When Medical Opinions, Judgments, and Conclusions Are "False" Under the False Claims Act: Criminal and Civil Liability of Physicians Who Are Second-Guessed by the Government.

"Contradiction is not a sign of falsity, nor the lack of contradiction the sign of truth." (1)

1. INTRODUCTION

   Traditionally considered a Civil War relic, the False Claims Act (FCA) remains a widely-used tool for the United States government to punish wrongdoing, particularly in the healthcare industry. (2) In a press release, the United States Department of Justice reported recovering $2.8 billion in FCA settlements and judgments for the 2018 fiscal year--$2.5 billion of which came from healthcare fraud claims related to federal healthcare programs such as Medicare and Medicaid. (3) The significant amount of healthcare fraud recoveries under the FCA is primarily due to the 1986 FCA amendments, with a continuing increase due to the 2010 Patient Protection and Affordable Care Act (ACA) amendments, which lowered the public disclosure hurdle. (4) In particular, many of the bourgeoning healthcare fraud claims under the FCA are brought by qui tam plaintiffs--that is, private individuals who bring suit on the government's behalf--and based on alleged lack of medical necessity. (5)

   The FCA prohibits an individual from "knowingly" presenting a false or fraudulent claim to the United States government. (6) A recent FCA suit questioned whether a physician's medical opinion regarding the medical necessity of a treatment or procedure was "reasonable and necessary under the government's definition of the phrase." (7) Until recently, courts had generally agreed that a mere difference in scientific or medical opinion could not constitute the basis of an FCA claim. (8) Recent Sixth and Tenth Circuit decisions, however, have imposed both civil and criminal liability on healthcare providers based on a finding of objectively false medical opinions that caused the government to pay physicians for services provided to Medicare and Medicaid patients. (9)

   While there are bright lines at either end of the spectrum for false claims, these decisions show a troubling shift towards broadening the scope of when a medical opinion or judgment can be "false or fraudulent" under the FCA, which has substantially expanded the potential liability for healthcare providers and their employers. (10) Although stating that a jury would not have acted unreasonably if it found that the physician performed the procedure in good faith, the Sixth Circuit nevertheless reinstated a physician's criminal conviction based on both another expert disagreeing with the treating physician's opinion and the treating physician's high billings and enormous salary. (11) Similarly, in a civil case, the Tenth Circuit held that it is possible for a medical judgment to be false or fraudulent under the FCA in a matter involving a type of cardiac heart procedure known as patent foramen ovale (PFO) closures--despite the lack of national coverage guidelines for such procedures. (12)

   This Note examines the history of the FCA and common-law precedent regarding whether and when medical opinions or judgments can serve as the basis of an FCA claim. (13) This Note then discusses how the recent decisions from the Sixth and Tenth Circuits have expanded healthcare providers' potential liability, and further analyzes the impact that widening the liability net will have on the practice of medicine--including the unintended consequence of limiting Medicare and Medicaid patients' access to treatment. (14) This Note concludes with a brief discussion of necessary policy reforms, in light of the trend towards holding healthcare providers liable for their professional medical judgments, and encourages other courts not to follow the Sixth and Tenth Circuits' reasonings. (15)

2. HISTORY

   1. Historical Background of the FCA

      Congress passed the FCA, originally known as the Informer's Act, in 1863 to combat the massive expenses incurred due to individuals committing fraud against the government. (16) During the Civil War, defense contractors defrauded the government using various methods, including billing for nonexistent or worthless goods, charging extraordinarily high prices for delivered goods, and generally robbing the government when purchasing the "necessities of war." (17) The FCA is thus typically referred to as a "Civil War relic," but Congress drafted it broadly enough to apply to all types of fraud committed against the government, and it has increasingly been used to combat and rectify Medicare and Medicaid fraud. (18) A person who knowingly submits a "false or fraudulent claim" to the government for reimbursement may be liable for civil penalties of up to $10,000 for each false claim, as periodically adjusted, plus triple the amount of the government's damages. (19) In addition, the government may prosecute individuals for submitting false claims under the criminal FCA. (20)

