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FCA Defendant Petitions Supreme Court, Argues Statute is Unconstitutional

As many of our readers know, we have been closely following the Polukoff False Claims Act (FCA) qui tam case, which is based on allegations that certain heart procedures performed by a cardiologist were not medically necessary.  Most recently, we reported on  the Tenth Circuit Court of Appeals’ three-sentence order rejecting defendants’ petition for rehearing, which raised questions about whether, by submitting a claim for reimbursement and certifying the medical necessity of the charged service, providers also certify that the claim meets all of the standards set forth in the Medicare Program Integrity Manual (MPIM). 

The Tenth Circuit declined to revisit its July 2018 decision to revive the relator’s FCA claims, after the district court had originally dismissed the complaint in part on the grounds that the relator’s FCA claims failed as a matter of law because he had not shown that the defendants “knowingly made an objectively false representation to the government that caused the government to remit payment” for the procedures at issue.  (We also wrote a post on this decision.)  We noted that the Tenth Circuit Court of Appeals’ decision potentially left open the door for future relators to assert claims premised on the alleged lack of medical necessity due to failure to comply with medical guidelines or Medicare manual provisions, while at the same providing defendants with little guidance on how the Tenth Circuit will interpret the “falsity” standard in such cases. 

The latest development in this case came a few weeks ago, when defendants Intermountain Health Care, Inc. and IHC Health Services, Inc. d/b/a Intermountain Medical Center (Intermountain) filed a Petition for a Writ of Certiorari with the United States Supreme Court. The Petition raised two issues:

(1) whether a court may create an exception to Federal Rule of Civil Procedure 9(b)’s particularity requirement when the plaintiff claims that only the defendant possesses the information needed to satisfy that requirement; and

(2) whether the False Claims Act’s qui tam provisions violate the Appointments Clause of Article II of the Constitution.

With respect to the first issue, Intermountain asked the Supreme Court to resolve a circuit split over Federal Rule of Civil Procedure 9(b), which requires fraud suits to include particular allegations of fraud. Intermountain alleged that the Tenth Circuit joined many other circuits in erroneously excusing a lack of detail when such detail is exclusively in the control of the defendant accused of FCA violations.  Specifically, Intermountain argued that many circuit courts “flout the plain text of Rule 9(b)” and that “the courts have no authority to rewrite the civil rules.”

With respect to the second issue, Intermountain argued that the whistleblower provisions of the FCA are unconstitutional because they violate the Constitution’s Appointments Clause.  The Tenth Circuit had previously rejected this argument back in 2002, but Intermountain seemingly raised it before the Court of Appeals for the purpose of making this same argument to the Supreme Court. (Notably, DOJ defended the FCA’s constitutionality in an Intervenor Brief that it filed with the Court of Appeals in January 2018.)  In making its arguments, Intermountain asked the Supreme Court to revisit its 2000 decision in Vermont Agency of Natural Resources v. Stevens, in which the Supreme Court ruled that whistleblowers have legal standing but declined to express a view as to whether qui tam suits violate the Appointments Clause.  In its Petition, Intermountain pointed to this opinion and suggested that the issue of whether the FCA’s whistleblower provision violates the Appointments Clause remains open. 

Notably, Intermountain filed its petition one day before William Barr, nominee for United States Attorney General, testified before Congress and walked back statements he had made about the FCA many years ago, including that the FCA was an abomination and that it violated the Appointments Clause.

Stay tuned for future updates on this case, as well as the many other cases we are following.

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Samantha advises clients on regulatory and enforcement matters. She has deep experience handling violations of the federal ant-kickback statute and FCA investigations for clinical laboratories and hospitals.