For the Defense - Volume 2, Issue 4 - 2017 - 12
Thus, the Supreme Court held that
a defendant's failure to comply with
statutory, regulatory, or contractual
obligations can, in fact, give rise to an
implicit misrepresentation that it was
in compliance with such requirements,
thus amounting to fraud.11
the complex intersection of the False Claims Act
with the processes for Medicare reimbursement
and Food and Drug Administration ("FDA")
approval and concluded that Medicare's determination that a treatment is medically accepted for
a particular use is only one piece of the payment
puzzle; doctors, said the Court, also play a role in
establishing which treatments the government will
reimburse. The Court did not, however, spell out
the circumstances in which a particular doctor's
view that a particular treatment for a particular
patient was inappropriate would render a claim
for payment "false" under the FCA. Accordingly,
although the Petratos decision employs a rigorous
materiality standard likely to discourage potential
private FCA litigants, at least within the Third
Circuit, it nevertheless appears to leave open the
possibility that healthcare defendants will be vulnerable to claims of fraud based on the opinions,
however idiosyncratic, of individual physicians
The FCA Materiality Requirement
The Petratos allegations arose under the FCA, the
statute designed to redress fraud-based financial
losses to the United States Treasury.6 The FCA holds
liable anyone who "knowingly presents, or causes
to be presented, a false or fraudulent claim for
payment or approval," or who "knowingly makes,
uses, or causes to be made or used, a false record
or statement material to a false or fraudulent
claim."7 Since Congress strengthened the law over
thirty years ago, such suits have multiplied, resulting in a number of billion-dollar recoveries. In
2016, for example, the U.S. Department of Justice
garnered over $4.7 billion in settlements and
12
For The Defense | Vol. 2, Issue 4
judgments, with over half of those funds deriving
from the healthcare industry alone.8 Nearly $3
billion of those recoveries related to lawsuits
filed by whistleblowers under the Act's qui tam9
provisions, which allow private individuals (known
as "relators") with inside knowledge about the
allegations to step into the government's shoes
and retain a portion of any monies recovered on
behalf of the United States.10
In June 2016, the Supreme Court handed
down its decision in Universal Health Services v.
United States ex rel. Escobar, a significant and
long-awaited FCA decision. In Escobar, the qui
tam relators alleged that the defendant mental
health facility committed fraud when it sought
government reimbursement for mental health
services it had provided to their daughter, a
Medicaid beneficiary, without disclosing serious
regulatory violations concerning staff qualifications and licensing.
In deciding Escobar, the Supreme Court
resolved a circuit split and upheld the validity
of the "implied false certification" theory of
FCA liability. Thus, the Supreme Court held that
a defendant's failure to comply with statutory,
regulatory, or contractual obligations can, in fact,
give rise to an implicit misrepresentation that
it was in compliance with such requirements,
thus amounting to fraud.11 The Supreme Court
therefore departed both from jurisdictions like the
First Circuit, which had more broadly interpreted
the implied false certification theory, and the
Seventh Circuit, which had refused to recognize
it altogether.12 This aspect of the Supreme Court's
holding did not result in any real change in the
Third Circuit, where the Court of Appeals had
already recognized that a claim for payment may
be "legally false" when it fails to comply "with a
statute or regulation the compliance with which is
a condition for Government payment."13
As Escobar further held, however, materiality
is also an essential element of FCA liability.14
