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Billions at Stake for Providers in Argument Before US Supreme Court

This week, the United States Supreme Court heard oral arguments in Universal Health Services v. United States ex rel. Escobar, a case destined to influence the scope of False Claims Act (FCA) liability for anyone who receives payments from Medicare, Medicaid or any other federal government-funded health care program. As Justice Breyer acknowledged during oral argument, “billions of dollars” are “at issue.”

During oral argument, the Justices seemed likely to accept the implied certification theory of liability under the FCA, at least in some form. The decision is likely by the end of June. Watch this space for details and analysis of its precise contours. Below are more details about the case.

Escobar concerns “implied certification” liability — a theory that requires a provider to comply with underlying statutory, regulatory or contractual obligations associated with a service even though those obligations are not specified when the service is provided. If the provider fails to comply with those obligations but submits a claim for payment, it has breached the implicit promise, thus potentially giving rise to liability under the FCA.

Universal Health and others want the theory abolished, while relator Escobar wants it upheld.  The Justices appeared to ponder—in the words of counsel for Universal Health Services—the “jot” from the “tittle” on how to distinguish underlying obligations that are sufficiently important to implicate the FCA from those that are not. Although both sides and the United States Solicitor General’s office (participating as an amicus in support of Escobar) posited several principles upon which to resolve the case, none seemed to elicit a consensus among the Court’s eight members.

The FCA is a Civil War-era law designed to protect government coffers by prohibiting individuals from “knowingly” submitting (or causing the submission of) a “false or fraudulent claim” for payment. In order to further protect the government’s coffers, the FCA authorizes private plaintiffs (known as “relators”) to bring suit on the government’s behalf and share in its recovery.

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About this Author

Thomas E. Zeno, Squire Patton Boggs, Healthcare Fraud Lawyer, Economic Crimes Attorney
Of Counsel

Thomas Zeno has more than 25 years of experience in the US Attorney’s Office for the District of Columbia. During that time, Tom investigated and prosecuted economic crimes involving healthcare, financial institutions, credit cards, computers, identity theft and copyrighted materials. As the office’s Healthcare Fraud Coordinator for the last eight years, Tom supervised investigation strategies of agents from the Federal Bureau of Investigation, the Department of Health and Human Services, the Drug Enforcement Administration and the Medicaid Fraud Control Unit regarding...

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James Hafner Health Care Lawyer Squire Patton Boggs Cleveland
Associate

James Hafner advises clients in industries ranging from manufacturing and medical technology to financial services, healthcare and insurance on a variety of corporate matters, including mergers and acquisitions, governance, contracts, securities and related matters. In addition to his work as a corporate lawyer, he previously worked as in-house counsel for one of the world’s leading hospital systems.

His transactional and regulatory experience includes negotiating physician practice acquisitions and employment contracts, providing guidance on insurance-related matters, advocating for clients with external audits, and performing due diligence in connection with mergers and acquisitions. His litigation practice includes advising hospitals on the impact of Medicare reimbursement decisions in federal courts and before administrative agencies. Outside of the healthcare industry, James has attended to corporate governance matters and assisted clients with internal investigations by collecting, reviewing and synthesizing electronic documents. 

Prior to joining Squire Patton Boggs, James worked in the legal department of one of the world’s leading hospital systems. He assisted in-house counsel and internal clients with navigating provider scope-of-practice issues, provided guidance on fraud and abuse matters, prepared board documents to facilitate realignment, ensured compliance with labor and employment regulations related to a hospital acquisition, and drafted Business Associate Agreements and other HIPAA-related materials. 

While attending law school, James was a member of the Ohio State Law Journal and received CALI Awards for Excellence in Constitutional Law and Advanced Constitutional Law. He is the author of a 2015 article in the Sixth Circuit Review, a publication dedicated to analyzing major legal developments in the US Court of Appeals for the Sixth Circuit.

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