Implied Certification in False Claims Act Cases – A Review of the U.S. Supreme Court’s Decision in Escobar
In Universal Health Services Inc. v. United States ex rel Escobar, the U.S. Supreme Court considered a False Claims Act (“FCA”) prosecution under the “implied certification theory”. Under this theory, when a provider certifies a claim for submission he or she is not only certifying the elements of the claim presented on the page but is also entering into an “implied certification” of other elements, such as the legal qualifications of the provider who rendered the care (licensed, credentialed, etc.). In Escobar, the Court considered claims by the parents of a deceased Medicaid beneficiary who died from alleged medication complications she received while under the care of a mental health counseling facility. After her death, her parents learned that the health care providers were not actually licensed to prescribe medications. They filed a qui tam action alleging that by submitting claims for reimbursement to Medicaid that the facility had impliedly certified that the practitioners were licensed to render the care which was being billed for.
The U.S. Supreme Court affirmed the validity of implied certification. The Court found that when a provider certifies a claim, they are not only certifying the express elements of that claim within the plain terms of the document, but also statements about “compliance with a statutory, regulatory, or contractual requirement . . . material to the Government’s payment decision”. Universal Health Services Inc. v. United States ex rel Escobar , Slip. Op. 15-7, Syllabus 1; 8-11 (June 16, 2016). Writing for a unanimous Court, Thomas, J., stated that “half-truths—representations that state the truth only so far as it goes, while omitting critical qualifying information—can be actionable misrepresentations”. Escobar at 9-10.
The Court did underscore the limits on the element of materiality found within the FCA itself, specifically holding that “a misrepresentation cannot be deemed material merely because the Government designates compliance with a particular requirement as a condition of payment”. Escobar Syllabus 3; 14-17. Further, the Court noted that “if Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material”. Escobar Syllabus 4; 14-17.
This decision has the potential to increase the volume of FCA claims. However, the necessity of proving materiality to the payment decision will provide some protection to health care providers.