A Supreme Court opinion delivered last week offers providers lines of defense against False Claims Act lawsuits, though any solace may be tenuous and short-lived, particularly if Congress responds by fortifying the law.
In a case involving subcontractors making parts for Navy destroyers, the high court ruled unanimously that plaintiffs have to do more than show that the governments money was used in order to invoke the law, which allows whistle-blowers to file lawsuits on behalf of the government and collect some of the proceeds if it leads to a judgment or settlement. More than three-quarters of the $2 billion the government recovered last year under the law came from the healthcare industry.
The decision expressly shuts down a line of reasoning that the American Hospital Association argued in an amicus curiae brief would have given vendors an opening to use the law to drag hospitals into federal court over routine contract disputes. Its not intended to be an all-purpose anti-fraud statute, said Tom Nickels, the AHAs senior vice president for federal relations. It should not have the reach of any action by any individual that ultimately results in payment by the federal government.
Although the court ruled that a bill doesnt have to be submitted directly to the government in order to constitute a false claim, its not enough that the duped organization pays it with public funds. The opinion penned by Justice Samuel Alito finds that there must be a direct link between the false statement or record and the governments decision to pay.
Those who champion the law as a weapon against fraud are dismayed at Alitos discussion of intent, which appears to obliterate a provision of the law triggering liability if the defendant has shown reckless disregard of the truth. Patrick Burns, spokesman for Taxpayers Against Fraud, said the reasoning could bolster the ability of healthcare providers and pharmaceutical companies to deflect False Claims Act lawsuits and will have to be sorted out by the lower courts. People could say, Hey, we didnt know, Burns said.
But because the case, known as Allison Engine Co. v. U.S., deals exclusively with subcontractors, it will be difficult for hospitals to successfully argue that Alitos notion of intent should apply to all False Claims Act lawsuits, said lawyer Pamela Johnston, a partner at Foley & Lardner, Los Angeles. Meat-and-potatoes Medicare fraud cases will not be affected by this decision, Johnston said. She added, however, that providers might try to argue that they should be viewed as subcontractors because they submit claims to fiscal intermediaries, not to the government.
Sen. Chuck Grassley (R-Iowa) had already introduced legislation intended to undo court decisions he believes have distorted the intent of Congress, and he issued a statement conveying his disapproval of the Allison Engine opinions call for a direct link between the fraudulent claim and the governments money.