A Supreme Court decision expected in June could give providers the necessary tools to protect themselves from unwarranted accusations of making fraudulent claims under that False Claims Act.
The court heard oral arguments April 18 in what could be a landmark decision regarding the False Claims Act scienter, or knowledge, standard.
The arguments came in a pair of consolidated cases about whether a defendant’s subjective knowledge of the law is equal to objective knowledge in filing a false claim. The cases fell under the FCA whistleblower provision — the oldest whistleblower regulation on the books, dating back to the Civil War — that rewards whistleblowers who confidentially disclose fraud that results in a financial loss to the federal government.
To be liable under the FCA, a defendant knowingly must make a false claim to the government. The high court will look at “whether a defendant’s subjective intent and objective intent with regard to the FCA scienter standard is relevant where the conduct is consistent with an objectively reasonable interpretation of the relevant standard and the government issued no authoritative guidance countering that interpretation,” lawyers at Morgan Lewis wrote in an article last week.
Lower courts found that “the knowledge standard could not be met due to the ambiguity of the regulation and the fact that the companies in this particular situation believe that the regulations were not in violation of the statute,” attorney Katie McDermott, a partner at Morgan Lewis in the firm’s Washington, DC, office, told the McKnight’s Business Daily. “The legal question for them specifically is whether their subjective belief was reasonable, and then there’s a dispute whether that has to be objective or subjective.”
McDermott is a former assistant US attorney and Department of Justice healthcare fraud coordinator.
“But I think these cases, in a nutshell, they are going to refine our understanding of the knowledge requirement under the False Claims Act that may not have a significant impact on a providers’ obligation to ensure that they reasonably comply with regulation and try to resolve ambiguities in the regulations,” she said.
During oral arguments, McDermott said, the justices were very engaged and asked numerous questions, showing deep knowledge of the law and also “practical concern on applying highly punitive fraud ability in these ambiguous situations.”
Whatever the outcome, according to McDermott, the decision will “answer to some degree questions that have been very controversial for the last few decades, as the False Claims Act has pushed and pushed to find these regulatory violations as fraud. And I think that’s the really big concern for the health industry: when are regulatory and ambiguous regulations fraud, and how can you protect yourself in showing good faith and resolving ambiguity?”
