The False Claims Act case argued before the Supreme Court on Tuesday will have implications for physicians no matter which way it is decided, according to one legal expert.
This article first appeared on Medpage Today website.
Facts of the Case
The case, known as Universal Health Services v. United States ex rel. Escobar, involves a Massachusetts mental health clinic which treated Yarushka Rivera, the stepdaughter of Julio Escobar and daughter of Carmen Correa; Rivera adversely reacted to prescribed medication and eventually died in 2009 following a seizure.
An investigation found that social workers at the clinic were not properly supervised and licensed as required by state law. Escobar and Correa filed suit under the False Claims Act on the theory that even though the claims submitted to Medicaid for payment by the clinic accurately represented the services that were provided, the claims were false because the clinic had not complied with state laws.
The clinic, for its part, says the False Claims Act is not meant to punish those who submit claims for services actually provided but who may have violated some regulations.
The argument is "as fundamental as whether the government has almost unbounded ability to investigate claims for alleged violations of any sort, and either extract a settlement or litigate," Laurence Freedman, JD, of the law firm Mintz Levin here, said in a phone interview. Freedman called the case "the most significant False Claims Act case the court has heard" since amendments to the act were passed in 1986.
"The government wants to say that any [rule] a doctor is required to [comply with] under any state regulation that had to do with the claim -- 'We didn't mean to pay that claim if we knew you weren't in compliance with whatever it is,'" he continued. "The government wants discretion to take an incredibly broad view and say which things are related to the claim and which aren't, and could do it after the fact." The government itself was not a party to the lawsuit, but instead filed it on behalf of Rivera's family.
Differing Opinions
But David Colapinto, JD, general counsel for the Washington-based National Whistleblowers Center, which filed a "friend of the court" brief in the case, disagreed, calling what Universal and its allies are alleging a "Chicken Little" argument.
"It is almost beyond belief that a medical provider would go to the Supreme Court and argue that you can submit a bill for a doctor's services when in fact you know that no licensed doctor performed the services," he said in a phone interview. "How can you bill Medicaid or Medicare under those circumstances and it would not be fraud?"
Colapinto noted that the False Claims Act was passed by Congress in 1863 during the Civil War. "What Congress was concerned about was contractors who were unscrupulous; they were selling guns to the government that couldn't shoot straight, selling mules that couldn't walk, or providing food that was rancid."
In this case, Universal is "saying they never said anything false when they submitted the claim, but they didn't tell the government that unlicensed people were performing the service. So they omitted things that needed to be told," he said. "When the government got a bill under those billing codes, were they right to assume a licensed medical professional performed the service?"
Healthcare providers, on the other hand, say that they should know in advance what requirements they need to be following to avoid these kinds of claims, Freedman said.
"When I submit a claim, I'm the doctor; I should know in advance whether I will be subject to [a fine of] $11,000 per claim plus treble damages -- what is it I'm saying I'm complying with? For a lot of us, it seems too broad if [the answer] is 'Every federal and state regulation out there.' The government's view is, 'Yes it is every federal and state regulation, but trust us, we'll only proceed if we think it's related to payment.'"
"It is my view that the government's view is overbroad and would turn the statute into an all-purpose enforcement mechanism that it's not intended to be," he added.
Picking and Choosing
Colapinto, who attended Tuesday's oral arguments, said he was particularly surprised that the attorney for Universal told the Supreme Court that healthcare providers and other federal contractors should be allowed to pick and choose which regulations they follow (this argument is found on page 51 of the oral argument transcript). "I was startled by that because since when have doctors and hospitals been allowed to pick and choose what laws they comply with?" he said.
Attorneys on both sides of the issue agreed that this case could easily result in a 4-4 tie, in which case the decision would revert back to an appeals court finding in favor of Rivera's parents. But there are other possibilities too.
For example, the court "could limit the theory to when there are explicit or express conditions of payment, which would give some folks notice of what it is," said Freedman. "The state [would then] have to say, 'These are the conditions of payment and you're on notice these are linked to your claim.' But it really just depends on how the court goes. If the court upholds a very broad theory, anyone submitting claims, about all they can do is hold their breath."
If, on the other hand, the court made a definitive decision in favor of Universal, "They would drastically reduce the government's ability to sue contractors in all contexts if they were to succeed," said Colapinto.
He dismissed the idea that a definitive ruling the other way, in favor of Rivera's parents, would "open the floodgates" for lots of False Claims Act suits by private parties. "You have to prove fraud in these causes; you have to prove allegations with a certain level of particularity -- there's a heightened pleading standard."
As a result, "most of the cases the government declines to pursue don't proceed very far," Colapinto said, calling arguments by the other side that False Claims Act cases have exploded "overblown." He pointed to a "friend of the court" brief submitted in the case by David Engstrom, JD, PhD, of Stanford Law School. Engstrom reviewed suits filed under the False Claims Act and found that they remained flat or even declined from 1996 to 2009. "We haven't seen exponential growth," he said.
But Hooper warned that if the False Claims Act is expanded, it could be bad news for doctors. "What it means is that any expansion of the False Claims Act gives added fuel to potential whistleblowers to complain about what a doctor is doing," he said. "That's the biggest threat to doctors -- not so much from the government initiating a False Claims Act claim against a doctor, but from a disgruntled former employee, a competitor, or someone like that on behalf of the government. The more the False Claims Act is expanded, the more people are going to file those lawsuits."
A decision in the case is expected later this year.