Circuits limit scope of FCA in quality-of-care cases
Two recent circuit court decisions may stem the growing effort to use the False Claims Act (FCA) as a weapon in quality-of-care cases. Just before Christmas, the Second Circuit Court of Appeals issued a lengthy opinion that severely limits any quality-of-care case that can be brought under the False Claims Act by the government or a qui tam relator. That follows a similar ruling by the Sixth Circuit Court of Appeals that the FCA does not apply to "those instances of regulatory noncompliance that are irrelevant to the government’s disbursement decisions."
"This is very important," says FCA expert John Boese. The Second Circuit, which Boese says may be the second most influential circuit court in the country, rendered its decision in the face of staunch opposition by the U.S. Department of Justice (DOJ) and several private parties that filed briefs with the court.
In making its decision, the Second Circuit joined four other circuits in limiting FCA enforcement of regulatory violations. "The Second Circuit is now actually the sixth appellate court to reach this holding," says Boese, of the law firm Fried Frank in Washington, DC.
In the Sixth Circuit, the court affirmed a district court decision granting summary judgment to FCA defendants who were alleged to have billed the Medicare program for medical tests on equipment that was not properly calibrated. The district court had ruled that a "claim" submitted to the government for services that did not meet a particular standard of care did not make the claim "false or fraudulent" under the FCA.
Quality-of-care issues have been rising on the government’s radar screen ever since the Health and Human Services’ Office of Inspector General (OIG) included this area in its compliance guidance for nursing homes two years ago. Since that time, the U.S. Attorneys office in Philadelphia has successfully prosecuted several quality-of-care cases against nursing homes.
Dan Anderson, an attorney in the civil division at the DOJ, says the DOJ has tried to be very careful in its use of the FCA in this area. "We are not alleging medical malpractice," he says. "I don’t think any DOJ lawyer thinks we are in business to say that other doctors would have done it differently or other providers would have done it differently."
Rather, he says, the department has sought to establish a minimum threshold under which no provider should fall and still be reimbursed for those services.
"Nursing homes are not out of the woods yet," says health care attorney Marie Infante of Mintz Levin in Washington, DC. These decisions make the court’s position more explicit, she says. But if services are so substandard that it can effectively be argued that no services were provided at all, these decisions may not offer protection.
Infante adds that the decisions likely will have a more direct impact on Medicare Part B services than on Medicare Part A, which includes nursing homes, where it still will be possible to make the so-called failure of care argument.
Anderson says the FCA isn’t the only enforcement tool being used in this area. He reports that the DOJ has established a loose working group that has brought together the OIG, U.S. Attorneys, nursing home ombudsmen, and state enforcement officials to address quality-of-care issues in nursing homes and devise ways to address the problem.
The FCA remains the biggest tool in the DOJ’s chest, and it is not likely to lay down that weapon based on those decisions alone, Infante says. She also points out that the OIG’s Work Plan makes it clear that the government is moving ahead with its agenda in the area of quality of care beyond just nursing homes. In effect, she says, DOJ and the OIG often are letting the state Medicaid Fraud Units act as fact finders.
"Most states have certain state law analogues," she says. In the area of long-term care, that can be the False Claims Act, but more likely is related to criminal charges associated with elder abuse or neglect.
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