Tag Archives: Scientific Standards

John Balko & Associates d/b/a Senior Healthcare Associates v. Kathleen Sebelius Secretary U.S. Department of Health and Human Services

John Balko & Associates operates Senior Healthcare Associates (SHA)and is located in Hermitage, Pennsylvania.    The company was audited and received a demand letter for approximately $680,000 dollars.  The case went through a number of appeals and eventually the Medicare Appeals Council (MAC) ruling was appealed for review by a Federal District Court.

This is a case filed April 30, 2012 in the United States District Court for the Western District of Pennsylvania.  (The PACER number is Case 2:12-cv-00572-AJS)  The case went through several stages prior to being appealed.  (See figure.)

BALKO_CHRONOLOGY.001

Source: Memorandum Opinion re: Parties’ Cross-Motions for Summary Judgment, files 12/28/2012, and Barraclough analysis.

A number of arguments were made that established clearly that the statistical work was faulty, and from a scientific point of view was completely invalid.

BALKO_ARGUMENTS_1.001BALKO_ARGUMENTS_2.001Arthur J. Schwab the United States District Judge wrote in his opinion “Balko is not entitled to the best possible statistical sample of claims that it submitted . . . Instead, Balko is only entitled to a statistically valid random sample.”  (Memorandum Opinion, p. 23.)

Question:  Is a “statistical valid random sample” one that is so poor that it lacks any scientific credibility?

What has happened in this case does not bode well for health care providers.   Here, statistical work that is demonstrably faulty and inferior and definitely not scientifically valid has been signed off on by the Medicare Appeals Council (MAC), and by the Federal Court that reviewed the case.

This type of sloppy scientific work never would be accepted in any other type of case before a Federal Court in which scientific evidence is evaluated in conformity with Rule 702 “Testimony by Expert Witnesses” of the Federal Rules of Evidence.   The question is why is this type of poor and inadequate scientific work OK for audits of health care providers but not OK anywhere else?

Barraclough NY LLC supplies experts for litigation support in Medicare and Medicaid appeals cases.

Documents reviewed:

John Balko & Associates d/b/a Senior Healthcare Associates, Plaintiff, v. Kathleen Sebelius Secretary U.S. Department of Health and Human Services, defendant. United States District Court for the Western District of Pennsylvania.  Case 2:12-cv-00572-AJS.

  1. Complaint (Filed 04/30/12)
  2. Answer to Complaint (Filed 08/20/2012)
  3. Brief in Support of Motion [for Summary Judgment] (Filed 11/15/2012)
  4. Brief in Opposition to Motion (Filed 12/04/12)
  5. Concise Statement of Material Facts (filed 11/16/12)
  6. Memorandum Opinion re: Parties’ Cross-Motions for Summary Judgment (Filed 12/28/2012)
  7. Judgment (Filed 04/08/14)
  8. Opinion of the Court (Filed 02/12/2014)

Note: There is another write-up of this ruling by Paige Fillingame at King & Spalding LLP with a free link to the ruling.

 

The Case of John Sanders, M.D. – Medicare Appeals Council (MAC) Throws Out Extrapolation

This is a case in which the extrapolation was thrown out.

Here, the Medicare Appeals Council agreed with the “determination that the sampling was sufficiently flawed to preclude calculation of an overpayment by extrapolation”.

Although the appellant had made a number of arguments attacking the statistical extrapolation, the MAC relied on two errors in throwing out the extrapolation:

“The errors are: 1) the PSC provided the independent statistical expert with sample data which assigned some claims to the wrong stratum; and 2) the PSC provided the independent expert with a second CD containing an Excel set of sample data with significant discrepancies from the first set of data, and the PSC was unable to clarify the discrepancies, to identify which set of data was applicable, or to explain the significance of the second set of data.”

This provides at least three check points when providing litigation support to a health care provider:

First, always have the statistical expert carefully check that all claims in any strata strictly fit the definition of the strata;

Second, look for any instance in which inconsistent records have been handed over by the contractor; and

Third, demand detailed explanations from the contractor for each and every inconsistency found in the data.

The case is: In the case of John Sanders, M.D. (May 12, 2011). Medicare Appeals Council (MAC).

Unfortunately, it has been our experience at Barraclough that these arguments do not always result in an extrapolation being thrown out.   Rulings are inconsistent with each other – sometimes this argument works, sometimes it does not.

Challenges to Statistical Sampling in Health Care Fraud Litigation

Statistical extrapolation in Medicare and Medicaid audits can be problematical.    They are not always done correctly, and it actually has been our experience that they frequently are not done correctly at all.

Steven E. Skwara identifies three challenges that can be made against statistical sampling in health care fraud cases:

  1. Reproducibility.  If the results can not be reproduced, then there is reasonable argument that the results are not scientific.  Documentation is crucial.
  2. Sample  Size.  Larger sample, more accurate results.   There is a great deal of leeway given by Medicare courts.
  3. Variability.  This is not often looked for, but a high degree of variability in the data may signal problems.  Ask your statistician.

SeeStatistical Sampling in Health Care Fraud Litigation“.