New opinion–incorrect medical certifications can establish FCA liability

U.S. and N.J. ex. rel. Druding v. Care Alternatives—civil / qui tam —reversal—Greenaway, Jr.

Former employees of a hospice-care provider alleged that it admitted patients ineligible for Medicare and issued them medical certifications in order to increase the provider’s income from the government. The employees brought suit under the False Claims Act and presented an expert who opined that numerous medical certifications were inappropriate, while the provider’s expert disagreed. The district court granted the provider’s motion for summary judgment, ruling that the employees’ expert’s opinion didn’t create a triable dispute of fact because a doctor’s clinical judgment could never be false and because falsity required proof of “objective falsity.”

Today the Third Circuit reversed, rejecting the district court’s objective-falsity requirement and its bright-line rule that a doctor’s clinical judgment cannot be false. A claim for government-reimbursement can be false under the FCA if it rests on an incorrect certification of compliance with a statute or regulation, even if the certification wasn’t based on a separate false facts like made-up test results. The Third Circuit split with the Eleventh, which recently adopted an objective-falsity requirement.

Joining Greenaway, Jr., were Hardiman and Bibas. Arguing counsel were Russell Paul of Berger Montague for the former employees, Jason Popp of Alston & Bird for the provider, and Charles Scarborough of the DOJ appellate section for the government as amicus supporting the former employees.