Healthcare News & Insights

Fraud or compliance issue? Supreme Court hears debate on ‘implied certification’

A case being heard by the Supreme Court could have far reaching consequences when it comes to healthcare fraud. 

ThinkstockPhotos-178733092The case, Universal Health Services V. U.S. ex rel Escobar, focuses on whether “implied certification” can be used to bring False Claim Act (FCA) cases against providers. And there are hundreds of millions of dollars at stake in FCA cases.

Basically, implied certification is when a claim for payment can be false simply because the contractor hasn’t complied with all applicable statutes, regulations or contractual provisions.

So the argument goes, providers are committing fraud if they submit claims without following certain regulations even if the government didn’t explicitly state that following the regs was a condition of payment and the provider didn’t explicitly claim to have complied with the regs.

Case specifics

The Escobars’ daughter, who was being treated at a mental health clinic, was given medication – allegedly by unlicensed and unsupervised staff – to which she had an adverse reaction and later died.

According to a daily brief from The Advisory Board, the Escobars claim that because the provider allegedly failed to hire and supervise its staff properly, in violation of state regs, its submission of reimbursement claims to Medicaid violated the FCA and its state equivalent. And that a claims submission by providers “implies” the provider has complied with ALL applicable regs, laws and contract provisions.

On the other hand, Universal Health Services (UHS) believes it didn’t submit false claims because it was asking for payment of services rendered.

So to UHS, the issue is a compliance case, not an FCA issue, because compliance slip ups aren’t the same as fraud.

UHS also has the backing of major medical groups, such as the American Medical Association, the American Hospital Association and the Pharmaceutical Research and Manufacturers of America. They’ve all submitted briefs supporting UHS.

Debate rages on

The fear of healthcare providers and entities is that if this lawsuit prevails it’ll open the door for all kinds of meritless lawsuits.

As for whistleblowers and mental health advocates, they see it as a way to protect patients from subpar care.

After hearing oral arguments from both sides on April 19, even the Justices seem to be taking sides.

In a post from Modern Healthcare, Justice Sonia Sotomayor said “I’m having a hard time understanding how you have not committed a fraud.” And Justice Elena Kagan said, “I would think that this is the exact same – that the contract was for a doctor’s medical care, and a doctor’s medical care was not provided.”

However, Chief Justice John Roberts seems to be siding more with the providers noting in the same news release that the FCA seems like an overly harsh tool to use for punishing failure to comply with certain regs. He acknowledged that when it comes to compliance these situations are often difficult and complex, especially “when you have hundreds of thousands of pages of regulations.”

Up until this point, various circuit courts have upheld implied certification. What the Supreme Court will do, it’s anyone’s guess. We’ll just have to wait until the end of June when the high court is expected to release its decision.


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