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False Claims Act and Medicare Conditions of Participation

Sixth Circuit Finds Limits to False Claims Act 

False Claims Act LimitationsThe sixth circuit court of appeals has found that there are limits to how the False Claims Act can be used to attach health care providers.  The court ruled that the future of an Independent Diagnostic Testing Facility to assure appropriately qualified providers supervised diagnostic tests could not form the basis for a claim under the False Claims Act.

The suit has been in the courts since it was filed by a qui tam complainant in 2006.  The lower court had found that the failure of the facility to assure appropriate supervision made claims for services “false claims” to which the extreme penalties of the Federal False Claims Act could be applied?

The appellate court found that even though the provider’s activities may have violated the conditions of participation for IDTFs, they did not amount to a violation of a “condition of payment.”  Based on the distinction between conditions of participation and conditions of payment, the court refused to apply the False Claims Act.

The extent that other courts will adopt similar reasoning in other types of cases is yet to be determined.  For now, providers can take some assurance in the fact that courts may be willing to find some limitation on the ability of the government to use the rather extreme penalties under the False Claims Act to prosecute every failure to comply with a condition of participation.  Had the court upheld the lower court’s ruling, it could have resulted in significant potential exposure to health care providers who could have been subject to False Claims Act exposure for every nonconformity with conditions of participation.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
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