Prospective Certifications and the False Claims Act

Much ink has been spilled arguing about the concepts of implied and express certification and their relationship to False Claims Act [31 U.S.C. § § 3729-33 (FCA)] actions brought against health care providers. Of late, hospital/home health agency cost report certifications have become a focus of discussion. Certainly what we can term after the fact certifications enjoy long-standing recognition under section 3729(a)(2) of the FCA. Recently, however, an interesting and important new wrinkle has been added to these discussions: prospective certifications.

The McNutt Decision

Not much was heard about prospective certifications until the recent decision in McNutt ex rel. United States v. Haleyville Medical Supplies, Inc., 423 F.3d 1256 (11th Cir. 2005). Here the relator, a former employee, filed a qui tam against a medical services company alleging that it had submitted to Medicare requests for reimbursement even though it knew it was not eligible for payment. The asserted basis for this allegation was that the defendant had engaged in conduct in violation of the Healthcare Anti-kickback Act, 42 U.S.C. §1320a-7b(b). Specifically, relator alleged that the defendant had paid kickbacks camouflaged as rental payments in order to attract referrals from pharmacists and others.

When the government intervened, it alleged that

Medicare providers are required to enter a provider agreement with the government, and under the terms of the agreement, the Medicare provider certifies that it will comply with all laws and regulations concerning proper practices of Medicare providers. One of the laws included in this certification is the Anti-Kickback Statute…. The government alleged that a Medicare ‘provider’s compliance with its provider agreement is a condition for receipt of payments from the Medicare program.’

McNutt, 423 F.3d at 1258. The district court denied defendants’ motion to dismiss and certified for interlocutory appeal the issue of whether a violation of the Anti-kickback Act could serve as the predicate for a FCA action.

The Eleventh Circuit spent little time in resolving this issue. “When a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable under the Act, for its submission of those false claims.” Id. at 1259. Because of the provider agreement certification, defendants were on notice that they were only entitled to payment from Medicare if they complied with all Medicare laws, regulations and program instructions. As a result, it was not difficult for the court to find that defendants had knowingly submitted false claims for payment because their violation of the Anti-kickback Act rendered them ineligible to receive Medicare reimbursement.

Medicare Form 855A Certification

Form CMS-855A is the Enrollment Application for institutional providers. Amongst others, home health agencies, hospitals, hospices, rural health clinics and skilled nursing facilities must execute this form in order to participate in Medicare. As part of completing the CMS-855A, a certification must be executed, which reads in pertinent part:

I agree to abide by the Medicare laws, regulations and program instructions that apply to this provider. The Medicare laws, regulations, and program instructions are available through the Medicare contractor. I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws, regulations and program instructions (including but not limited to, the Federal anti-kickback statute and the Stark law), and on the provider’s compliance with all applicable conditions of participation in Medicare.

The potential breadth of this certification is dazzling. For example, what is the content of Medicare laws, regulations and program instructions? Moreover, what is the reach of the applicable conditions of participation in Medicare? Fortunately, for hospitals, the applicable conditions of participation are well established. See 42 C.F.R. §§ 482.1-482.66. Home health agencies have their own set of conditions of participation at 42 C.F.R. §§ 484.1-484.55. Even a cursory review of these provisions makes it clear what a significant regulatory burden a provider assumes in prospectively certifying in advance that it will comply with all of these manifold regulatory provisions.

Interestingly, the Form 855A certification is even broader in scope than the heavy-duty certification found in hospital/home health agency cost reports, which does not specify by name the conditions of participation. Identical language is found in the CMS-855B for Clinics/Group Practices and Certain Other Suppliers, the CMS-855I covering Physicians and non-physician Practitioners, and the CMS-855S governing Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Suppliers.

Healthcare Providers At Jeopardy?

When one recognizes the expansive reach of the Medicare Enrollment Application certifications, and couples this recognition with the fact that the provider is executing the certification even before it has begun providing Medicare beneficiaries with services or devices, and is thereby pledging its future behavior, the ultimate threat to providers becomes evident. Because of their explicit inclusion of the Medicare conditions of participation as a template for provider practices, such certifications impose significantly more stringent limitations than, for example, cost report certifications. Moreover, cost report certifications occur after the behavior at question has taken place, not before as with Enrollment Application certifications. The McNutt decision, therefore, adds an important new weapon to the government’s healthcare fraud arsenal—prospective certifications. This is particularly the case given that the Enrollment Application certifications explicitly identify, along with the Anti-kickback Act, the Stark law as well. Immediate implementation of an effective compliance plan becomes even more essential in light of these developments. See, What is a Healthcare Fraud Compliance Program and How Can a Provider Design and Implement One?

It shall be interesting to see how this concept develops over time. But one thing is clear, providers must be careful not to pledge to satisfy regulatory standards they cannot, in reality meet. If they do, a Department of Justice FCA action, a qui tam complaint, or HHS-OIG administrative sanctions may await them.


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