The federal False Claims Act (FCA) imposes liability for treble damages and civil penalties on “any person who [among other things] … knowingly presents, or causes to be presented, a false or fraudulent claim for payment” to the federal government or who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” Today, most FCA enforcement actions involve healthcare providers accused of submitting false claims for reimbursement to federal healthcare programs such as Medicare, Medicaid, or TRICARE.
To prevail in an FCA action, the plaintiff (either the federal government or a whistleblower, known under the FCA as a “relator”) must show, among other things, that the defendant made a false claim or used a false statement or record in connection with a claim presented to the government. However, there is some ambiguity as to what constitutes “falsity” in this context. For instance, federal regulations prohibit Medicare reimbursement for services that are not “reasonable and necessary.” Thus, when a healthcare provider submits a claim for reimbursement to Medicare, they represent that the services for which they are seeking reimbursement were reasonable and necessary. If it is determined that those services were not, in fact, reasonable and necessary, the healthcare provider may be liable for making a false claim under the FCA, assuming the other elements of an FCA claim are met.
But what happens if a healthcare provider’s clinical judgment genuinely led them to the view that the services were reasonable and necessary, but the FCA plaintiff disagrees? Moreover, what if the healthcare provider is able to offer evidence – in the form of expert testimony or otherwise – that the services were, in fact, reasonable and necessary?
Unfortunately, the answers to these questions are not simple, and vary across the federal circuit courts. For instance, in United States v. AseraCare, Inc., the Eleventh Circuit found that an FCA plaintiff must show an “objective falsehood” to prevail on an FCA claim and explained that “a reasonable difference of opinion among physicians reviewing medical documentation ex post is not sufficient on its own to suggest that those judgments—or any claims based on them—are false under the FCA.” United States v. AseraCare, Inc., 938 F.3d 1278, 1297 (11th Cir. 2019). A few months later, however, the Ninth Circuit rejected this position and held that “the FCA does not require a plaintiff to plead an ‘objective falsehood.’” Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1119 (9th Cir. 2020) (emphasis added). In its opinion, the Ninth Circuit found that that even an honestly held clinical opinion about the need for medical services can be “false” if that opinion is inconsistent with “accepted standards of medical practice.” The Third Circuit also appears to have adopted this view in United States v. Care Alternatives, 952 F.3d 89, 100 (3d Cir. 2020), wherein the court declined to impose an “objective falsehood” requirement and found that “a difference of medical opinion is enough evidence to create a triable dispute of fact regarding FCA falsity.”
The U.S. Supreme Court has not weighed in on these varying approaches, but the defendant in Care Alternatives has filed a petition for certiorari in the hopes that it will do so. Moreover, a number of other parties, including the U.S. Chamber of Commerce, have filed amicus briefs in support of the petition. If the petition is granted, the U.S. Supreme Court will have an opportunity to give healthcare providers and other government contractors some clarity regarding their potential liability under the FCA.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us today.