Last week, in a False Claims Act ("FCA") case based on the so-called "implied false certification theory," the Sixth Circuit held that the plaintiff must plead a violation that is a "prerequisite to payment" and applied this requirement as a necessary element of proof of "falsity" under that theory. In United States ex rel. Chesbrough v. VPA, PC, dba Visiting Physicians Ass'n, No. 10-1494, 2011 WL 3667648 (6th Cir. Aug. 23, 2011), a decision that affirmed dismissal of the qui tam complaint for failure to satisfy Rule 9(b), the court held that in the absence of any statute or regulation that conditioned the government's payment on compliance with radiology industry standards or HIPAA's patient confidentiality provisions, there is no FCA cause of action based on a violation of those standards or provisions. The Sixth Circuit specifically relied on the Second Circuit's reasoning in United States ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001), where the court held that alleged violations of medical standards of care are not actionable under the FCA because they are not requirements of reimbursement. Applying similar reasoning to the relators' allegations of substandard testing and HIPAA violations, the Chesbrough decision held that the allegations failed to satisfy Rule 9(b) because they did not allege that the purported violations were prerequisites to payment. The Sixth Circuit's decision is significant in that it adopts a stringent interpretation of "falsity" and effectively limits FCA liability based on implied false certifications. While not citing the Fifth Circuit's decision in Steury v. Cardinal Health, Inc., 625 F.3d 262 (5th Cir. 2010), which also relied heavily on Mikes, the decision in Chesbrough means that three separate circuits have limited FCA liability based on the implied certification theory to situations in which the violation is a prerequisite to payment of a claim by the government agency.The relators in Chesbrough operated a business that interpreted radiology tests performed by the defendant, Visiting Physicians Association ("VPA"), which billed the government for the tests. Relators claimed that VPA (a) billed Medicare and Medicaid for purportedly substandard radiology tests and for "nondiagnostic" or worthless tests, and (b) failed to preserve patients' confidentiality as required by the Health Insurance Portability and Accountability Act ("HIPAA"). The Sixth Circuit rejected relators' substandard testing allegations because...
CIVIL FALSE CLAIMS ACT: Sixth Circuit Joins Second And Fifth Circuits In Holding That FCA Claims Based On Implied False Certifications Must Allege And Prove That The Alleged Violation Was A Prerequisite To Payment
|Author:||Mr John Boese and Douglas Baruch|
|Profession:||Fried Frank Harris Shriver & Jacobson|
To continue readingFREE SIGN UP