The Department of Justice (DOJ) continues to make medical necessity a focal point of False Claims Act (FCA) enforcement. The DOJ explicitly identified medically unnecessary care as one of three major healthcare FCA enforcement priorities (alongside managed care and prescription drugs) in its January 16, 2026 announcement of record-breaking FY 2025 recoveries. Recent settlements underscore that the government remains vigilant in pursuing claims against providers who the government believes have billed federal healthcare programs for services deemed excessive, unnecessary, or unsupported by adequate documentation. Fraud allegations involving medical necessity issues are factually intense and complex, often requiring plaintiff and defense retention of respective “dueling” clinical experts. Medical-necessity cases are often fact-intensive, clinically nuanced, and expert-driven. They rarely turn on a single chart note or a simple disagreement between physicians; instead, they typically focus on the totality of the provider’s documentation, utilization patterns, internal knowledge, and response to potential red flags. For healthcare providers, understanding the evolving legal landscape around medical necessity is essential to mitigating FCA risk.
The legal framework: medical necessity and the FCA
The FCA imposes civil liability on anyone who knowingly presents a false or fraudulent claim for payment to the federal government. 31 U.S.C. § 3729(a)(1)(A)–(B). Under the Supreme Court’s “implied false certification” theory, liability attaches when a defendant submits a claim that makes representations about the goods or services provided but knowingly fails to disclose noncompliance with material statutory or regulatory requirements. Universal Health Servs., Inc. v. United States, 579 U.S. 176, 181, 196 (2016). The plaintiff, whether the United States or a qui tam relator, must establish the falsity of the claim. Under the FCA, an alleged misrepresentation is material if it has “a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. 3729(b)(4). This is particularly important in medical necessity cases, where the question is not only whether the clinical judgment was wrong, but whether the alleged noncompliance mattered to the government’s payment decision.
The FCA’s “knowingly” element does not require proof of specific intent to defraud. 31 U.S.C. § 3729(b)(1)(B). Rather, it is satisfied where a defendant has “actual knowledge,” acts in “deliberate ignorance of the truth or falsity of the information,” or acts in “reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b)(1)(A). This means that the scienter requirement can be met by showing a high level of recklessness—a provider need not have intended to submit a false claim if it consciously disregarded a substantial risk that its claims lacked medical necessity. The Supreme Court’s decision in SuperValu makes that inquiry more consequential. United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739, 143 S. Ct. 1391 (2023). Although SuperValu was not a medical necessity case, it clarified that FCA scienter turns on the defendant’s actual knowledge and subjective beliefs—not on whether counsel or an expert can later identify an objectively reasonable interpretation of the governing requirement. Id. at 752.In medical necessity cases, that means contemporaneous evidence—internal audits, physician concerns, payer denials, compliance warnings, peer-comparison data, and how the provider responded—may be central to the scienter analysis.
Specifically, to secure Medicare reimbursement, expenses must be “reasonable and necessary.” 42 U.S.C. § 1395y(a)(1)(A). The Medicare Act does not define this term but vests the Secretary of Health and Human Services with authority to decide what is “reasonable and necessary” through National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs), or case-by-case adjudication. See 42 U.S.C. § 1395ff; Heckler v. Ringer, 466 U.S. 602, 617 (1984); Odell v. U.S. Dep’t of Health & Hum. Servs., 995 F.3d 718, 720 (9th Cir. 2021). Under Centers for Medicare & Medicaid Services (CMS) guidance, a service is “reasonable and necessary” if it is safe and effective, not experimental, and appropriate, including whether it is “[f]urnished in accordance with accepted standards of medical practice.” CMS, Medicare Program Integrity Manual § 13.5.4; see United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 735 (10th Cir. 2018).
In medical necessity FCA cases, the government often proceeds under a false certification theory, alleging that providers billed Medicare for services that did not satisfy the “reasonable and necessary” standard. This framing raises a critical question: Can a physician’s clinical judgment itself be deemed “false” under the FCA?
The circuit split: defense-friendly vs. government-friendly approaches
The answer to that question depends, in significant part, on where you are. The federal circuits are divided on whether and when a physician’s subjective medical determination can satisfy the FCA’s falsity requirement.
