Navigating Ambiguity in Well being Care Reimbursement Claims

On the intersection of regulation and enterprise, ambiguity can current vital challenges. However one factor appears obvious below the False Claims Act (“FCA”) for well being care entities submitting reimbursement claims to the federal government: when you
subjectively imagine that your claims are or may be false, you doubtless have the requisite intent to violate the FCA. And this precept might maintain true even when there may be technically some ambiguity concerning the info underlying the representations
inherent in presenting your declare to the federal government.

On June 1, 2023, in U.S. ex rel. Schutte v. Supervalu Inc. and U.S. ex rel. Proctor v. Safeway, Inc., the U.S. Supreme Court docket unanimously confirmed the FCA’s intent normal, holding that the FCA’s scienter factor activates one’s subjective data, fairly than what an objectively affordable individual might have identified or believed. The Court docket overturned the earlier seventh Circuit selections with comparable however distinct qui tams actions introduced in opposition to two retail chain pharmacies
regarding the pharmacies’ reporting of their “common and customary” costs.  In these circumstances, the seventh Circuit utilized the intent normal adopted by the Supreme Court docket below the Honest Credit score Reporting Act in Safeco Ins. Co. of America v. Burr,
551 U.S. 47 (2007), holding that the defendant pharmacies couldn’t be discovered to have acted with requisite intent below the FCA if their conduct was in line with any objectively affordable interpretation of the regulation. In every case, the defendant
pharmacies argued that the business definition of “common and customary” is unclear. As a result of their actions had been objectively affordable provided that ambiguity, in keeping with the pharmacies and the seventh Circuit, the appellate court docket
held that the defendant pharmacies couldn’t have acted with intent below the FCA.

The Supreme Court docket disagreed. To violate the FCA, the Court docket first famous, an individual should act with fraudulent intent. The FCA defines that intent 3 ways: precise data, deliberate ignorance, or reckless disregard for the reality.  In Schutte & Proctor, the Court docket reasoned that solely subjective intent is related in figuring out legal responsibility below the FCA. Consequently, what an objectively affordable individual might have identified or believed concerning the falsity of the declare is irrelevant for FCA legal responsibility and won’t save the defendant who truly thought that its claims had been or may be false when submitted, however the acknowledged ambiguity about “common and customary.”

The Court docket’s resolution makes clear {that a} well being care supplier will probably be liable below the FCA if the supplier submits a declare and truly is aware of such declare is fake, is subjectively conscious of a considerable danger that its declare is fake, or is subjectively conscious of such a considerable and unjustifiable danger of falsity however submits the declare anyway. Even when business ambiguity would possibly nonetheless exist in sure varieties, corresponding to within the difficult world of drug/pharmacy value reporting, an objectively affordable individual normal can’t save a supplier from being discovered to have acted with the requisite fraudulent intent below the FCA.

Lastly, though the Court docket made clear that it didn’t grant certiorari to determine the precise that means of “common and customary” pricing, it’s noteworthy that the Court docket mentioned a few of the proof cited by the relators as to the defendant pharmacies’ (alleged) data concerning the falsity of the costs they reported. Among the many potential info that will be related to figuring out the pharmacies’ subjective intent below the Court docket’s resolution are emails and different artifacts probably suggesting that the defendants tried to cover sure pricing information when reporting different figures to the federal government. Though the Supreme Court docket didn’t maintain that such proof does, in actual fact, meet the subjective intent normal confirmed in Schutte and Proctor, it could be an uphill battle to beat such proof, and serves as a reminder concerning the potential impression of day-after-day inner communications in FCA circumstances.

Joyce Harris-Hennessy and Nicole Jobe are companions in Thompson Coburn’s Well being Legislation Observe Group. Thompson Coburn Summer season Affiliate Christine Moser contributed to this weblog.