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Supreme Court Declines to Weigh in on Requiring Objective Falsity in FCA Medical Necessity Cases

As our readers know, we have long been closely watching False Claims Act (FCA) cases across the country alleging the submission of false claims based on the lack of medical necessity, particularly as a possible circuit split seemed to be developing with respect to requiring “objective falsity” to allege such FCA violations.  And we have likewise been waiting to see if the issue will be decided by the Supreme Court.  On February 22, 2021, we got an answer – at least for now – when the Supreme Court denied a petition for certiorari in RollinsNelson LTC Corp. et al v. U.S. ex rel. Winters, a FCA case out of the Ninth Circuit in which the defendant was accused of submitting claims to Medicare for medically unnecessary hospital admissions (which we have been following since last year).

This case was brought by a former hospital director who alleged that the defendant (which owns a hospital management company in California) engaged in a scheme to force the admission of nursing home patients to the hospital, even when it was not medically necessary (e.g., for infections ordinarily treated with oral antibiotics).  RollinsNelson had prevailed in its motion to dismiss at the district court level, with the district court finding that “to prevail on an FCA claim, a plaintiff must show that a defendant knowingly made an objectively false representation,” and thus a statement implicating a doctor’s clinical judgment can never state a claim under the FCA because “subjective medical opinions . . . cannot be proven to be objectively false.”

The Ninth Circuit Court of Appeals, however, sided with the relator, reinstating the case and finding that a “plaintiff need not allege falsity beyond the requirements adopted by Congress in the FCA” and observing that Congress did not impose objective falsity requirement in the FCA and the panel had no authority to add such a requirement.  The panel also held that a doctor, like anyone else, can express an opinion that s/he knows to be false or makes in reckless disregard of its truth or falsity and thus a false certification of medical necessity can give rise to FCA liability.  (This opinion also discusses many of the opinions from other circuits that we have covered in our previous posts, including AseraCare and Polukoff.) 

In its petition for certiorari, RollinsNelson argued that the Ninth Circuit had relied on an incorrect pleading standard and reinforced a circuit split on this issue, but the Supreme Court declined to weigh in on the matter.  As always, we will continue to monitor new cases that address this issue and to wait to see if the Supreme Court will decide to take it up.

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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.