[Updated] Supreme Court Ruling Could Increase False Claims Cases

False claims cases against health care providers—home health included—could spike following a June 16 ruling by the U.S. Supreme Court regarding payment conditions in provider claims.

The Supreme Court unanimously decided that the implied false certification theory can be a basis for False Claims Act (FCA) liability when a party submitting a claim makes specific representations about its services, but fails to disclose its non-compliance with relevant regulations or laws.

“The decision has far-reaching impact potential on any company that does business with the U.S. government including home health agencies under Medicare,” William Dombi, vice president for law with the National Association for Home Care and Hospice (NAHC), told Home Health Care News in an email. “With this ruling, violations of an expanded group of rules could trigger prosecution and liability under the False Claims Act.”

In the case at hand, Universal Health Services v. Escobar, the Supreme Court found that a government contractor’s Medicaid reimbursement claims were legally false, despite payment conditions not being clearly specified.

Part of the issue lies in the definition of a false or fraudulent claim, as Congress did not explicitly outline the terms in the False Claims Act. As such, the question remained if omissions in health care claims from providers qualified as fraudulent or false.

The court put the issue to bed with its ruling on implied certification.

“We first hold that, at least in certain circumstances, the implied false certification theory can be a basis for liability,” the Supreme Court opinion from Justice Clarence Thomas reads.

A defendant can have “actual knowledge” that a condition is relevant, even if the government does not specifically deem it a condition of payment, Thomas said.

“What matters is not the label that the government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the government’s payment decision,” Thomas wrote.

The Supreme Court also clarified that not all misrepresentations are fraudulent, noting that a misrepresentation cannot be considered material simply because the government designates compliance with a specific requirement as a condition of payment.

“Materiality also cannot be found where noncompliance is minor or insubstantial,” Thomas wrote. “Moreover, if the government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.”

While the ruling could potentially open up more false claims cases, there may still be some interpretations to clarify regulations related to conditions of payment, according to Dombi.

“The court’s ruling is also likely to trigger many years of clarifying interpretation in the lower courts,” he said.

Written by Amy Baxter and Mary Kate Nelson