The U.S. Supreme Court recently denied two petitions for certiorari that had raised significant issues under the False Claims Act that impact not just some health-care providers, but all government contractors: What evidence is required to prove a false claim under the Medicare hospice benefit, and whether the FCA requires a so-called “objective falsehood.”
As is its customary practice, the Supreme Court included no comment on its decision not to address these two cases, which arose from the U.S. Court of Appeals for the Third Circuit (Care Alternatives) and Ninth Circuit (Winter). It seems likely that the court will review these issues in one or more later cases, but, for now, the court’s decision keeps in place a messy circuit split that will lead to troubling uncertainty.
It is important to understand that there is both a “narrow” view of the issues presented by these two cert petitions, and a “broad” view. On both views, the state of the law now is muddy.
Geographic Differences for Hospice Providers?
The narrow view: In Care Alternatives, the Third Circuit created a circuit split with the Eleventh Circuit (and that court’s decision in AseraCare) on the question of what evidence is required to prove an FCA claim in the context of the Medicare hospice benefit. At the most basic level, the Supreme Court’s denial of cert appears to leave hospice providers on different legal footing, depending on where they operate geographically.
A hospice provider in New Jersey, Pennsylvania, or Delaware (Third Circuit) might be subject to FCA liability where the plaintiff offers nothing more than an expert’s subjective opinion that the provider submitted false claims. But in Florida, Georgia, and Alabama (Eleventh Circuit), a plaintiff needs more evidence to prove that a hospice provider is liable under the FCA—something more than just an expert’s subjective opinion.
Long story short, the Supreme Court arguably has made it easier for plaintiffs to prove FCA claims against hospice providers in the Third Circuit than in the Eleventh Circuit.
So, for the time being, hospice providers now will have to calibrate their business practices and litigation strategies in light of this geographic difference. A hospice provider that operates in states within the Third and Eleventh Circuits even may consider “house divided” operations.
Practically speaking, there is no explanation for why the FCA should apply differently to a hospice provider in Newark than it does to a provider in Miami (to say nothing of providers operating elsewhere), but that appears to be how the Supreme Court decided to leave things.
‘Objective Falsehood’ Required?
The broad view: These cases (Care Alternatives, Winter, and AseraCare), along with other circuit court decisions, all have combined to create a snarled, confusing circuit split about whether the FCA requires an “objective falsehood,” and about what that term of art even means.
The impact of those hotly contested issues goes far beyond the context of the Medicare hospice benefit, beyond health-care law, and potentially reaches all government contractors. The core question is what evidence is required to prove an FCA claim, where the health-care provider (or other government contractor) submits claims for payment that are based at least in part on the provider’s subjective judgment or opinion.
Stated simply, courts nationwide have struggled for years with the question of when is a subjective opinion false under the FCA. The Supreme Court’s decision to deny cert leaves us without a uniform, national answer.
What this means in practice for health-care providers and other government contractors is difficult to predict. Some providers, particularly those in the Eleventh Circuit states, will continue to operate and litigate according to the “AseraCare rule.”
As noted above, that bright-line rule requires an FCA plaintiff to introduce something more than a subjective expert opinion that the provider’s own subjective opinion—which supported the allegedly false claim for payment—was false or wrong. The AseraCare rule provides certainty, and a mechanism to dispose of meritless cases early in litigation before a provider would face extensive and costly discovery, and the threat at trial of treble (three-times) damages under the FCA.
Other providers may be more cautious. For example, providers in the Third Circuit states may worry that, under the Care Alternatives rule, they might be found liable under the FCA (and punished by treble damages) based only on a plaintiff expert’s subjective, hindsight opinion.
Health-care providers (and other government contractors) never will know when a plaintiff may find an expert to offer the subjective opinion that a claim for payment was false—even when that claim was submitted years before, and was based on the provider’s own subjective, genuinely held judgment or opinion.
In litigation, given the uncertainty that the Supreme Court has left in place, some of these providers may consider an early settlement when they otherwise would not.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
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Nicholas A. Danella is a partner at Bradley Arant Boult Cummings LLP in Birmingham, Ala. He was a member of the trial and appellate teams that represented the defendant hospice provider in the AseraCare litigation discussed in this Insight. The views expressed in this article are those of the author only.