FCA Deeper Dive: Escobar and Its Aftermath – Part I

by Bass, Berry & Sims PLC
Contact

Bass, Berry & Sims PLC

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we are taking a closer look at recent legal developments involving the FCA. This week, we examine the Supreme Court’s opinion in Escobar and its impact on the theory of implied certification.

In Escobar, the Supreme Court held that the “implied false certification theory can, at least in some circumstances, provide a basis for liability.”  One such circumstance is when: (1) the defendant submits a claim that “does not merely request payment, but also makes specific representations about the goods or services provided,” and (2) “the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations half-truths.”  In other words, when “a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant’s representations misleading with respect to the goods or services provided.”

The Supreme Court’s Escobar opinion left many unanswered questions as to the scope of the implied certification theory, and not surprisingly, lower courts have varied significantly in how they have applied the Court’s decision.  In particular, lower courts have disagreed as to whether the two conditions set forth by Escobar for stating an implied certification claim—(1) that a claim makes representations about the services provided and (2) that defendant’s failure to disclose noncompliance makes the representations misleading half-truths—represent the only viable path or just one possible option.

In U.S. ex rel. Doe v. Health First, Inc., 2016 WL 3959343 (M.D. Fla. July 22, 2016), the district court took the former view, stating that under Escobar the “two conditions must exist” for implied certification liability.  In U.S. v. Sanford–Brown, Ltd., 840 F.3d 445 (7th Cir. 2016), the Seventh Circuit found that the two conditions had not been met, yet did not consider whether the implied certification theory might be tenable in other circumstances.

Noting that Escobar held implied certification could be a viable theory “at least” where the two conditions were met, other courts have concluded that Escobar does not present the only way to state an implied certification claim.  For example, in Rose v. Stephens Institute, 2016 WL 5076214 (N.D. Cal Sep. 20, 2016) (appeal pending), the district court explained that Escobar did “not purport to set out, as an absolute requirement, that implied false certification liability can attach only when these two conditions are met.”  It remains to be seen whether and how other courts will flesh out the contours of potential implied certification theories that differ from that espoused in Escobar.

Regardless, the “specific representation” requirement may often be met in the healthcare context, where claims typically specify the services provided.  For instance, in U.S. v. Crumb, 2016 WL 4480690 (S.D. Ala. Aug. 24, 2016), the district court explained, “[a]s to [Escobar’s] first requirement, the Amended Complaint clearly alleges that the Form CMS-1500 claims … were much more than bare requests for payment, but also made specific representations about the services provided and the reasons for those services (i.e., diagnoses).”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bass, Berry & Sims PLC | Attorney Advertising

Written by:

Bass, Berry & Sims PLC
Contact
more
less

Bass, Berry & Sims PLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.