Summer is almost here. For some, that means planning vacations to the beach, hitting the gym to shed that winter weight, or perhaps hitting the golf course—but for us at the Sheppard Mullin Healthcare Law Blog and the False Claims Act Defense Blog, summer signals the anniversary of the Supreme Court’s seminal decision in Universal Health Services, Inc. v. United States ex rel. Escobar. Continue Reading What Have We Learned About False Claims Act Litigation in the Two Years Since Universal Health Services, Inc. v. United States ex rel. Escobar? Quite a Lot, Actually
Escobar’s Demanding Materiality Standard Nixes $350 Million Verdict Against Florida Nursing Facility
A Florida federal court threw out a $350 million jury verdict against a nursing facility, citing the Supreme Court’s landmark decision in Universal Health Services, Inc. v. United States ex rel. Escobar. The court explained that the relators had failed to establish that the alleged violations were material to the federal Medicare and state Medicaid programs’ decision pay claims.
The ruling is another piece of welcome news to the healthcare community, which is historically the primary target of the government’s False Claims Act enforcement efforts. The ruling demonstrates that under Escobar, it is one thing to proclaim that a violation was material to the government’s decision to pay, but it is another thing to prove it. Continue Reading Escobar’s Demanding Materiality Standard Nixes $350 Million Verdict Against Florida Nursing Facility
Escobar: Year One
The healthcare industry is exposed to False Claims Act liability more so than other industries because of the federal government’s unique role as both a regulator and payor. Universal Health Services, Inc. v. United States ex rel. Escobar is a game changing decision for those in the healthcare industry because it makes violations of certain regulations potential bases for liability under the False Claims Act. Indeed, Escobar itself was a case about a facility that allegedly violated Massachusetts Medicaid regulations requiring mental health facility staff to have certain qualifications. Since Escobar, we have seen numerous cases brought against healthcare entities based on an implied certification theory. Although it seems that Relators and the Government continue to push the boundaries to find new avenues to liability, the decisions are uniformly enforcing what the Supreme Court described as a “rigorous” materiality requirement. This materiality requirement is governed by several principles described in the Escobar decision. Earlier this summer, to mark the one-year anniversary of the Escobar decision, our team prepared a handy desk reference describing those principles, which we would encourage you to download by clicking here.
Proving Fraud is and Should Be Hard: Lessons from a Recent Medicare Advantage False Claims Act Decision
The litigator’s adage “it’s easy to plead, it’s hard to prove” once again came true in the long-running False Claims Act (FCA) case targeting Medicare Advantage (“MA”) plans operated by UnitedHealth (United). Eight years after the complaint was filed, a Special Master recommended granting United’s motion for summary judgment. U.S. ex rel. Poehling v. UnitedHealth Group, Inc., 2025 U.S. Dist. LEXIS 40921 (CD CA). Both the litigation and the Special Master’s report contain valuable insights for all FCA defendants, and especially for those matters involving allegations related to diagnosis coding.
Continue Reading Proving Fraud is and Should Be Hard: Lessons from a Recent Medicare Advantage False Claims Act Decision
Supreme Court Hears Arguments on False Claims Act Scienter Standard
Companies regularly are required to interpret ambiguous and vague regulatory provisions. Today, the United States Supreme Court heard oral arguments in a pair of consolidated cases to determine whether a defendant’s subjective interpretation of an ambiguous regulation is relevant to determining the knowledge (or scienter) element of the False Claims Act or, as the Seventh Circuit held in the case below, that once a defendant can articulate an objectively reasonable interpretation its contemporaneously held subjective belief is irrelevant to the knowledge inquiry. The issue is a significant one for both the government and relators on one side, and potential defendants on the other, as False Claims Act (FCA) liability imposes treble damages and penalties exceeding $20,000 per claim as well as relators’ attorneys’ fees and costs.
Continue Reading Supreme Court Hears Arguments on False Claims Act Scienter StandardSupreme Court Addresses False Claims Act Statute of Limitations
On May 14, 2019, the Supreme Court issued a decision in the case of Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315, 2019 WL 2078086 (U.S. May 13, 2019). In its decision, the Supreme Court essentially added four years on the time available for private suits to be brought by whistleblowers/relators under the False Claims Act (“FCA”), regardless of whether the Government decides to intervene. As a result of this decision, entities that submit claims to the Government for payment – including Medicare, Medicaid and other Federal healthcare program-participating providers and suppliers – may find themselves facing a private whistleblower complaint more than six years after the alleged conduct took place. As described in the following article, “Supreme Court Addresses False Claims Act Statute of Limitations,” that was previously posted on the Sheppard Mullin False Claims Act Defense Blog on May 14, 2019, the Court decision now allows for the possibility that a whistleblower could inform an appropriate U.S. official of material facts relating to an alleged FCA violation after the whistleblower’s own six-year statute of limitations has already tolled, so long as the action is brought within 10 years of the alleged violation. Continue Reading Supreme Court Addresses False Claims Act Statute of Limitations
The Overpayment Rule and the Implied False Claims Theory: “What You Don’t Know Can Still Hurt You”
In 2010, the Affordable Care Act (“ACA”) enacted new rules governing overpayments made by the Medicare and Medicaid programs. Under these rules, providers have 60 days from the date that the overpayment has been identified to return the overpayment or face penalties and treble damages under the False Claims Act (“FCA”). As described below, recent regulations have clarified some of the issues surrounding the ACA obligation to refund overpayments, at least for overpayments under Medicare Parts A and B. But, determining whether a provider has “identified” an overpayment – and thus started the 60 day countdown – can still be nuanced and complex. Diligent providers that have proactive and robust compliance and audit functions in place may find some comfort, since such providers are presumably able to respond quickly to credible information that there has been a potential overpayment, as required by the new regulations, and thereby have a reasonable period of time to conduct an investigation and quantify the amount of any overpayment before the 60 day clock begins to run.
Supreme Court Preserves But Significantly Changes “Implied Certification” Theory of False Claims Act Liability
On June 16, 2016, the Supreme Court issued its opinion (“Op.”) in Universal Health Services v. U.S. ex rel. Escobar (“Escobar”), a case testing the viability and scope of the implied certification theory of False Claims Act (“FCA”) liability. Under the implied certification theory, a defendant may be liable under the FCA based on the its failure to comply with certain statutory, regulatory, or contractual provisions, even if the defendant did not expressly certify compliance.. The circuits have split, both on whether an implied certification theory is viable at all and, if so, when non-compliance can trigger FCA liability.
Did the FCA’s “Implied Certification” Theory Dodge a Bullet?
Yesterday’s argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar had the potential to put false claims based on an “implied certification” in the crosshairs. Instead, based on the weight of questioning by a plurality of justices, it appears that some form of implied certification theory may survive. (We previously reported on this case, here.) Continue Reading Did the FCA’s “Implied Certification” Theory Dodge a Bullet?