The False Claims Act (FCA) makes it illegal to use false or fraudulent claims to seek payment from government sources, like Medicare and Medicaid. This law is complex. Court cases have questioned the best way to apply the FCA to establish a violation. These cases often require the plaintiff establish four elements: “(1) a false statement or fraudulent course of conduct, (2) made with scienter, (3) that was material, causing (4) the government to pay out or forfeit moneys due.” The outcome of these cases often hinges on the scienter and materiality elements.
This piece will focus specifically on how a recent case provides some guidance on establishing scienter.
Scienter, elaborated
Scienter is, essentially, the knowledge of wrongdoing. The prosecution will generally establish scienter in one of two ways: express or implied. Express false certification involves knowingly making a false statement. Implied false certification occurs when the accused has omitted the false statement.
United Health Services, Inc. v. United States ex rel. Escobar provides some guidance on implied false certification
The Supreme Court of the United States’ (SCOTUS) ruling in Escobar included the use of two conditions to establish implied certification. These conditions include: “first, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual provisions makes those representations misleading half-truths.”
Legal professionals with the American Bar Association explain plaintiffs argue use of the conditions as a recommendation, not requirement. Use as a requirement, it is argued, would encourage vague billing practices to avoid potential liability. Defendants argue for a mandatory approach, as use of these conditions provides clear guidance for one the law is violated.
As noted in a recent publication in the National Law Review, lower courts throughout the country continue to struggle with how to apply these conditions. Recommendations or requirements? At this time, only one court has taken a clear stance: the United States Court of Appeals for the Ninth Circuit supports use of these conditions.
It is important to be familiar with this information if accused of violating the FCA and other similar regulations. Any medical professional, hospital or clinic facing such allegations are wise to take action. An attorney familiar with this unique area of law can review the allegations and help build a case to protect your interests.