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From Health Law Daily, April 18, 2016

Can false claims be implied? High Court to hear arguments

By Sarah E. Baumann, J.D.

The legitimacy of the implied certification theory of liability under the False Claims Act (FCA) (31 U.S.C. §§3729-3733) will the subject of oral arguments before the U.S. Supreme Court on April 19, 2016. The case, Universal Health Services v. U.S. ex rel. Escobar, will ultimately resolve a circuit split between the First and Seventh Circuits regarding the viability of a theory under which claims for reimbursement can be considered legally false under the FCA when parties imply, but do not formally certify, that they have complied with all applicable federal laws. Stay tuned for continued coverage in Health Law Daily.

In Escobar, the First Circuit determined that the United States and the state of Massachusetts stated an actionable FCA claim in alleging that Universal Health Services submitted improper claims for reimbursement to the U.S. government while violating Medicaid regulations that were conditions of payment. In U.S. v. Sanford-Brown, Ltd., however, the Seventh Circuit determined that the government did not have an actionable claim where it alleged that, because an educational institution implied that it was continuing to comply with federal statutes and regulations incorporated by reference into a program participation agreement with the Department of Education, it was liable for the submission of false claims under the FCA (see Does fraud go without saying? Supreme Court to examine ‘implied certification’ in FCA, December 8, 2015).

Companies: Universal Health Services

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