by social workers who were ineligible to provide supervision and where the supposed supervisors provided only administrative or licensing supervision that included no clinical discussion of patients. In U.S. ex rel. Harbit v. Consultants in Gastroenterology, P.A. , the defendants argued that the relators failed to plead false certification of medical necessity because the relators’ complaint relied upon and repeatedly cited interpretive guidance under the Medicare Act, which was not promulgated through public notice and comment. 113 The district court rejected that argument, holding that the relators’ claims were not based on interpretive guidance but merely used it to show what resources were available to the defendants and to provide background information about the relevant regulations that the relators alleged were violated and that provided the basis for the defendants’ alleged false certifications. In U.S. ex rel. Higgins v. Boston Scientific Corp. , the district court addressed whether false statements made to the FDA to obtain approval for two types of medical devices could constitute false certifications to support an FCA claim. 114 Although the defendant did not submit claims directly to the government in relation to the devices, the relator argued that the defendant caused third-party providers to falsely certify that the devices were medically necessary when, in fact, they were defective, misbranded and not medically necessary. At summary judgment, the district court held that genuine issues of fact existed with respect to four of the defendant’s alleged false statements that could constitute misrepresentations that caused false claims to be submitted to the government. The district court, however, held that no reasonable jury could find that the defendant’s alleged misrepresentations were material to the FDA’s device approval decision and granted summary judgment in favor of the defendant. The district court reached a split falsity ruling in U.S. ex rel. Mbabazi v. Walgreen Co. 115 The relators there alleged that Walgreens violated the FCA by submitting claims to Pennsylvania Medicaid without first determining whether beneficiaries had other insurance. On a motion to dismiss, the district court agreed with Walgreens that the relators failed to allege an express false certification claim because the complaint alleged no facts showing that other coverage was available. Yet, the district court held that the relators had pleaded an implied false certification claim by alleging that Walgreens failed to disclose it and did not try to determine whether other coverage was available, in violation of regulations requiring it to do so. In other rulings, district courts continued to examine the intersection of Escobar and falsity. In U.S. ex rel. Torricer v. Liberty Dialysis-Hawaii LLC , for example, the district court held that the relator failed to sufficiently allege either an express false certification or an implied false certification and accordingly granted the defendants’ motion to dismiss. 116 The district court found that even though the relator plausibly alleged that the defendant made claims for payment while having deficient plans of care in violation of Medicare regulations, a relator must do more to allege falsity after Escobar than allege the mere submission of a noncompliant claim. After supplemental briefing on the subject, the district court held that
it would be futile to grant the relator leave to amend to include missing details about the claims submission process because the claim forms used by the defendant did not include any express certification and only included boilerplate statements of compliance that were not sufficient to state a viable cause of action. In U.S. ex rel. Kelley v. McKesson Corp. , the relators argued that their complaint alleged either express or implied false certification. 117 The district court disagreed and granted the defendant’s motion to dismiss, holding that under Escobar and subsequent Ninth Circuit cases, relators must allege specific representations about the goods or services provided in a claim for payment in order to state a claim on an implied false certification theory. The relators’ allegations that the defendant was in breach of various contracts and violated numerous laws and regulations did not suffice to allege a false claim. The relator in U.S. ex rel. Freedman v. BAYADA Home Health Care, Inc. , alleged that the defendant fraudulently induced a government contract. 118 The district court noted that fraudulent inducement may create FCA liability without fraudulent claims if the fraudulently induced contract results in government payment. The relator, however, failed to allege any facts showing that the defendant’s misrepresentations during its bid concerned the government or induced the government to enroll it as a Medicare provider. The district court held that the defendant’s contract with the county – which was negotiated, executed and performed without any federal government involvement – could not give rise to FCA liability. In U.S. ex rel. Govindarajan v. Dental Health Programs, Inc. , the district court ruled that the relator failed to plead that the defendant dental services provider falsely certified compliance with various requirements in federal grant contracts. 119 Although the relator contended that the defendants’ certifications of compliance were false based on a bevy of alleged misconduct – including that the defendants violated nonprofit organization requirements and improperly assigned managerial duties to other entities – the district court found the relator’s allegations were merely conclusory and thus insufficiently pleaded to establish falsity. Worthless Services In U.S. ex rel. SW Challenger, LLC v. eviCore Healthcare MSI, LLC , the district court addressed whether claims submitted for allegedly worthless services were false for purposes of pleading an FCA claim. 120 The relator alleged that the defendant caused false claims to be submitted by providing worthless utilization management and prior authorization services to the managed care organizations with which it contracted. The district court granted the defendant’s motion to dismiss because, even accepting the relator’s allegations as true, the relator alleged only that the defendant failed to provide some of the prior authorization and utilization management services that it contracted to provide. Thus, the relator failed to plead the falsity of the claims submitted because the services were not so worthless that they were “equivalent of no performance at all.”
113 114 115 116
2021 WL 1197124 (D.S.C. Mar. 30, 2021). 2021 WL 3604848 (D. Minn. Aug. 13, 2021). 2021 WL 4453600 (E.D. Pa. Sept. 28, 2021).
117 118
2021 WL 583506 (N.D. Cal. Feb. 6, 2021). 2021 WL 1904735 (D.N.J. May 12, 2021).
119 2021 WL 3213709 (N.D. Tex. July 29, 2021). 120 2021 WL 3620427 (S.D.N.Y. Aug. 13, 2021).
512 F. Supp. 3d 1096 (D. Haw. 2021).
FALSE CLAIMS ACT UPDATE BASS, BERRY & SIMS | 19
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