[Cross-posted from Hamilton and Griffin On Rights]
In a recent post, I explained the contours of the False Claims Act (FCA) implied certification theory of falsity, the subject of the recent Supreme Court argument in Universal Health Services v. United States(UHS). In this post, I will address an issue largely overlooked by most commentators: the potential for differing interpretations of what is required by the underlying Medicare and Medicaid provisions that form the basis for the certification.
Recent years have seen an expansion of FCA cases from “factually false” misrepresentations to those involving “legally false” claims, where items or services were provided but the claimant also violated an underlying legal requirement. For example, UHS involves an allegation that the defendant clinic violated the FCA because, by submitting a claim for payment under MassHealth, it implicitly certified that it was in compliance with all relevant Massachusetts regulations – including the staffing and supervision requirements it later was found to have violated.
Courts have taken two broad approaches to defining the universe of regulatory provisions with which certification will be implied. Some courts, notably the Second Circuit in Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001), limit the theory to violations of statutes or regulations clearly identified as conditions of payment. Other courts, such as the First Circuit in UHS, instead ask whether the claimant “knowingly represented compliance with a material precondition of payment,” which need not be “expressly designated.” The tests may sound similar, but differ both theoretically and functionally. First, defining implied certification by reference to “materiality” is curious in light of the fact that, since 2009, materiality has been an express – and distinct – element of the FCA false records provision in 31 US.C. § 3729(a)(1)(B). Yet implied certification cases such as UHS usually arise under the false claims provision in § 3729(a)(1)(A), which Congress did not amend to require materiality.