Major Implications for Providers
The U.S. Supreme Court has issued a decision that allows a legal theory known as “implied certification” to potentially bring more False Claims Act cases against providers.
In the case, Universal Health Services v. Escobar, the provider had argued that it and its counterparts should not be held liable for fraud if they fail to comply with regulations never explicitly stated by the government to receive payment. In essence, “implied certification” can impose liability if a contractor has engaged in a lie by omission, such as failing to disclose its noncompliance.
The outcome of the case could affect a number of industries, but the biggest impact could be on healthcare players. In 2015, two-thirds of federal whistle-blower lawsuits targeted healthcare entities. Implied certification is the basis of many suits brought against providers, and the federal circuit courts have been split on whether it should be allowed.
“Unfortunately, the subjective nature of the Court’s ruling is not likely to reduce the avalanche of FCA cases because these issues are intensely factual and not likely to be dismissed early in the case,” said David Nadler, chairman of the Government Contracts practice at Blank Rome.
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