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Supreme Court Declines to Resolve Circuit Split on FCA “Objective Falsity” Issue

On Monday February 22, 2021, the U.S. Supreme Court declined to grant certiorariin CareAlternatives v. United States (CareAlternatives), a case on appeal from the Third Circuit that could have assessed the issue of “objective falsity” under the federal False Claims Act (FCA). The Supreme Court’s rejection leaves standing the split among Circuit Courts on whether a whistleblower (Relator) must prove that a claim is objectively false in order to bring a successful FCA claim. This means that health care providers potentially face differing levels of FCA risk depending on where an FCA case is brought.

As we have previously discussed, federal courts are split on whether Relators must prove objective falsity. Both CareAlternatives and AseraCare v. U.S. (AseraCare)a case before the Eleventh Circuit, considered whether a physician’s subjective clinical judgment as to medical necessity could be deemed “false” for the purpose of FCA liability, or whether a claim must involve a fact that could be proven to be objectively false. Both cases involved allegations that physicians’ certifications of medical necessity for hospice services were false and thus sufficient for plaintiffs’ FCA allegations. The Eleventh Circuit in AseraCare adopted the objective falsity standard, holding that in order to show that a claim was false under the FCA, the Government must show “something more than the mere difference of reasonable opinion[.]” (938 F.3d 1278, 1297 (11th Cir. 2019)). In contrast, in CareAlternatives the Third Circuit rejected the objective falsity standard, andfound that a certification of medical necessity could be considered false if a jury determined that an expert physician’s review of the same medical records was more persuasive. (952 F.3d 89 (3d Cir. 2020)).

We are not surprised that the Supreme Court declined certiorari, in part because the rulings in both cases were very fact specific and were based on an unusual Medicare hospice regulation. More importantly, we think it is unlikely that the Supreme Court would have upheld a potentially major limitation on FCA liability had it taken the case based on the facts in CareAlternatives. We have seen in a number of cases that the Court is reluctant to endorse such broad limitations that are not in the language of the FCA itself. See e.g. Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (rejecting argument that FCA claims could not be based implied certifications of compliance). Therefore, although the Court’s rejection of the appeal may look like a loss for FCA defendants, it may be a better result than a ruling from the Court that could have limited falsity arguments in every Circuit.

Michael P. Matthews contributed to this article. 

© 2023 Foley & Lardner LLPNational Law Review, Volume XI, Number 54

About this Author

Lawrence M. Kraus, Boston, MA, Foley, Lardner law firm, Complex Healthcare, Business Litigation attorney

Lawrence Kraus is a partner and litigation attorney with Foley & Lardner LLP. His practice focuses on complex healthcare, False Claims Act, civil, commercial, and real estate litigation. Mr. Kraus is a member of the firm’s Business Litigation & Dispute Resolution and Government Enforcement, Compliance & White Collar Defense Practices and Health Care and Technology Industry Teams.

Mr. Kraus counsels corporations and individuals in a wide range of industries. He has represented clients in federal and state trial and appellate courts,...

Michael J. Tuteur, Foley Lardner, Healthcare lawyer, Government Enforcement Defense Attorney

Michael J. Tuteur is chair of the Litigation Department of Foley & Lardner LLP and focuses his practice on health care litigation and government enforcement defense. Mr. Tuteur represents clients in a broad range of industries, including healthcare, software, biotechnology, insurance, education, advertising, banking and mutual funds. His litigation experience is similarly diverse, and includes ERISA and RICO class actions, securities and syndicated debt disputes, licensing and copyright actions, contract and shareholder suits, and defense of civil false claims...

Lisa Noller, Trial Lawyer, Foley Lardner Law Firm

Lisa Noller is a trial lawyer and investigator with Foley & Lardner LLP, where she is chair of the Government Enforcement, Compliance & White Collar Defense Practice. She has spent almost 20 years investigating, litigating and trying complex criminal and civil cases, including responding to government investigations, conducting corporate internal investigations, and persuading the government not to pursue clients. When cases proceed to trial, Ms. Noller also has significant experience successfully trying a wide variety of over 30 civil and criminal matters in...

Olivia King Health Care Lawyer Foley Lardner Boston

Olivia King is an associate with Foley & Lardner LLP and a member of the firm’s Health Care Industry Team.

Olivia was selected for the inaugural Mayo-Foley Health Law Fellowship, consisting of summer internships with the Mayo Clinic Legal Department in Rochester, Minnesota (2017), and Foley (2018).While at the Mayo Clinic, Olivia researched and prepared memorandum on state and federal medical prescribing and licensure requirements with analysis of potential implications on telemedicine initiatives and state mental health ombudsman reporting...

Pam Johnston, Trial Attorney, Foley Lardner Law Firm

Pamela L. Johnston is a partner and trial lawyer with Foley & Lardner LLP, where she is chair of the firm’s Government Enforcement, Compliance & White Collar Defense Practice, a member of the Securities Enforcement & Litigation Practice, and a member of the Health Care Industry Team. Ms. Johnston focuses in the areas of white collar criminal defense, False Claims Act and whistleblower actions, securities enforcement and other governmental enforcement actions. She represents companies and individuals in parallel civil and criminal proceedings involving a...