Tag Archives: FCA

An Ever Widening Gap: Circuit Split on the Applicable Pleading Standard for the False Claims Act

Many areas of the False Claim Act are subject to legal interpretation and have been subject to Circuit splits, sometimes resulting in rulings from the Supreme Court.  In the United States, there are thirteen federal circuit courts that provide intermediate appellate review of the federal district courts in several states.  The decision by a circuit court has binding authority on the district courts within its jurisdiction.  When there is a conflict between circuit courts on an important issue it creates the basis for review by the Supreme Court.

One such area that is currently subject to a Circuit split is the standard to which a relator or the government must plead their case for the False Claims Act.  The Federal Rules of Civil Procedure, Rule 9(b), requires that when alleging fraud or mistake, “a party must state with particularity the circumstances constituting fraud or mistake.” F.R.C.P. Rule 9(b). Continue reading

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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

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