Health Reform WK-EDGE Supreme Court’s focus on FCA and whistleblowers examined in HCCA webinar
Wednesday, November 6, 2019

Supreme Court’s focus on FCA and whistleblowers examined in HCCA webinar

By Cathleen Calhoun, J.D.

The U.S. Supreme Court decided four FCA decisions in the past ten years—why were they all unanimous?

The False Claims Act (FCA) is not meant to cover just the health care industry, but in 2018, of the $2.8 billion recovered by the government under the FCA, $2.5 billion came from the health care industry. In a Health Care Compliance Association (HCCA) webinar, entitled Supreme Court Delivers Important Victory for Qui Tam Whistleblowers, Michael A. Morse, partner at Pietragallo, Gordon, Alfano, Bosick & Raspanti, LLP, explained the FCA in detail, outlined how the Supreme Court has ruled on FCA issues in recent years, and pointed out what might be coming in future cases.

FCA. Many in Congress have referred to the FCA as the most important tool for fraud, according to Morse. The FCA creates a civil, not criminal, liability for: (1) knowingly submitting a false claim for payment to the government; or (2) causing another to submit a false claim. It has been used tremendously in health care because the government spends so much on health care and there are so many claims. Damages can include:

  1. Treble/three times the government’s damages
  2. Penalty (currently) of $11,181 to $22,383 for each claim, and the penalties are mandatory

Whistleblowers. In 1986, Congress deputized private parties to come forward and file a qui tam lawsuit, or "whistleblower" lawsuit. This meant that third parties could come forward and file a lawsuit under seal (i.e., not public) to recover federal funds. A whistleblower can conduct an investigation with the protection against retaliation. Additionally, the government gets to investigate without filing a lawsuit.

Knowledge requirement. The false claim does not have to be intentional. The FCA knowledge requirement includes one of the following:

  1. actual knowledge of the information
  2. acts in deliberate ignorance of the truth or falsity of the information; or
  3. acts in reckless disregard of the truth or falsity of the information.

"Most cases fall into reckless disregard, sometimes called gross negligence," Morse said. The question is one of fact, but intention does not need to be determined, Morse noted.

Supreme Court. The last four FCA decisions by the Supreme Court were unanimous and were in the last decade. This shows that the Court has been active in FCA issues, according to Morse.

In the webinar, a question was asked about why the decisions were unanimous, even though the Court is described as divided by most. Morse said that his best guess is that, in part, since the decisions were on narrow issues, the Court found agreement easier.

The recent four unanimous Supreme Court FCA decisions were as follows:

  • Kellogg Brown & Root Services v. Carter, (May 26, 2015), the Court held, in part, that the FCA’s first-to-file bar applies only to "pending" cases. Cases are no longer "pending" under the FCA once they have been dismissed.
  • UHS v. Escobar, 136 S.Ct. 1989 (Jun. 16, 2016), where the Court approved of FCA cases based on an implied certification theory, recognized that liability in implied certification cases only applied to violations material to the government’s decision to pay and found materiality to be a fact specific inquiry.
  • State Farm Fire & Casualty Co. v. Rigsby, 137 S.Ct. 436 (Dec. 6, 2016), where the Court held that a violation of the FCA’s seal provisions does not mean an automatic dismissal of the relator’s complaint. The trial court has the discretion to dismiss based on a number of factors, including the impact of a seal violation.
  • Conchise Consultancy Inc. v. United States, ex. rel. Hunt (May 13, 2019) where the Court held that whistleblower suits are civil actions, regardless of the government’s intervention, and that realtors are not officials of the United States.

What’s next. Morse noted that FCA cases are high in volume—645 new qui tam/FCA matters and 122 non-qui tam/FCA matters filed in 2018, and 58 Circuit Court of Appeals FCA cases so far in 2019. What that means, according to Morse, is that the Supreme Court will be paying attention to FCA cases. Although the Supreme Court denied certiorari for several FCA cases this year, two more were filed this year:

  • Perry v. Hooker Creek (9th Cir., 4/8/19) (cert. filed 8/21/19) (Rule 9(b))
  • Strubbe v. Crawford County Mem. Hosp. (8th Cir., 3/20/19) (cert. filed 6/17/19) (Rule 9(b), FCA/Retaliation)

"It’s important to monitor what’s going on, since government’s primary enforcement is the FCA, and the cases will impact all of us in health care compliance," Morse said.

Attorneys: Michael A. Morse (Pietragallo, Gordon, Alfano, Bosick & Raspanti, LLP).

Companies: Pietragallo, Gordon, Alfano, Bosick & Raspanti, LLP

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