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Supreme Court Unanimously Agrees with AARP Position

The U.S. Supreme Court issued a unanimous ruling affirming the viability of the legal theory of “implied certification” under the False Claims Act (FCA). AARP filed a friend-of-the-court brief in the Court defending whistleblowers’ and the government’s ability to combat fraud on government programs—including Medicare and Medicaid—through the implied certification theory. Whistleblowers and the government have used the FCA’s implied certification theory to recover government monies and remedy substandard care in nursing facilities and other healthcare settings.


Background

Julio Escobar and Carmen Correa sued Universal Health Services, Inc. (UHS)—a Fortune 500 corporation with more than 200 healthcare facilities across the country—in connection with the death of their daughter, Yarushka Rivera. Yarushka, a teenage Medicaid recipient, received treatment at a UHS facility in Massachusetts. From 2007 to 2009, Yarushka was treated by five unlicensed, unsupervised therapists and psychiatrists—in flagrant violation of Massachusetts health regulations. She suffered two seizures under the care of UHS employees, the second of which was fatal. A state investigation found that UHS’s facility employed 23 unlicensed therapists, none of whom were supervised.

UHS billed Massachusetts’s Medicaid program, MassHealth, for services provided by its unlicensed employees to Yarushka and other vulnerable, low-income patients. Medicaid is a federal-state partnership in which states administer the programs, tailored heavily to each state’s individual needs.  States must receive approval of their plans from the federal government, which in return picks up a substantial share of the program’s cost. Yarushka’s parents brought suit under the FCA’s whistleblower provisions, which allow anyone with personal knowledge of fraud on government programs to sue on behalf of the government.

The Court of Appeals for the First Circuit reversed the lower court’s judgment for UHS, finding that a MassHealth regulation requiring supervision of clinical staff was a condition of payment, and that UHS impliedly certified compliance with this regulation when it billed the government. UHS appealed to the U.S. Supreme Court, and the chief question on appeal was whether a government contractor implies that it has complied with all applicable statutes and regulations when it submits a claim for payment. UHS argued that unless contractors expressly certify compliance, they are entitled to reimbursement, even when they violate essential health and safety regulations.

AARP’s friend-of-the-court brief, filed by AARP Foundation Litigation, illustrated the importance of the implied certification theory, not only to enforcement of the FCA, but also to the provision of safe and appropriate healthcare. The brief discussed how the statutory language and structure of the FCA support implied certification. Equally important, AARP’s brief demonstrated how implied certification promotes improved conditions in nursing facilities through global settlements and corporate integrity agreements between healthcare providers and the Department of Health and Human Services.

What’s at Stake

Government programs, such as Medicare and Medicaid, are constant targets of fraud. Whistleblowers and the government need all available legal tools to combat this fraud under the FCA. AARP has participated in several cases across the country supporting the importance of FCA suits. Given the wide scope of government contracting and the existence of fraud across all sectors, maintaining the implied certification theory and bolstering the FCA has never been more important. When healthcare providers like UHS render substandard care and bill the government, it erodes both the financial integrity of and public trust in the Medicare and Medicaid programs.


Case Result

In a unanimous ruling, the Supreme Court held that the implied certification theory could serve as a basis for FCA liability when a party submits a claim for payment while failing to disclose noncompliance with a contractual, statutory, or regulatory condition of payment. The Court found that a condition of payment need not be express, so long as the condition is material to the Government’s decision to pay. The Court also held that “omissions and partial half-truths may form the basis of [FCA] liability.”

The Court’s ruling is a major victory for anti-fraud advocates like AARP and supports the continued financial viability of government programs like Medicare and Medicaid. The ruling will also help whistleblowers in nursing facilities and other healthcare settings improve conditions for older adults by holding Medicare and Medicaid providers liable for their failures to meet basic health and safety regulations.


Case Status

Universal Health Services, Inc. v. United States ex rel. Escobar and Correa was decided by the U.S. Supreme Court.