SCOTUS Declines to Review FCA Objective Falsity Standard

The United States Supreme Court recently declined to take up two cases relating to whether a False Claims Act can go forward if the only evidence proving medical necessity are conflicting medical opinions.

The plaintiffs in both cases were hoping to settle the question since courts around the country have been split on the issue. However, the high court rejected, without comment, petitions filed by a hospice operator and a hospital management company.

In the Third Circuit Court case, U.S. ex rel. Druding v. Care Alternatives, three former employees of Care Alternatives filed a whistleblower action alleging that the hospice operator admitted patients who were ineligible for hospice care and directed its employees to improperly alter those patients’ Medicare certifications to reflect eligibility.

To be eligible for the hospice benefit, a Medicare or Medicaid patient’s physician must certify (and re-certify every 60 to 90 days) that the patient has a life expectancy of six months or less.

To support their opinion, they retained an expert who opined that based on the records he examined, the patients were inappropriately certified for hospice care 35 percent of the time.

For its part, Care Alternatives’ expert disagreed and testified that a reasonable physician would have found all of the patients reviewed by the whistleblowers’ expert were eligible for hospice care. The district court ruled that a medical opinion must be “objectively false†to prove the FCA’s falsity element and that a difference of opinion between experts regarding the accuracy of the prognosis was not sufficient enough to create a triable case. The lower court then granted summary judgment in favor of Care Alternatives.

To violate the FCA, “a person must have submitted, or caused the submission of, the false claim (or made a false statement or record) with knowledge of the falsity.  In § 3729(b)(1), knowledge of false information is defined as being (1) actual knowledge, (2) deliberate ignorance of the truth or falsity of the information, or (3) reckless disregard of the truth or falsity of the information.â€

The plaintiffs appealed to the Third Circuit, which rejected the lower court’s ruling finding that “appellants’ expert testimony created a genuine dispute of material fact as to falsity.†The court reversed the lower court ruling for summary judgment and remanded it back to the district court for proceedings consistent with the appellate court ruling. Click here to read the ruling.

In the Ninth Circuit court case, Winter v. Gardens Regional Hosp. & Med. Ctr., a former director of Care Management at Gardens Regional Hospital brought a whistleblower lawsuit alleging that the hospital submitted, or caused to be submitted to Medicare, claims falsely certifying that patients’ inpatient hospitalizations were medically necessary.  The patients being admitted were coming from a nursing home with ownership ties to the management company that oversaw operations at the hospital. The relator alleged that the admissions were not medically necessary and were contraindicated by the patients’ medical records and the hospital’s own admissions criteria. She noted the spike in admissions correlated to the management company’s ownership interest in the defendant.

The defendants moved to dismiss the case on the grounds that “(a) Respondent had not alleged an objectively false claim for payment and (b) the allegedly false certifications were not material to the government’s payment decision as a matter of law.â€

The district court granted their motions to dismiss, and the case was appealed to the Ninth Circuit, which revived the claim stating that the plaintiff “need not allege falsity beyond the requirements adopted by Congress in the FCA, which primarily punished those who submit, conspire to submit, or aid in the submission of false or fraudulent claims.â€

The appellate court held that a false certification of medical necessity can be material because medical necessity is a statutory prerequisite to Medicare reimbursement.

The court held that “a doctor’s clinical opinion must be judged under the same standard as any other representation.  A doctor, like anyone else, can express an opinion that he knows to be false, or that he makes in reckless disregard of its truth or falsity. Agreeing with other circuits, the panel therefore held that a false certification of medical necessity can give rise to FCA liability. The court also held that a false certification of medical necessity can be material because medical necessity is a statutory prerequisite to Medicare reimbursement.

The Ninth Circuit joined the Fifth, Tenth, and Third Circuits in holding that “a false certification of medical necessity can give rise to FCA liability.â€

However, as we mentioned earlier, the courts remain split on this matter. In 2019, the Eleventh Circuit in United States v. AseraCare, held that in order to show “falsity†under the FCA, the government must show “something more than the mere difference of a reasonable opinion. In other words, a claim cannot be deemed false based on a difference of clinical judgment, rather there must be proof of an objective falsehood.

Without a final say from the U.S. Supreme Court, healthcare entities are left without a unified standard for falsity under the FCA.

The Health Law Offices of Anthony C. Vitale represents clients in False Claims Act cases. For more information contact us at  305-358-4500 or email info@vitalehealthlaw.com.