Consumer Fraud

U.S. Supreme Court Issues Key Ruling On False Claims Act Reach

whistleblower 2 370x210 U.S. Supreme Court Issues Key Ruling On False Claims Act ReachThe U.S. Supreme Court’s ruling last week on a False Claims Act case clarifies the “implied false certification of theory of liability,” an aspect of the law that lower courts have been divided over.

According to the high court’s ruling, submitting a detailed claim to the government for reimbursement, such as health care providers seeking payments for treatments provided to Medicare and Medicaid beneficiaries, implicitly certifies to be in compliance with all federal rules and regulations.

A provider that bills the government for goods and services while in violation of a material statutory, regulatory, or contractual requirement at the time of submission renders the claim false or fraudulent.

This effectively allows whistleblowers who sue on behalf of the federal government to base their qui tam claims on statutes and regulations outside of the False Claims Act.

Thus, any company or other entity that knowingly remains silent about its noncompliance with material government rules and regulations yet seeks payment from federal agencies and programs is technically committing fraud.

Senate Judiciary Chairman Chuck Grassley (R-Iowa), who authored key revisions of the False Claims Act in 1986 to reintroduce and strengthen the whistleblower provisions, filed an amicus brief in the case arguing that the plain text and history of the Act supports the implied false certification theory.

Sen. Grassley’s brief demonstrated how the U.S. Congress has never restricted the FCA’s reach just to cases of “express certification,” because doing so would allow anyone in a financial arrangement with the U.S. to get away with fraud.

Sen. Grassley released a statement after the Supreme Court’s ruling, hailing the Supreme Court’s decision as a win for taxpayers.

“It goes without saying that a lie of omission is still a lie. So it should also go without saying that if you fail to hold up your end of a bargain, but neglect to tell the other party, you aren’t being intellectually honest. And when it involves agreements with the government, this sort of behavior is fraud against taxpayers, plain and simple. The Supreme Court ruling in [this case] makes clear that entities that knowingly mislead the government through half-truths and lies of omission when conducting business run afoul of the False Claims Act. This unanimous ruling is a big victory for taxpayers and will help to better protect those who rely on quality government programs,” Sen. Grassley said.

The case, Universal Health Services v. U.S. ex rel. Escobar, was filed by the parents of Yarushka Rivera, a child who died after receiving medication from providers at the Massachusetts hospital who weren’t qualified to prescribe drugs. The girl’s parents filed the FCA lawsuit claiming that Universal Health Services billed Medicaid for the health care expenses while allegedly being in violation of Medicaid regulations.

Sources:
Forbes
Chuck Grassley
Law360