Medical device and pharmaceutical manufacturers and health care providers will have to wait for clarification about the extent to which courts will allow the federal False Claims Act (FCA) to be used to police underlying violations of the many statutory and regulatory requirements that apply to their operations. On December 5th, the United States Supreme Court denied a petition for a writ of certiorari from the First Circuit decision in Blackstone Medical, Inc. v. United States ex rel. Susan Hutcheson.
In Blackstone, and in Amgen Inc. et al., v. State of New York et al. (a related request for certiorari discussed in a previous post), the defendants essentially asked the Supreme Court to clarify the reach of the so-called “implied certification” theory under the FCA. Implied certification is a rule of construction that generally means that a claim for payment to the government (i.e. to Medicare, Medicaid, or CHIP) is legally false if that party had, and failed to meet, an ongoing obligation to comply with an underlying law — regardless of whether that party submitted a claim that was false on its face or expressly certified compliance with that law when it submitted the claim. In other words, through the implied certification theory, a party can be held liable under the FCA when an underlying violation of law causes the entire claim to be viewed as tainted.
While a highly technical area of FCA law, the basic effect of the implied certification theory is clear: the narrower the doctrine of implied certification, the narrower the reach of the FCA. As my colleague Tom Crane, an attorney with Mintz Levin’s Health Care Enforcement Defense Group and Health Care Practice, and I discussed in detail in a client advisory, federal circuit courts have taken different approaches to “implied certification.” Thus the law is unsettled.
And the law will likely remain unsettled for some time now that the Court has declined to take up the Blackstone petition. It also appears unlikely that the Amgen case will be decided. In October, after filing a petition for review, Amgen announced that it settled claims over the FCA suit that it had asked the Supreme Court to review.
The bottom line is that health care providers will continue to operate in murky legal waters. According to Tom, “by taking up the Blackstone petition, the Supreme Court would have answered a longstanding question under the FCA about whether it can be properly used to police underlying violations of law where such violation is not clearly tied to the payment of claims.” However, Tom also notes that by declining to take up Blackstone on appeal, the Court will not give medical device and pharmaceutical manufacturers and providers guidance in this important area of the law.