STEVEN D. MERRYDAY, District Judge.
The qui tam relator, Angela Ruckh, sues (Doc. 75) under the Federal False Claims Act and the Florida False Claims Act. Ruckh alleges that the defendants defrauded the United States and Florida by "upcoding" and "upcharging" for patients at fifty-three medical facilities in Florida. Ruckh argues that individually analyzing each claim from each of the fifty-three facilities is impractical and moves (Doc. 172) in limine to admit expert testimony based on statistical sampling that has yet to occur. The defendants respond (Doc. 179) in opposition, and the United States submits (Doc. 190) a brief in support of the motion.
On June 10, 2011, Ruckh sued (Doc. 1) one defendant, La Vie Health Care Centers, Inc., in a twenty-two page complaint. The complaint alleged that Ruckh worked for La Vie — a company operating 122 nursing and rehabilitation centers — at two facilities from January 2011 until May 2011, when she "depart[ed]" from her job. (Doc. 1 ¶ 27) Ruckh alleged that, while working for La Vie, she witnessed false claims submissions and "flagrant upcoding" by which La Vie charged Medicare and Medicaid more for a patient than the circumstance justified.
On August 2, 2012, after the United States declined to intervene,
Soon after the amendment, Genoa and Salus each moved (Docs. 19, 20) to dismiss the complaint. The two defendants argued (1) that, under United States ex rel. Clausen v. Laboratory Corporation of America, 290 F.3d 1301 (11th Cir. 2002), Ruckh failed to allege each claim with particularity, (2) that Ruckh's allegations targeted neither defendant but instead Marshall and Governor's Creek (i.e., "related" companies that "share the same parent company" as the two defendants), and (3) that Ruckh failed to adequately plead vicarious liability.
A March 5, 2013 order (Doc. 48) grants the motions and dismisses the complaint. The order explains that, although Ruckh alleged a general scheme to defraud the government, under Clausen Ruckh failed to state a claim with the particularity required by Rule 9(b), Federal Rules of Civil Procedure. Most importantly, the complaint specifically described only one instance of fraud, and that description lacked "details about the fraudulent substance of the submission or about the time of the submission or about the government's overpaying the claim." (Doc. 48 at 6) Accordingly, the order stayed discovery (except on the one specified instance of fraud and on the defendants' corporate structure), dismissed the complaint, and directed the relator to file an amended complaint that included "`specific, discrete facts of the who, what, when, and where variety,' to support [any] allegations of fraud." (Doc. 48 at 8-9 (citation omitted))
On April 30, 2013, the relator amended (Doc. 63) the complaint, but an order (Doc. 71) resolving a "discovery tiff" sanctioned the defendants and permitted the relator to amend the complaint again. On June 3, 2013, the relator amended (Doc. 75) the complaint again, and the amended complaint remains the operative complaint. Although the complaint retains contains six counts, the complaint has grown from twenty-two pages to eighty pages and greatly expands each count. Rather than alleging that two defendants defrauded Medicaid and Medicare at Ruckh's two facilities, the complaint alleges that five defendants defrauded Medicaid, Medicare, and TRICARE
Citing the voluminous discovery in this action and arguing that producing and processing the relevant medical records at the "fifty-three . . . [medical] facilities and some fifty-three . . . off-site storage locations" within a reasonable time is impossible, Ruckh moves (Doc. 172) in limine to admit expert testimony on statistical sampling, but the sampling has yet to occur. The defendants respond (Doc. 179) in opposition, and the United States submits (Doc. 190) a brief in support of the motion.
The expert explains the statistical sampling that Ruckh moves to admit:
(Doc. 172-1 ¶ 16) The expert describes the "general steps of sampling . . . as follows":
(Doc. 172-1 ¶ 19)
The defendants argue that the proposed expert testimony is inadmissible in this action. A Daubert hearing will best resolve those issues. However, the defendants also argue that statistical sampling is impermissible in a qui tam action and that, even though statistical sampling is sometimes admissible, Ruckh's motion is premature. This order resolves those arguments.
Citing United States v. Friedman, 1993 U.S. Dist. LEXIS 21496 (D. Mass. July 23, 1993) (Mazzone, J.), the defendants argue that "statistical sampling and extrapolation cannot form the basis for liability in a [qui tam] case due to the lack of individual proof." (Doc. 179 at 12) In footnote 1, Friedman stated:
However, Friedman is inapplicable in this action. United States ex rel. Martin v. Life Care Centers of America, Inc, 2014 U.S. Dist. LEXIS 142660, at 33 (E.D. Tenn. Sept. 29, 2014) (Mattice, J.) — the only opinion that cites Friedman — explains that "Friedman recognized the validity of statistical sampling even though it was not applied in that case, indicating that the case does not stand for the proposition that statistical sampling cannot be used in large-scale [qui tam] cases." Like Martin, this action differs from Friedman:
Martin, 2014 U.S. Dist. LEXIS 142660, at 45-46. Further, even if Friedman applied in this action, Friedman is an unpublished, district court opinion from another circuit that contains little analysis, cites no precedent, and is cited favorably by no one. Accord Martin, 2014 U.S. Dist. LEXIS 142660, at 33 ("[Friedman] is not binding on this Court and provides little analysis regarding the propriety of statistical sampling in a [qui tam] case."); see also United States v. Robinson, 2015 WL 1479396, at *10 (E.D. Ky. Mar. 31, 2015) (Van Tatenhove, J.) (admitting statistical sampling and collecting cases supporting the finding that "statistical sampling methods and extrapolation have been accepted in the Sixth Circuit and in other jurisdictions as reliable and acceptable evidence in determining facts related to [False Claims Act] claims as well as other adjudicative facts").
The defendants "characterize[] [the relator's motion] as an effort to obtain this Court's `advisory opinion' or `comfort order' indicating that Relator is `on the right track' in preparing its expert analysis." (Doc. 179 at 6) The defendants cite Jahn v. Equine Services, PSC, 233 F.3d 382, 393 (6th Cir. 2000) (Cudahy, J.), which holds, "A district court should not make a Daubert ruling prematurely, but should only do so when the record is complete enough to measure the proffered testimony against the proper standards of reliability and relevance."
The defendants explain that until the expert completes the statistical sampling, the margin of error is unavailable. The expert describes the margin of error:
(Doc. 172-1 ¶ 16) Unlike the sample size, the variability of the overpayments is not known until after the sampling is complete. Thus, as the expert admits, "it is not yet possible to precisely calculate the margin of error that will result from a certain sample size." (Doc. 172-1 ¶ 29) Because the margin of error is unknown and because the defendants have not moved in limine to exclude any expert testimony, an Daubert hearing is premature.
To the extent that Ruckh requests a Daubert hearing before the expert completes the statistical sampling and without an objection based on Daubert, Ruckh's motion (Doc. 172) is