On February 22, 2021, the United States Supreme Court declined to resolve a circuit split regarding the definition of “falsity” in False Claims Act (“FCA”) cases.  In November 2020, CG attorneys wrote about the United States Supreme Court potentially hearing the cases because federal circuits were – and continue to – interpret the FCA’s “falsity” requirement inconsistently.  That did not occur.

By way of background, the 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.”  31 U.S.C. § 3729(a).  Although the FCA defines “knowingly,” it does not define “falsity.”  Id.  Without a statutory definition for falsity, circuit courts have undertaken to interpret the FCA’s falsity requirements, resulting in various definitions and standards for determining when falsity exists.  

FCA cases in the healthcare industry exemplify the importance of how a court defines falsity.  For medical services to be reimbursed by Medicare, a provider must attest that such services, amongst other qualifications, were “reasonable and necessary.” How falsity is defined impacts whether a provider’s genuine belief that a medical service is reasonable and necessary equates to a lack of falsity under the FCA.  Some circuits, like the Eleventh Circuit, require “objective falsity.”  In circuits using the objective falsity standard, falsity is established where there is a false statement or representation based on an objective falsehood.  Therefore, a reasonable difference of opinions by physicians may demonstrate subjective disagreement, which is insufficient for FCA liability.   United States v. AseraCare, Inc., 938 F.3d 1278 (11th Cir. 2019).  In AseraCare, the court reasoned that “a properly formed and sincerely held clinical judgment is not untrue even if a different physician later contends that the judgment is wrong.”  Id.

Multiple circuits, however, have declined to adopt the objective falsity standard.  The Ninth Circuit found that even an honestly held clinical opinion about the need for medical services can be “false” if that opinion contradicts “accepted standards of medical practice.”  Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108 (9th Cir. 2020).  Under the Ninth Circuit’s interpretation, a plaintiff need not plead an objective falsehood.  Id.  The Third Circuit, also declining to adopt the objective falsity standard, noted that “a difference of medical opinion is enough evidence to create a triable dispute of fact regarding FCA falsity.”  United States v. Care Alternatives, 952 F.3d 89, 100 (3d Cir. 2020).

Since the United States Supreme Court refused to resolve the circuit split and decide the definition of falsity or establish a national standard, FCA litigants must be especially mindful of the jurisdiction in which their FCA case is pending or will be filed.  In circuits that do not apply the objective falsity standard, the government or relator may introduce expert testimony that contradicts the defendant-physician and may overcome certain dispositive motions.  In circuits that apply the objective falsity standard, a provider may have a defense if the provider can show that their clinical judgment was sincerely held and reasonable, whether or not the government or relator presents expert testimony contradicting that clinical judgment.   

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.