DEVELOPMENTS REGARDING FALSITY This year both appellate and district courts issued numerous notable holdings concerning the issue of establishing falsity in FCA litigation. Supreme Court Declines to Review Objective Falsity Standard In prior years, we discussed the growing divide among federal appellate courts about whether a disagreement of medical opinion can establish that a physician’s clinical judgment about patient treatment and any attendant certifications were “false” under the FCA. Specifically, the Third Circuit in U.S. ex rel. Druding v. Care Alternatives 108 and the Ninth Circuit in U.S. ex rel. Winter v. Gardens Regional Hospital 109 found that unreasonably held medical opinions or subjectively dishonest certifications could give rise to FCA liability. In contrast, the Eleventh Circuit in United States v. AseraCare 110 held that a mere difference of clinical opinion could not render a physician’s clinical judgment false. Although the Supreme Court was presented with an opportunity to weigh in on this issue, in February the Court declined to grant the defendant’s petition for certiorari in Druding . This is an issue worth monitoring to see how it continues to unfold in district and appellate courts. False Certification Appellate and district courts continued to evaluate express and implied false certification claims. The Seventh Circuit held in U.S. ex rel. Prose v. Molina Healthcare of Illinois, Inc. , that the relator’s complaint stated a claim based on false certification by alleging that
The First Circuit has also been willing to infer that false claims were presented from the circumstances alleged in the pleadings, and district courts within the First Circuit have reflected this approach. In U.S ex rel. Carbon v. Care New England Health Sys. , the relator alleged that the defendant owners and operators of an inpatient rehabilitation facility (IRF) admitted patients that did not meet the strict regulatory requirements for admission, resulting in false claims for payment for these IRF services. 106 In holding that the relator plausibly alleged that the defendants
This year both appellate and district courts issued numerous notable holdings concerning the issue of establishing falsity in FCA litigation.
submitted actual false claims, the district court analyzed the relator’s allegations regarding at least one example patient. The relator alleged facts explaining why that patient did not qualify for admission to the IRF and that he was admitted anyway. Taking these allegations as true, the district court concluded that the patient was improperly admitted to the IRF, and because the patient’s only insurer was Medicare, the IRF must have billed Medicare for the improper admission, “unless [the patient] stayed in the [IRF] for a week free of charge.” The district court acknowledged counterarguments against such an inference, but it reasoned that if a patient were admitted to the IRF, their insurance would be billed, and if the insurer is the government, the government would have been billed. “Thus, there is a logical connection between the admission of at least one patient . . . and improper billing.” The district court characterized its assumption as reasonable given that there were significant financial returns on IRF admissions, that the defendant hospital system was facing significant financial losses after an acquisition of a failing hospital, and it is “incredibly unlikely” that a hospital facing financial difficulties would allow patients to be treated for free when they are insured. Like the First Circuit, the Third Circuit has recognized exceptions to a strict presentment requirement and its district courts have followed suit. In U.S. ex rel. Menoher v. FPoliSolutions, LLC , the district court concluded that the relator’s complaint sufficiently alleged that a Department of Energy contractor falsely billed time employees spent working on other projects to the government. 107 The defendants argued that the relator needed to plead facts about specific invoices and that the court cannot presume the necessary details, such as the context, dates, amounts and submissions. The district court disagreed, explaining that the Third Circuit has never required the plaintiff to identify a specific claim at the pleading stage, but rather the relator can allege particular details of a scheme to submit false claims coupled with “reliable indicia that lead to a strong inference that claims were actually submitted.” The district court denied the motion to dismiss and found that the relator adequately cited several examples where the defendants manipulated the timekeeping records, paired with approximate dates outlining their conduct.
the defendant misleadingly omitted critical facts when seeking payment from the government. 111 The relator alleged that the defendant, which had a contract to provide nursing facility services to government health plan beneficiaries, stopped offering SNF services that it was contractually required to provide. The Seventh Circuit held that the complaint adequately pleaded that by continuing to seek reimbursement after it ceased providing SNF services, the defendant impliedly falsely certified that patients had access to SNF services when they actually did not. In U.S. ex rel. Martino-Fleming v. S. Bay Mental Health Ctrs. , the relator alleged that the defendants had falsely certified that unlicensed staff members
Appellate and district courts continued to
evaluate express and implied false certification claims.
were appropriately supervised at the defendant mental-health center. 112 Applying state medical practice regulations, the district court found at summary judgment that the relator had established falsity where, for example, unlicensed staff members were supervised
108 952 F.3d 89 (3d Cir. 2020). 109 953 F.3d 1108 (9th Cir. 2020). 110 938 F.3d 1278 (11th Cir. 2019). 111 17 F.4th 732 (7th Cir. 2021). 112
106 2021 WL 4860736 (D.R.I. 2021). 107 2021 WL 3513860 (W.D. Pa. Aug. 10, 2021).
2021 WL 2003016 (D. Mass. May 19, 2021).
FALSE CLAIMS ACT UPDATE BASS, BERRY & SIMS | 18
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