Last week the U.S. Supreme Court agreed to hear an appeal filed by a mental health facility in a Massachusetts false claims case. The case, Universal Health Services, Inc. v. United States and Commonwealth of Massachusetts, ex rel Julio Escobar and Carmen Correa, involves a false claims action brought by parents of a patient who died of a seizure. 

They claim that the clinic was not supervising care properly and that the clinic lacked a board-certified or board-eligible psychiatrist and a licensed psychologist. The clinic alleges that even if there was a violation of some state regulation, that doesn’t mean that the claims submitted for services at the clinic are false. The district court concluded that only one of the regulations involved was a condition of payment and that there was no sufficient allegation that this regulation had been violated. 

The U.S. Court of Appeals for the First Circuit reversed, concluding that the relevant regulations were conditions of payment. But now, the U.S. Supreme Court will weigh in. 

The Supreme Court will almost certainly decide whether implied certification can form the basis of a false claims case. What is implied certification? There is no dispute that if you formally sign a certification, breaking that promise permits the government to impose false claims liability. However, appeals courts have disagreed about whether the act of submitting a claim to the government means that you are implicitly certifying that you are in compliance with all laws and regulations.

There are three levels of federal courts. The district court hears trials, and each state has one or more districts. Each district is part of a “circuit” of appeals courts; go online here ( for a map of the circuits. District courts are expected to follow decisions from their own court of appeals even when other appeals courts reach different conclusions. The Supreme Court governs all courts. The Supreme Court takes only a small percentage of cases, and is more likely to take a case when the circuit courts have split.

This past summer, the Seventh Circuit, which hears appeals from the three Midwestern states of Wisconsin, Illinois, and Indiana, rejected the concept of implied certification. The court said that unless you have explicitly indicated that you are in compliance with a rule, the government can’t bring a false claims act case just because you violate a rule. But other appeals courts have disagreed. By June we likely will know if the Supreme Court agrees (the Supreme Court occasionally does not reach a decision on the issue it agreed to hear.)

If the court decides that there is implied certification, it probably will settle a second issue: in order for a rule to support a False Claims Act case, must the rule state explicitly that it is a condition of payment, or can that be inferred from context? Even courts that disagree that certification can be implied generally agree that unless payment is conditioned on compliance with a rule, one can’t face false claims penalties for breaking the rule. However, courts have disagreed about whether the rule must say that payment depends on compliance with the rule. The First, Fourth, and district court circuits have said that the court can infer that reimbursement is conditioned on the rule. By contrast, the Second and Sixth circuit courts say the rule must be explicit.   

Many of the false claims cases in the healthcare world are based on implied certification, contending that failure to meet a rule renders the claim false. But while this ruling will be important for the healthcare industry, it is important to realize that there are many explicit certifications in the Medicare program. For example, when you submit an enrollment form such as the 855 A or B, you are attesting that “my signature legally and financially binds this provider/supplier to the laws, regulations, and program instructions of the Medicare program.”  

However this case ends, plaintiffs will be able to argue that this creates some type of explicit certification.

The court’s decision will have the power to somewhat expand or limit the number of false claims cases, but whatever the court rules, false claims cases are likely to remain a fixture of the healthcare marketplace for the foreseeable future.

About the Author 

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board. 

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