Eleventh Circuit: United States v. AseraCare Inc., 938 F.3d 1278 (11th Cir. 2019)
The Eleventh Circuit’s decision in AseraCare, involving hospice reimbursement eligibility requirements, remains the leading defense-friendly precedent. There, the court held that a “reasonable difference of opinion” between physicians reviewing medical documentation after the fact is not sufficient on its own to establish falsity under the FCA. AseraCare, 938 F.3d at 1297. As the court explained: “A properly formed and sincerely held clinical judgment is not untrue even if a different physician later contends that the judgment is wrong.” Id. The court emphasized that to properly state a claim under the FCA in the hospice context, a plaintiff “must identify facts and circumstances surrounding the patient’s certification that are inconsistent with the proper exercise of a physician’s clinical judgment.” Id. The court did acknowledge, however, that objective falsehood can be shown in various ways, including, for example, when a certifying physician fails to review a patient’s medical records or does not subjectively believe the patient is terminally ill, or when expert evidence proves that no reasonable physician could have reached the conclusion at issue given the relevant medical records. Id. at 1297.
The practical takeaway is that AseraCare is an important defense precedent, but not an absolute shield. It protects well-supported, sincerely held clinical judgments from being converted into FCA liability based solely on after-the-fact expert disagreement. It does not protect certifications that were not actually held, were not based on adequate review, or are contradicted by the provider’s own records or conduct.
First Circuit: United States ex rel. Omni Healthcare Inc. v. MD Spine Solutions LLC, 160 F.4th 248 (1st Cir. 2025)
Last year, the First Circuit provided additional defense-friendly precedent, holding that in FCA cases alleging Medicare fraud based on laboratory testing, laboratories may generally rely on a physician’s order to demonstrate that the test is “reasonable and necessary” without independently verifying each order for medical necessity. Omni Healthcare, 160 F.4th at 261. The court stated that “the doctor’s order for medical testing will generally offer a safe harbor of medical necessity.” Id. However, the decision should not be read as a free pass to ignore obvious red flags. The court recognized that the safe harbor may not apply when laboratories engage in conduct that undermines the integrity of physicians’ orders, such as employing deceptive marketing campaigns or pre-printed requisition forms designed to encourage medically unnecessary testing. Id. at 261 n.15.
Tenth Circuit: United States ex rel. Polukoff v. St. Mark’s Hospital, 895 F.3d 730 (10th Cir. 2018)
On the other side of the split, the Tenth Circuit’s decision in Polukoff rejected a broad “objective falsity” requirement and held that physician opinions can still be false under the FCA where they imply compliance with governing medical standards. Polukoff, 895 F.3d at 741–42. The case involved a cardiologist who allegedly performed thousands of unnecessary patent foramen ovale (PFO) closure procedures, far exceeding norms—for example, performing 861 PFO closures in 2010 while the Cleveland Clinic reported just 37 during the same period. Id. at 737. The court held:
[I]t is possible for a medical judgment to be ‘false or fraudulent’ as proscribed by the FCA for at least three reasons. First, we read the FCA broadly . . . . Second, the fact that an allegedly false statement constitutes the speaker’s opinion does not disqualify it from forming the basis of FCA liability . . . . Third, claims for medically unnecessary treatment are actionable under the FCA.
Id. at 742 (cleaned up). The court further held that a doctor’s certification to the government that a procedure is “reasonable and necessary” is “false” under the FCA if the procedure was not, in fact, reasonable and necessary under the government’s definition. Id. at 743.
Third Circuit: United States ex rel. Druding v. Care Alternatives, 952 F.3d 89 (3d Cir. 2020)
The Third Circuit expressly rejected the notion that FCA falsity requires “objective falsity” and held that competing expert testimony alone may create a triable issue of falsity—a direct split with AseraCare. Care Alternatives, 952 F.3d at 100. The court stated: “[W]e reject the District Court’s bright-line rule that a doctor’s clinical judgment cannot be ‘false’ . . . . [M]edical opinions may be ‘false’ and an expert’s testimony challenging a physician’s medical opinion can be appropriate evidence for the jury to consider on the question of falsity.” Id. at 98. The court disagreed with the “objective falsity” standard as “conflat[ing] scienter and falsity,” and expressly acknowledged its departure from AseraCare. Id. at 96, 100.
