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Ninth Circuit Endorses Implied Certification Theory of Liability Under False Claims Act

The Ninth Circuit became the latest in a handful of other Circuits to endorse the “implied certification theory” of the False Claims Act in a decision handed down on August 9th.  Liability under the FCA is most clear when a defendant falsely obtains money from the government by “expressly” certifying compliance with federal regulations.  However, the question of whether a defendant can be liable for “impliedly” certifying compliance with federal law – such as by simply submitting a claim for reimbursement from Medicare – is much more debatable.

Sadik Ebeid, a private physician in Arizona, filed an FCA case against Theresa Lungwitz (and also 3 companies with which Ms. Lungwitz had involvement: Health Resource Center, LLC, Home Health Resources, Inc., and The Crossing Hospice Care, Inc.) under the “implied false certification theory.”  The lawsuit alleged that the defendants operated a corporate structure that gave Ms. Lungwitz an illegal amount of control over the medical decisions of the doctors working at the various hospitals and clinics.  Also, the lawsuit claimed that all the entities illegally referred patients amongst themselves.

A traditional FCA case might allege that a defendant submitted a false claim for payment that expressly certifies compliance with federal law – such as falsely claiming a procedure was medically necessary and submitting medical necessity documentation as required by law.  In contrast, this case and others like it claim that all claims for payment from Medicare are false claims if the defendants impliedly certified compliance with all Medicare rules such as those prohibiting a health care provider from exercising control over the medical decisions of its doctors.  According to this theory, every claim for reimbursement submitted constituted a false claim under the FCA.

With its decision, the Ninth Circuit joins the Second, Sixth, Tenth, Eleventh, and Federal Circuit Courts of Appeals in recognizing an implied certification theory of liability.

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