Last week, in a case that will have a significant impact on future False Claims Act (FCA) suits against health care entities, the Supreme Court granted certiorari in Universal Health Services, Inc. v. United States ex rel. Escobar. By agreeing to hear the case, the Court will resolve the circuit split over the so-called “implied certification” theory of legal falsity under the FCA. For more information about the circuit split, read the post co-authored by Jason Crawford and Jared Engelking on the Whistleblower Watch blog.
In short, FCA cases based on the “implied certification” theory allege that claims submitted by the defendant are “false” or “fraudulent” because of noncompliance with a statutory, regulatory, or contractual provision even though no express certification of compliance has been made. While cases based on this theory often include an allegation that compliance is a condition of payment not all courts require it. Of note, both whistleblowers and the government have increasingly relied on this theory to prosecute health care FCA cases alleging noncompliance with the Physician Self-Referral (“Stark”) Law, which is a strict liability statute that bans physicians in prohibited financial relationships from submitting claims to Medicare and Medicaid for reimbursement. The Court’s decision on whether and to what extent implied certification is viable will likely prove a turning point in the use of the FCA and eliminate diverging outcomes for attaching FCA liability under factually identical circumstances dependent on where the case is filed. We will monitor the case and provide more insights in future posts.