Far-Reaching False Claims Act Decision Won in U.S. Supreme Court by Greene LLP

GREENE LLP MASTER LOGO [65 percent of SMALL]With a unanimous 8-0 decision delivered today, the Supreme Court of the United States ruled in favor of Greene LLP and its clients on a landmark False Claims Act issue with far-reaching consequences on the so-called “implied certification” theory of liability. The Supreme Court held that contrary to the assertions of defendant Universal Health Services, Inc., a regulation need not specify that it constitutes a “condition of payment” in order for a failure to comply with that regulation to form the basis of liability.

Key to the Supreme Court’s decision was that in providing mental health services through unlicensed and unsupervised personnel, Universal submitted claims for payment to MassHealth, the state Medicaid program in Massachusetts which uses both state and federal funds. The Court ruled that a defendant may be held liable under the False Claims Act for misleading the government when it represents to an agency that services were provided without disclosing that the services did not comply with material regulations.

Greene LLP clients Julio Escobar and Carmen Correa filed the False Claims Act case on behalf of the government after learning that most of the counseling and medical services received by their daughter, Yarushka Rivera, had been provided by unlicensed personnel. MassHealth regulations permit services by unlicensed personnel at satellite facilities like the Universal facility in Lawrence, MA where Rivera received care, but only when the unlicensed personnel is supervised by licensed personnel. The lawsuit alleged that four of five persons who treated Rivera at Universal were unlicensed and unsupervised, including a nurse held out as a psychiatrist. Rivera later died due to complications with a medication first prescribed by that nurse.

The implications of the Supreme Court’s decision on False Claims Act litigation are vast. Prior to today’s decision, only two Circuit Courts of Appeal had recognized some form of “implied certification,” with other courts holding that if a regulation did not by its own terms refer to itself as a “condition of payment,” a failure to meet such requirements did not render claims for payment false. The Supreme Court’s ruling means that the government need not specify in each and every regulation it considers important that it will not pay for services that do not meet those requirements – the only test is one of materiality, articulated in the False Claims Act itself.

“Today’s decision vindicates more than six years of efforts by Julio Escobar and Carmen Correa to hold Universal accountable,” said Thomas M. Greene, who represents the relators. “Requiring unlicensed mental health providers to be closely supervised is common sense. The Supreme Court spoke loudly today: if you’re trying to get the government to pay for services, you’d better actually provide them. That means providing them in compliance with regulations that most people would consider important, like licensing and supervision requirements.” In addition to Greene, the relators were represented in the Supreme Court by Michael Tabb and Elizabeth Cho, both also of Greene LLP, and David Frederick and Derek Ho of Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC.

Greene LLP is complex civil litigation firm specializing in qui tam suits filed under the False Claims Act, which permits private citizens to share in a recovery if they have information of fraud against the government. The Universal Health Services, Inc. v. United States ex rel. Escobar decision today is the latest in a long line of trailblazing whistleblower rulings pursued by Greene LLP attorneys, including United States ex rel. Franklin v. Parke-Davis, the first case in which a court ruled that a pharmaceutical company could be held liable under the False Claims Act for off-label promotion of drugs.

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