Wednesday, November 30, 2011

Implied False Certification : Not Every Regulatory Violation Gives Rise to FCA Liability

This week I came across United States ex rel. Wilkins v. United Health Group, Inc.,  659 F.3d 295 (3rd Cir. 2011) which was decided in late June and just published in F.3d.  In Wilkins, the Third Circuit joined several other circuits in holding that an “implied false certification” made by a provider in conjunction with its claim for payment to the government may give rise to False Claims Act (“FCA”) liability.  “Implied false certification the Court explained, “attaches when a claimant seeks and makes a claim for payment from the government without disclosing that it violated regulations that affect its eligibility for payment.” Id. at 305.  The Wilkins Court found that FCA liability could be based on a claimant seeking payment when it knew it had violated the Anti-Kickback Statute. Id. at 313.  FCA Alert and Whistleblower Qui Tam Law Blog both analyzed Wilkins, and I commend their analyses to you.  Additionally, take a look at FCA Alert’s discussion of Amgen’s recent Petition for Writ of Cert to the Supreme Court wherein Amgen challenges the implied false certification theory and discusses the differences in the Circuits that apply it.

I found the more interesting portion of Wilkins to be where the court found that violations by the Medicare Advantage provider of marketing rules contained in provider’s contract with the Centers for Medicare and Medicaid (“CMS”) did not give rise to an implied false certification FCA violation even though the provider had certified that it complied with all CMS guidelines. Id. at 299-300.  The relator in Wilkins alleged that the provider had violated  several “marketing rules” including “using  marketing flyers and forms that CMS did not approve” in making presentations, “ “using an excessive number of  sales representatives at presentations,” and “giving out door prizes” at presentations to prospective clients in “excess of $15 in value contrary to CMS guidelines.”  The Court, however, rejected FCA claims based on these alleged violations of regulations that were not preconditions to the provider’s claim for payment.


The FCA, the Court emphasized, was not a “blunt instrument” to enforce compliance with all regulations, just those “regulations that are a precondition to payment.” Id. at 307.  Rather, the government has “established an administrative mechanism for managing and correcting Medicare marketing violations other than the withholding of payment otherwise due . . . [and] it does not require perfect compliance as an absolute condition for receiving Medicare payments for serviced rendered.” Id. at 310 (emphasis added).  “Anyone examining Medicare regulations,” the Court noted, “would conclude that they are so complicated that the best intentioned plan participant could make errors in attempting to comply with them.” Id.  Following the 2nd and 10th Circuits, the Court “question[ed] the wisdom of regarding every violation of a Medicare regulation as a basis for a qui tam suit.”  Courts “unwisely” shift the burden of enforcing Medicare regulations to themselves when they do not permit the administrative process to address those violations, unrelated to payment claims, which it is best suited to do.  Id. at 311.  

Should a similar rule apply in the workplace?  At least for some violations, shouldn’t compliance officers be the first stop for “managing and correcting” some FCA violations?  Should the failure of a relator to first report alleged violations to a compliance officer be a basis for denying a qui tam suit?

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