Tuesday, January 26, 2016

US Supreme Court Will Hear FCA Case

Dianne De La Mare

In December, the US Supreme Court granted review in Universal Health Services v. United States ex rel. Escobar, to determine important issues about the scope of the federal False Claims Act (FCA), a statute that makes it unlawful for any person to knowingly submit a false or fraudulent claim for payment to the federal government. The FCA applies to both federal contractors and recipients of federal grant and cooperative agreement assistance (including long term care providers).

The steep damages associated with a FCA violation (three times the damage sustained by the government, plus civil penalties of $5,500 to $11,000 per claim) have enabled whistleblowers and the federal government in recent years to recover billions of dollars from various entities, in both court victories and FCA settlements. Much of the significant uptick in government enforcement actions is a result of the whistleblowers increasingly aggressive assertion of the "implied certification" theory under the FCA. Under this theory, a claim for reimbursement submitted when a recipient of federal funds is noncompliant with any regulation, or other federal, state, or local law can be "false" under the theory that the government would not have paid for the services had it known of the provider’s noncompliance. Under the implied certification theory, this is true even where the government does not expressly condition payment on compliance of the provision, regulation, or law. The theory raises important questions about the difference between a breach of the contract or agreement and "defrauding" the government.

AHCA/NCAL will monitor this important and on-going litigation, and plans to submit an amicus brief, asking the court to either reject the “implied certification” theory outright, or in the alternative to impose strict limits on the use of the theory.

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