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Healthcare Reforms

The US Supreme Court recently issued an undisputed decision on the Universal Health Services v. Escobar case that has great implications for upcoming False Claim Act (FCA) cases. The Court also ruled that the same theory for FCA liability could be implemented for proving the non-compliance of an institution. Besides that, an exceptional materiality standard was also set by the court that would officially assess the claim to be false or fraudulent.

The psychiatric services offered from a facility resulted in the death of a patient and the case emerged from this facility, which billed the state Medicaid program for the service they offered to the deceased. It was later exposed that the facility that provided the psychiatric services consisted of many providers, who were not licensed to offer these services. Several other violations were also reported in the case along with this.

The legal theory of implied false certification enables an entity to apply for a claim even when they are not eligible, as there is no official rule that mentions about the exact requirements needed for the claim.

The United Health Services responded by saying that there is no need to notify patients about the non-compliance of the institution, as there are no regulations which states the need for it. Another interesting factor to note is that UHS was in non-compliance and they failed to disclose their non-compliance when the case was filed.

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The Supreme Court ruling clarified that if the institutions that provide health care services fail to disclose non-compliance with substantial evidence, then they would be liable to be charged with fraud. Justice Thomas said, “What matters is not the label that the government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the government’s payment decision.”

The Court also ruled that in order to prove an entity fraud, relevant documents should be submitted to support that the entity was claiming on false grounds to get financial compensation from the government.  This ruling will raise the burden of proof in future FCA cases, and make the rulings more favorable towards the defendants. As for now, companies are subjected to False Claims Act implied certification theory, if they fail to disclose non-compliance with substantial proof after requesting claim for a service they have provided to the patients.

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