The Ninth Circuit: Winter ex rel. United States v. Gardens Regional Hospital, 953 F.3d 1108 (9th Cir. 2020)
The Ninth Circuit similarly rejected the argument that clinical judgments can never be false absent objectively verifiable falsehoods. Gardens Regional, 953 F.3d at 1119. The court held that a physician’s certification that inpatient hospitalization was “medically necessary” can be false or fraudulent for the same reasons any opinion can be false or fraudulent—namely, where the opinion is “not honestly held” or “implies the existence of facts . . . that do not exist.” Id. The court also stated that its holding did not conflict with AseraCare, reasoning that the Eleventh Circuit “was not asked whether a medical opinion could ever be false or fraudulent, but whether a reasonable disagreement between physicians, without more, was sufficient to prove falsity at summary judgment.” Id.
The Supreme Court Weighs In: United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023)
The Supreme Court’s unanimous decision in SuperValu did not resolve the medical necessity circuit split, but it did strengthen the government’s hand in FCA cases—including medical necessity disputes—by clarifying that the statute’s scienter element “refers to the [defendant]’s knowledge and subjective beliefs—not to what an objectively reasonable person may have known or believed.” SuperValu, 598 U.S. at 749. The case involved retail pharmacies that allegedly reported inflated drug prices for Medicare and Medicaid reimbursement despite internal awareness that their discounted prices were likely the correct “usual and customary” figures. Id. at 746–47. The Seventh Circuit had granted summary judgment on scienter grounds, reasoning that the defendants’ conduct was consistent with an “objectively reasonable interpretation” of the relevant term regardless of what they actually believed. Id. at 748. The Supreme Court reversed, holding that “[f]or scienter, it is enough if respondents believed that their claims were not accurate.” Id. at 757–58. In the medical necessity context, SuperValu means that a defendant cannot defeat scienter merely by showing that an objectively reasonable interpretation of the medical necessity standard existed. The more important question may be what the provider actually believed at the time of billing—and whether it ignored information suggesting that the services were not medically necessary.
Why medical necessity theories remain viable
Several factors make it likely that medical necessity will remain a potent enforcement theory going forward. First, many circuits—the Third, Ninth, and Tenth—have adopted the government-friendly position that clinical judgments are not immune from FCA scrutiny. On the other hand, the Eleventh Circuit (and, with important qualifications, the First Circuit) have adopted standards that make it materially more difficult for the government to proceed. In most jurisdictions, the DOJ and relators can pursue medical necessity theories without having to demonstrate “objective falsity” beyond the existence of competing expert opinions. And under the Supreme Court’s decision in SuperValu, defendants cannot defeat FCA scienter merely by identifying an objectively reasonable interpretation of the relevant legal standard—what matters is whether the defendant subjectively believed the claim was false at the time it was submitted.
Second, the Supreme Court’s decision in Universal Health Services reinforced that the FCA’s materiality requirement—that a misrepresentation about compliance be material to the government’s payment decision—is “demanding.” But the decision further held that implied false certification remains a viable theory where a defendant’s omissions render its representations misleading with respect to goods or services provided. 579 U.S. at 194–95. This framework readily accommodates allegations that providers billed for services while failing to disclose that those services did not meet the “reasonable and necessary” standard. At the same time, materiality remains an important limiting principle. Providers should not overlook evidence that the government, Medicare contractors, or other payers knew of the challenged practice and continued to pay claims, particularly where the dispute concerns clinical judgment rather than an express billing prohibition.
Third, the DOJ’s increasing reliance on data analytics and statistical methodologies to identify billing outliers means that providers with unusual utilization patterns will face heightened scrutiny. Data-driven enforcement reduces the government’s dependence on individual whistleblowers and allows the DOJ to proactively identify potential targets. But outlier status is an investigative lead—not proof of falsity. Providers should be prepared to explain the clinical, demographic, geographic, referral-based, or practice-specific reasons why their utilization patterns may differ from peer benchmarks.
