not only the trial testimony.
A properly formed and sincerely held clinical judgment is not untrue even if a different physician later contends that the judgment is wrong.
The Third Circuit's Different Approach
The Third Circuit reached the opposite conclusion in United States ex rel. Druding v. Care Alternatives, decided the following year. 952 F.3d 89 (3d Cir. 2020). Reviewing a different hospice provider's claims, the court declined to adopt the Eleventh Circuit's objective falsehood requirement, holding that it improperly folded the statute's knowledge element into falsity. The court held that testimony from a physician retained to review the records, disputing another physician's prognosis, can itself create a genuine dispute for a jury, without a separate showing that the certifying physician's judgment was dishonest or unreasonable. The panel said directly that it was departing from its sister circuit's reasoning in AseraCare. The Supreme Court denied certiorari in the case on February 22, 2021, leaving the split unresolved.
What the Split Means for a Pending Investigation
Where a healthcare fraud investigation or qui tam suit is filed can decide how much a disagreement among physicians is worth to the defense. A provider in the Eleventh Circuit has a real argument that reasonable disagreement alone cannot carry the government's burden on falsity. A provider in the Third Circuit should expect that disagreement to reach a jury and should build the record accordingly. The stakes extend beyond the claims at issue: a False Claims Act judgment or settlement can also trigger years of oversight under a corporate integrity agreement. Contemporaneous documentation showing the basis for the clinical judgment, not a later reconstruction, is the strongest evidence a provider can offer under either standard.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
Why Early Legal Counsel Is Critical
It is critical that healthcare providers promptly retain experienced healthcare defense counsel upon receiving a subpoena, civil investigative demand, audit notice, or qui tam complaint that turns on a physician's clinical judgment. Early legal intervention can help identify which circuit's falsity standard applies, preserve the contemporaneous documentation supporting the certifying physician's judgment, and avoid admissions that narrow the provider's defenses. Delaying legal representation until after the government has built its record can significantly affect the outcome of the matter.
How Health Law Alliance Can Help
Health Law Alliance's False Claims Act defense attorneys represent healthcare providers nationwide in investigations and qui tam suits built on medical necessity and clinical judgment disputes. If your pharmacy, hospice, or physician practice has received a civil investigative demand, subpoena, or qui tam complaint, contact Health Law Alliance's False Claims Act defense attorneys for a free, confidential consultation.
