Sixth Circuit Provides Powerful Authority for False Claims

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Recently, the Sixth Circuit in United States ex rel. Williams v. Renal Care Group et al. threw out an $83 million judgment against a dialysis provider in an opinion recognizing the ambiguity endemic in the current health care regulatory environment and rejecting the government’s attempts to exploit that ambiguity under the False Claims Act.

Of particular interest to companies in the health care space is the court’s analysis in confronting — and rejecting — two positions commonly advanced by the government in False Claims Act cases. First, the court rejected the notion that it is inherently wrongful for government contractors, when facing ambiguous laws and regulations governing federal programs, to interpret those rules with the goal of maximizing profit. In so doing, the court underscored the value of relying in good faith on advice of counsel when facing regulatory uncertainty. Second, the court rejected an argument commonly advanced by relators that a contractor’s violation of conditions of participation in a government program automatically renders otherwise truthful claims submitted to the United States “false.” On both grounds, the court ultimately found the government’s case so flimsy that it not only reversed the District Court’s $83 million judgment for the United States, but also granted summary judgment to the defendants.

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