Accordingly, whether a defendant may be liable
for noncompliance with a statutory, regulatory,
or contractual obligation does not turn solely on
whether the obligation at issue is an expressly
designated condition of payment, but also
Table of Contents for the Digital Edition of For the Defense - Volume 2, Issue 4 - 2017
Table of Contents
Commonwealth v. Jerome King and Beyond: Trial Counsel’s Obligation to Cooperate with an Ineffective Assistance of Counsel Claim
United States ex rel. Petratos v. Genentech Inc. – The Third Circuit Embraces A Rigorous Pleading Standard for Materiality In False Claims Act Suits, But Leaves Healthcare Industry Defendants Vulnerable On Medicare Claims
Changes in the DUI Landscape: Acts 33 and 30
Police Misconduct Resulting in Arrest: Weighing the Options
Dying with Dignity: Compassionate Release in Pennsylvania
Amicus Matters
Attorney Discipline
Finding the Hidden Data in Technology to Defend Your Client
For the Defense - Volume 2, Issue 4 - 2017 - 1
For the Defense - Volume 2, Issue 4 - 2017 - 2
For the Defense - Volume 2, Issue 4 - 2017 - Table of Contents
For the Defense - Volume 2, Issue 4 - 2017 - 4
For the Defense - Volume 2, Issue 4 - 2017 - Commonwealth v. Jerome King and Beyond: Trial Counsel’s Obligation to Cooperate with an Ineffective Assistance of Counsel Claim
For the Defense - Volume 2, Issue 4 - 2017 - 6
For the Defense - Volume 2, Issue 4 - 2017 - 7
For the Defense - Volume 2, Issue 4 - 2017 - 8
For the Defense - Volume 2, Issue 4 - 2017 - 9
For the Defense - Volume 2, Issue 4 - 2017 - 10
For the Defense - Volume 2, Issue 4 - 2017 - United States ex rel. Petratos v. Genentech Inc. – The Third Circuit Embraces A Rigorous Pleading Standard for Materiality In False Claims Act Suits, But Leaves Healthcare Industry Defendants Vulnerable On Medicare Claims
For the Defense - Volume 2, Issue 4 - 2017 - 12
For the Defense - Volume 2, Issue 4 - 2017 - 13
For the Defense - Volume 2, Issue 4 - 2017 - 14
For the Defense - Volume 2, Issue 4 - 2017 - 15
For the Defense - Volume 2, Issue 4 - 2017 - 16
For the Defense - Volume 2, Issue 4 - 2017 - 17
For the Defense - Volume 2, Issue 4 - 2017 - Changes in the DUI Landscape: Acts 33 and 30
For the Defense - Volume 2, Issue 4 - 2017 - 19
For the Defense - Volume 2, Issue 4 - 2017 - 20
For the Defense - Volume 2, Issue 4 - 2017 - 21
For the Defense - Volume 2, Issue 4 - 2017 - Police Misconduct Resulting in Arrest: Weighing the Options
For the Defense - Volume 2, Issue 4 - 2017 - 23
For the Defense - Volume 2, Issue 4 - 2017 - 24
For the Defense - Volume 2, Issue 4 - 2017 - 25
For the Defense - Volume 2, Issue 4 - 2017 - 26
For the Defense - Volume 2, Issue 4 - 2017 - 27
For the Defense - Volume 2, Issue 4 - 2017 - 28
For the Defense - Volume 2, Issue 4 - 2017 - Dying with Dignity: Compassionate Release in Pennsylvania
For the Defense - Volume 2, Issue 4 - 2017 - 30
For the Defense - Volume 2, Issue 4 - 2017 - 31
For the Defense - Volume 2, Issue 4 - 2017 - 32
For the Defense - Volume 2, Issue 4 - 2017 - 33
For the Defense - Volume 2, Issue 4 - 2017 - 34
For the Defense - Volume 2, Issue 4 - 2017 - Amicus Matters
For the Defense - Volume 2, Issue 4 - 2017 - 36
For the Defense - Volume 2, Issue 4 - 2017 - 37
For the Defense - Volume 2, Issue 4 - 2017 - 38
For the Defense - Volume 2, Issue 4 - 2017 - 39
For the Defense - Volume 2, Issue 4 - 2017 - Attorney Discipline
For the Defense - Volume 2, Issue 4 - 2017 - 41
For the Defense - Volume 2, Issue 4 - 2017 - 42
For the Defense - Volume 2, Issue 4 - 2017 - 43
For the Defense - Volume 2, Issue 4 - 2017 - Finding the Hidden Data in Technology to Defend Your Client
For the Defense - Volume 2, Issue 4 - 2017 - 45
For the Defense - Volume 2, Issue 4 - 2017 - 46
For the Defense - Volume 2, Issue 4 - 2017 - 47
For the Defense - Volume 2, Issue 4 - 2017 - 48
For the Defense - Volume 2, Issue 4 - 2017 - 49
For the Defense - Volume 2, Issue 4 - 2017 - 50
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