False Claims Act: Payment vs. Participation Regulations

In U.S. ex rel. Williams v. Renal Care Group, Inc. (Case No. 11-5779) (October 5, 2012), the Sixth Circuit Court of Appeals reversed a grant of summary judgment in favor of the United States on two main False Claims Act (FCA) claims relating to Medicare reimbursement of dialysis supplies. In doing so, the Court issued an important decision distinguishing the applicability of the FCA between noncompliance with payment and participation regulations.

The United States alleged, inter alia, that defendants violated the FCA by submitting claims which they knew were not in compliance with DME supplier standards set forth by statute and regulation relating to conditions of participation (i.e. to honor warranties, fill orders, and maintain an appropriate place of business), which impose independent sanctions and potential exclusion.

The Sixth Circuit reasoned that “[t]he False Claims Act is not a vehicle to police technical compliance with complex federal regulations.” As such, the Court agreed with the defendants that noncompliance with participation regulations does not render a claim materially false, irrespective of the whether the regulation is violated, because payment is not expressly or impliedly conditioned upon compliance with participation conditions.

This decision could have a further relevance in the context of Medicare and Medicaid provider audits for improper payments. In opposing audit tactics, our firm has always maintained that disallowances based on noncompliance with conditions of participation are unwarranted and inconsistent with the structure and purposes of the Medicare and Medicaid program. This decision adds support and justification to the validity of this argument in suggesting that payment is not expressly or impliedly conditioned upon compliance with participation conditions.

This post is contributed by Charles Dunham


Caitlin Monjeau

About Caitlin Monjeau

Caitlin is an associate with our Health Law department in the Albany office. She is a magna cum laude graduate of Boston University School of Law where she served as Articles Editor for the Boston University Law Review, and is a graduate of Duke University with a major in English and minor in Political Science. Caitlin was an intern with the United States Attorney’s Office, Criminal Division in Boston, MA before joining O’Connell and Aronowitz. Her experience includes clerkships with the Office of the General Counsel at Boston University and New York State Supreme Court, Appellate Division, 3rd Department. She also interned with the Office of Senator Hillary Rodham Clinton. While in law school, Caitlin was honored with the Paul J. Liacos Scholar and G. Joseph Tauro Distinguished Scholar awards. She also received the Best Oralist award in the Stone Moot Court Competition in 2009, and she was the Winner and recipient of the Best Brief Award for the Sutherland Cup Moot Court Competition in 2011.

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