The False Claims Act is a unique and nuanced law that has been in effect since the 1800s. Since then, it has undergone several amendments and become an integral part of the government’s fight against wasteful healthcare and defense fraud. One of the most highly-contested issues within False Claims Act cases is actually whether the Act applies at all, or if the defendant’s alleged misconduct merely amounts to traditional common law fraud or negligence.
Within this contentious subset of the law, there exists a fine line that has been the source of ongoing argument amongst the federal circuits and False Claims Act practitioners alike. In today’s post, we will introduce the distinction between a “condition of payment” versus a “condition of participation” as two important False Claims Act concepts. Tomorrow, we will look at how these two concepts come into play within False Claims Act litigation – with one tending to provide healthcare fraud whistleblowers with a stronger case than the other.
Conditions of Payment
As the name suggests, a condition of payment is a rule, regulation, or requirement that must be met in order for a healthcare provider to lawfully request and receive reimbursement from a federal healthcare coverage provider (e.g., Medicare, Medicaid, or TRICARE). The government imposes conditions of payment to ensure providers are offering patients quality service congruent with set standards within the medical community.
As a foundational principle, the intentional or reckless failure to comply with a condition of payment is an actionable form of misconduct and a whistleblower may be able to successfully impose False Claims Act liability on the provider. Within this concept, however, there exist two sub-concepts that have proven somewhat difficult to decipher, known as express and implied false certification of compliance.
Express and implied false certifications of compliance are considered “legally” false claims, as opposed to factually false claims. An express false certification of compliance occurs when a defendant “falsely certifies compliance with a particular statute, regulation, or contractual term, where compliance is a prerequisite to payment.”
An implied false certification occurs when the provider actually submits a claim for reimbursement, thereby impliedly certifying compliance with condition of payment rules. It is this latter concept that has caused the courts significant distress. In some instances, courts have found the False Claims Act did not apply to implied false certifications of compliance due to the likelihood the claims were sent inadvertently or negligently – especially given the complex framework of today’s healthcare industry.
Conditions of Participation
A condition of participation is a much broader concept, and, depending on which federal circuit a case is brought in, it may not trigger False Claims Act liability. Under this theory of liability, a provider has committed or failed to commit some act that is a prerequisite to treating Medicare or Medicaid patients. Perhaps the most confounding aspect of False Claims Act cases involving these allegations is that a provider can actually violate a condition of participation without violating a condition of payment.
In tomorrow’s post, we will examine the application of both principals in the qui tam lawsuit context, reviewing how courts have generally handled both under the False Claims Act.
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