Supreme Court Hears Oral Arguments in Significant False Claims Act Case

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Our colleagues Jackie Baratian and Jason Popp summarize here the oral argument for Universal Health Services v. United Sates ex rel. Escobar heard by the U.S. Supreme Court on Tuesday, April 19th, laying out the various arguments presented by counsel and addressed by the Justices.  As they note, much of the argument focused on the Restatement of Contracts, as a source of “fraud” in contracting common law, to help draw a distinction between an implied promise and an immaterial unspoken performance detail.  The Justices also took note of the decision in Halper, in which the Supreme Court in 1989 concluded that a False Claims Act civil case had double jeopardy implications based on the penal nature of the civil statute.  Similarly, the fact that the government “holds the keys” and is able to dictate the materiality of certain regulatory obligations – or indeed all of them – and also to amend the statute in response to a Supreme Court decision (see Allison Engine and Congress’s response with FERA for a very recent and similar example) might be factors on which the ultimate decision is based.  While the Justices were reviewing state and federal regulations related to Medicaid coding and reimbursements, the point about “thousands of pages” of regulations being both arcane and sometimes confusing or in conflict applies in spades to the Federal Acquisition Regulation, agency supplements, executive orders and policies that make up the government contract.  Stay tuned indeed.

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