Bradley attorney Ty Howard was quoted in Inside Health Policy on the U.S. Supreme Court’s ruling in Universal Health Services v. Escobar that a provider’s noncompliance with regulatory requirements can be grounds for a False Claims suit denying payment. While the Court held the “implied certification theory” can be a basis for FCA cases, they rejected the government’s and plaintiff’s expansive view that noncompliance with any requirement in statute, regulation or contract could drive a FCA case so long as the defendant knew the government could refuse payment were it aware of the violation.
“ Under this ‘rigorous’ standard, ‘garden-variety breaches of contract or regulatory violations’ would not trigger liability, nor would ‘minor or insubstantial’ noncompliance, nor would the government’s option to decline to pay if it knew of the noncompliance. The Court also expressly noted that if the government paid or regularly pays claims despite actual knowledge of noncompliance, it would be ‘very strong evidence’ against materiality,” Howard said. “Although the Court’s unanimous decision may initially be construed as a government victory because it upholds the implied certification theory, it likely will be a Pyrrhic one,” he added. “The Court’s significant limitations on when that theory can apply and the significant bolstering of the materiality requirement foreclose the government’s most expansive use of the theory and create a much higher bar for qui tam plaintiffs to clear before FCA liability can apply, both of which will be welcome news to health care providers, government contractors, and others that do business with the federal government.”
The complete article, “High Court Limits When Noncompliance Can Trigger A False Claims Case,” appeared in Inside Health Policy on June 16, 2016.