      While the government may bring civil claims under the FCA, the Act also includes a qui tam provision. (21) The phrase qui tam comes from a Latin phrase meaning "who as well for the king as for himself sues in this matter." (22) The provision allows a private individual, known as a relator, to bring suit on behalf of the United States government and share any recovery with the government. (23) Qui tam relators are entitled to a maximum of 30% of any recovery, as well as their costs and reasonable attorney's fees. (24) Due to the 1986 amendments to the FCA, which increased qui tam relators' maximum recovery from 15% to 30%, there has been an escalating number of actions by relators who serve as private prosecutors. (25) In addition to monetary incentives, amendments to the FCA in the ACA made it easier to overcome the public disclosure bar to qui tam claims, further incentivizing qui tam litigation. (26) In fact, healthcare fraud prosecution is the leading recovery area for FCA claims. (27) Healthcare providers may find that disgruntled employees, coworkers, and competitors become relators under the FCA, even though they otherwise would have no standing to bring a claim for alleged Medicare or Medicaid fraud. (28)

   2. Using the FCA to Bootstrap Medicare and Medicaid Fraud Claims on the Government

      The FCA is applicable to many statutes that include provisions for the reimbursement of expenses to the federal government. (29) The Medicare Act states that no payment may be made "for any expenses incurred for items or services" that "are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." (30) Healthcare providers seeking reimbursement under the Medicare Act must "certify the necessity of the services and, in some instances, recertify the continued need for those services." (31) Additionally, Medicaid regulations define fraud as "an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person." (32)

      The HHS Secretary decides whether a medical service is "reasonable and necessary." (33) For some items and services, the HHS Secretary issues a "national coverage determination" stating whether a particular item or service is covered nationally. (34) If there is no national coverage determination, local Medicare contractors may issue a "local coverage determination." (35) In addition, contractors have the discretion to make individual claim determinations based on the particular facts of an individual's case if there is no national or local coverage determination that applies. (36) When deciding whether to reimburse a medical provider for a Medicare claim, contractors must consider a service to be "reasonable and necessary if the contractor determines that the service is: [s]afe and effective; [n]ot experimental or investigational ...; and [a]ppropriate." (37)

      When examining whether a claim is appropriate, claims examiners assess whether the service was "furnished in accordance with accepted standards of medical practice for the diagnosis and treatment of the patient's condition or to improve the function of a malformed body member." (38) When the provider submits a claim for payment, the provider must sign a form certifying that "the services on this form were medically necessary." (39) By signing such form for payment of services that are not on the national or local coverage list, a healthcare provider must rely on his or her medical opinion and judgment that the services were medically necessary. (40) Under the FCA, such medical opinion may be challenged as a legally false claim for payment based on an expressly false certification. (41)

      The courts have established two doctrines--false certification, either express or implied, and promissory fraud--that attach potential FCA liability to claims for Medicare and Medicaid payment that are not explicitly or independently false. (42) The false certification theory has been the foundation for complaints against healthcare providers alleging fraud under the FCA. (43) Section 3729(a)(1)(A) of the FCA imposes liability on a person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval." (44) Section 3729(a)(1)(B) imposes the same liability on a person who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." (45) An FCA cause of action generally requires proving three elements: the defendant presented a claim for payment to the United States; the claim was false or fraudulent; and the defendant acted knowingly. (46) The FCA does not define what makes a claim false or fraudulent, and thus the courts developed a federal common law. (47) The FCA, however, does define the term "knowing" or "knowingly"--the scienter requirement--as follows:

      (1) the terms "knowing" and "knowingly"--

      (A) mean that a person, with respect to information--

      (i) has actual knowledge of the information;

      (ii) acts in deliberate ignorance of the truth or falsity of the information; or

      ...