On June 30, 2011, a panel of the Court of Appeals for the Third Circuit issued a decision in United States ex rel. Wilkins v. United Health Group, Inc., adopting the implied false certification theory of liability under the False Claims Act (FCA).
The Wilkins Case
On July 10, 2008, Charles Wilkins and Daryl Willis
("relators"), former employees of United Health Group and
AmeriChoice, filed a qui tam action alleging that sales
representatives from their former companies violated the FCA by
offering illegal kickbacks to physicians in violation of the
Medicare Anti-Kickback Statute ("AKS") and failing to
comply with Medicare marketing rules. Relators did not identify any
specific false or fraudulent claims for payment that the companies
made to the federal government. Instead, they alleged that the
companies certified each month to "continued compliance with
all of the [Medicare] Guidelines and based on such certification
[continue] to receive the monthly capitation payment," Am.
Compl. at 10, and that defendants were liable under the FCA on that
basis alone.
Defendants moved to dismiss the complaint under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim and Federal
Rule of Civil Procedure 9(b) for failure to plead fraud with
particularity. The district court granted the motion to dismiss on
12(b)(6) grounds, holding that the complaint did not identify
"even a single claim for payment to the Government."
Wilkins, 2010 U.S. Dist. LEXIS 47080, at *13. The court
rejected relators' AKS-based claims because relators failed to
allege that the companies specifically certified compliance with
the AKS, or that the Government made payments based on such a
certification. Id. The district court did not address the
9(b) argument.
Affirming in part and reversing in part, the Third Circuit panel
held that FCA liability may exist even though the complaint does
not identify a particular false claim, as long as the defendant
submitted a claim for payment while in knowing non-compliance with
a statute or regulation to which it had certified compliance.
Wilkins, at *14. The court was careful to explain that a
defendant would not be liable for an implied false certification if
compliance with the provision at issue is simply a condition for
participation in the government program. Liability may exist only
if compliance with the particular statute or regulation is a
condition for government payment. Id.
Thus, even though defendants never expressly certified to compliance with AKS, the court reversed the dismissal of relators' AKS-based claims because defendants were required monthly to certify to continued compliance with Medicare guidelines as a prerequisite to eligibility under the Medicare program; AKS was part of those guidelines; and compliance therewith was an express condition of payment. On the other hand, the panel affirmed the dismissal of relators' Medicare marketing regulations-based allegations because compliance with those regulations was only a requirement for Medicare participation — not a condition for government payment. Id., at *12.
Implications
The implied false certification theory — now adopted
by seven courts of appeal (Second, Third, Sixth, Ninth, Tenth,
Eleventh, and District of Columbia) — has expanded the
scope of FCA liability. Under the theory, courts have held that an
FCA violation may occur without a false claim or a false
certification submitted with a claim for payment. Instead, the
government or a relator typically must allege: (1) a general
certification of compliance with the statutes or regulations
regarding the government program at issue; and (2) a later
submission of a claim for payment at a time the contractor was out
of compliance with the statutes or regulations. Relators have
argued that defendants should be liable for violating any statute
or regulation that was a condition of participation in the
government program; courts that have adopted the theory, however,
have been careful to cabin it by requiring that the provision at
issue set forth an express condition of payment.
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