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FCA Express Certification Liability Theory

(September 24, 2012): There are 3 recognized legal theories under which False Claims Act (FCA) liability may be established – the FCA Express Certification, Implied Certification, and Worthless Services theories. As you may know, the FCA is the government’s primary fraud fighting tool, and prohibits the presentation of false claims for payment by the government. It is used most often, but not exclusively, in health care fraud matters. Recently, the FCA was amended to prohibit the holding of identified overpayments as well.

I.  FCA Express Certification:

In any regard, the most common theory relied upon by the government and relators in FCA cases is known as “Express Certification.” Specifically, an “expressly” false claim occurs when a provider falsely certifies compliance with a law or contractual term that is a prerequisite to payment. As you know, all health care providers submit claims on the CMS-1500 form, and as part of that form, the provider must certify that the service or supply provided was “medically indicated and necessary to the health of [the] patient.” Therefore, if a provider submits a claim for payment for a service or supply that does not end up being “medically indicated and necessary,” they have falsely certified compliance and have likely violated the FCA. Additionally, this also includes claims when services were not provided as billed, or not provided at all.

FCA express certification is the most obvious type of false claim. For instance, when a provider performs a stent procedure to open up a patient’s blocked artery, but the patient’s occlusion level (the percentage of blockage) was not significant, the procedure was most likely medically unnecessary. But by the provider signing the CMS-1500 (usually electronically), they have formally stated to the government that the service was medically necessary, making the claim false.

II. Government Intervention in FCA Cases:

When a whistleblower or relator alleges a simple “express certification” theory in their complaint, the government may very well take the case if the facts are clearly set out and show on their face that a violation has occurred. It is also more enticing to the government if the dollar amounts at issue are high (greater than a million dollars). Regardless, the government ends up taking (it is formally known as “intervening”) many fewer cases than it receives – only around 25%. Many of the cases in which the government decides not to intervene may likely be legitimate matters, but the resources of the Department of Justice are limited.

In any regard, as Medicare and Medicaid fraud prevention efforts continue to expand, there will likely continue to be a rise in the number of FCA cases filed. This area of the law has become increasingly important as the Justice Department looks to stem the rising tide of fraud and abuse in the nation’s healthcare system, and providers should ensure that their compliance programs are effective to identifying and deterring potential violations of the FCA and other laws.

Healthcare LawyerRobert W. Liles is the managing member of Liles Parker PLLC, located in our Washington D.C. office. Robert was the first National Health Care Fraud Coordinator for the Department of Justice, and has extensive experience in litigation cases under the False Claims Act. He is a talented advocate and has practiced with and before many of the Assistant United States Attorneys (AUSAs) that handle these cases on a daily basis. For more information or for a free 30 minute consultation, call today at:  1 (800) 475-1906.

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