Recent settlements: DOJ enforcement in action
Against this legal backdrop, the DOJ continues to bring and resolve medical necessity cases across a range of specialties and service lines. Recent settlements demonstrate the breadth of enforcement activity:
- May 6, 2026 – A vascular practice and physician agreed to pay more than USD6.73M to resolve FCA allegations that they billed Medicare for allegedly unnecessary vascular procedures. The case centered on the allegation that the practice routinely performed and billed for vascular interventions that were not medically necessary for the patients in question. Notably, the investigation reportedly relied on analysis of the practice’s billing patterns relative to peer providers, with DOJ alleging that the volume and frequency of certain procedures far exceeded what would be expected for the patient population served. The resolution also fits DOJ’s broader focus on procedure volume, utilization patterns, and whether the clinical record supports repeated or high-frequency interventions.
- April 22, 2026 – An eye practice and physician owner agreed to pay USD415,000 to resolve allegations of false billing under the FCA. The allegations involved billing Medicare for ophthalmological procedures and services that were either not medically necessary or not adequately documented, demonstrating that even relatively smaller practices are not beyond the DOJ’s reach when billing patterns raise red flags.
- April 2, 2026 – Advanced Urology and physician Jitesh Patel agreed to pay USD14M to settle FCA allegations related to a series of urological and diagnostic procedures that were not performed or were medically unnecessary. The DOJ alleged that the practice performed and billed for procedures without adequate clinical indication, and in some instances, billed for services that were never actually rendered. This case illustrates how medical necessity allegations can overlap with factual falsity claims (billing for services not provided), compounding potential FCA exposure.
The DOJ continues to prioritize claims involving allegedly excessive, unnecessary, or unsupported medical services across specialties. In addition, the DOJ is increasingly using statistical analyses and billing data to identify “outliers” (i.e. providers whose utilization patterns deviate significantly from their peers) as a basis for investigations and enforcement actions.
Practical compliance lessons for healthcare providers
Given this landscape, healthcare providers should consider the following steps to mitigate potential FCA exposure:
- Conduct Internal Billing and Utilization Benchmarking – Providers should regularly compare their billing patterns and utilization rates against national and regional peers. Because the DOJ uses statistical data to flag outliers, proactive benchmarking can surface potential problems before the government does. Where a provider is an outlier, the key is not simply to reduce volume; it is to understand and document the legitimate clinical or operational explanation for the variance.
- Strengthen Medical Necessity Documentation – Robust contemporaneous documentation of the clinical rationale for treatment decisions is critical. Clinical judgments must be tethered to valid medical records, with individualized narrative documentation explaining why a chosen course of treatment was reasonable and necessary. Template language, cloned notes, and conclusory statements that a service was “medically necessary” are unlikely to carry the same weight as patient-specific documentation tied to the applicable coverage criteria and clinical facts.
- Monitor Outlier Physician Behavior – Organizations should implement monitoring systems to identify physicians whose utilization patterns deviate significantly from those of their peers. Those systems should include a process for escalating, reviewing, and documenting the resolution of concerns, so that the organization can show it responded appropriately rather than ignored potential red flags.
- Understand Your Jurisdictional Risk – FCA risk varies by geography. In the Third, Ninth, and Tenth Circuits, expert disagreement alone may create a triable issue of falsity. The Eleventh Circuit’s more protective standard still leaves room for enforcement where facts are inconsistent with the proper exercise of clinical judgment. Providers should keep in mind that even where a favorable circuit standard makes it harder to prove falsity, SuperValu forecloses any defense premised on an after-the-fact “objectively reasonable” reading if the provider actually believed or was aware of a substantial risk that its claims were inaccurate at the time of submission.
- Stay Alert to Evolving Standards – With a clear circuit split, Supreme Court review remains a possibility that could resolve the question definitively. Providers should monitor developments closely and adjust their compliance programs accordingly. But providers should not wait for the Supreme Court review to tighten controls. The current enforcement environment already rewards contemporaneous documentation, internal monitoring, and prompt responses to medical-necessity concerns.
The bottom line is that medical necessity remains, at its core, a clinical question—but FCA exposure often turns on process. Providers are better positioned when they can show not only that a service was clinically appropriate, but also that the decision was supported by patient-specific documentation, consistent with applicable coverage standards, and made in good faith at the time of billing.
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