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News & Knowledge

Health care providers score supreme court victory in false claims act case

13th September 2016
Cindy Amedee, Taylor Porter

The unanimous United States Supreme Court ruling in Universal Health Srvs, Inc. v. United States ex rel. Escobar, U.S. scored a victory for health care providers as the Court reversed a court of appeals ruling in favour of two False Claims Act (FCA) whistle-blowers who alleged that a mental health facility submitted false Medicaid claims. MSI's Louisiana law member Taylor Porter provides further information on the supreme court ruling.

Escobar began in the District of Massachusetts. Julio Escobar and Carmen Correa alleged that their daughter, Yarushka River, who died of a seizure in 2009, was treated by unlicensed and unsupervised staff at Arbor Counseling Services, owned and operated by defendant Universal Health Services. The suit was filed in 2011, contending that UHS violated the FCA, the Massachusetts False Claims Act, and various Massachusetts regulations by submitting bills for staff members who were not properly licensed and/or supervised, and by submitting bills during a time when Arbor did not employ a fully-certified psychiatrist and a fully-certified psychologist.

The whistle-blowers and government attorneys argued that the facility falsely implied its certification with applicable federal regulations in submitting reimbursement claims for treatment. But the Court, in a decision authored by Justice Clarence Thomas, rejected an expansive reading of FCA liability, saying that noncompliance with federal regulations may only result in FCA liability if compliance is material to the government’s decision to pay.

The ruling turns on whether non-compliance with federal regulations is material to a government health plan’s decision to pay a claim for treatment submitted by a health care provider to the government payor. The ruling also gives health care providers a wall of defense against an increasing trend of FCA whistle-blower complaints, which carry the possible burden of big money damages, and signals that the FCA must be more strictly interpreted.

Read the complete Supreme Court ruling

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