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From Health Law Daily, December 8, 2015

Does fraud go without saying? Supreme Court to examine ‘implied certification’ in FCA

By Jenny Burke, J.D., M.S.

The issue of whether a government contractor's Medicaid reimbursement claims are "legally false" if payment conditions were not clearly specified will be taken up by the Supreme Court after a split in opinion among the First and Seventh Circuit Courts developed. The high court agreed to tackle two questions on appeal, regarding the "implied certification" theory of legal falsity under the False Claims Act (FCA).

Legally false. Under the FCA, it is illegal to submit a false or fraudulent claim for government reimbursement. The doctrine of implied certification developed as some judges began to find a claim to be "legally false" if a contractor provided products or services but did not comply with a payment condition imposed by law or a contract provision. This situation may happen over time, where a party expressly certifies compliance initially, but then implies compliance with subsequent requests for payment. In these situations, the doctrine of implied certification must be used to attach liability. Upon its review of this doctrine, the U.S. Supreme Court will determine whether the implied certification theory is truly viable and, if it is, whether a government contractor's reimbursement claim can be considered legally "false" under the theory if the law or contractual provision at issue does not specifically say that it is a condition of payment.

Split. One of the cases involved in the circuit split is U.S. ex rel Escobar v. Universal Health Services. In that case, the U.S. and the state of Massachusetts alleged that reimbursement claims from Universal Health Services were legally false because the company's services did not comply with certain regulatory provisions. The First Circuit reversed the trial court and found that the government stated an actionable FCA claim for legal falsity because the Massachusetts Medicaid regulations, which were allegedly violated by Universal Health, were conditions of payment (see Appeals court takes practical approach to False Claims Act, March 19, 2015). The District of Columbia and Fourth Circuit courts have also made similar determinations.

The Seventh Circuit went the opposite way and rejected an implied certification theory of FCA liability in its June 2015 decision in United States v. Sanford-Brown, Ltd., a case involving the U.S. Department of Education and its regulations. Claiming that it was falling in line with the reasoning of the Fifth Circuit, the Seventh Circuit court concluded that it would be unreasonable to hold that an institution’s continued compliance with federal statutes and regulations that are incorporated by reference into a program participation agreement with the Department of Education were conditions of payment for purposes of liability under the FCA.

Oral argument in the Supreme Court will likely be held in March or April 2016, and a decision is expected by the end of June 2016.

MainStory: TopStory SupremeCourtNews QuiTamNews FCANews FraudNews MedicaidPaymentNews

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