In May 2009, Yarushka Rivera was prescribed medication to treat bipolar disorder, had an adverse reaction, suffered a seizure and died. Rivera had received intermittent counseling at Arbour for behavioral problems from 2004 until 2009, at which point she was prescribed the medication that caused her death. Following her death, Rivera’s parents brought a whistleblower suit against Universal Health Services and its subsidiary, Arbour Counseling Services, based on violations of the state’s Massachusetts Medicaid program.

After Rivera’s death, her parents found out that few of Arbour’s employees were actually licensed to provide mental health counseling. Of the five practitioners who treated Rivera, only one was properly licensed. The practitioner who diagnosed Rivera as bipolar had received a degree from an unaccredited internet college and was previously rejected for licensure by the state. The practitioner who prescribed the medication that caused Rivera’s death did not have the authority to prescribe medication without supervision. The clinic’s director helped misrepresent the staff’s qualifications.

Rivera’s parents based their False Claims Act claim on Arbour’s reimbursement requests to the state Medicaid program. Under the implied false certification theory, the complaint asserted Universal Health and Arbour submitted reimbursement claims that made representations about the services provided to patients like Rivera, as well as representations about the qualifications of the staff providing those services. By flouting the regulations associated with licensing requirements, Universal Health and Arbour made fraudulent representations, and the state Medicaid program, unaware of the violation, paid the claim. Had the program known that it was billed for mental health services performed by unlicensed and unsupervised staff, it would not have paid the claims.

The False Claims Act imposes civil liability on “any person who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” of a government contract. Because the government does not have the resources to investigate or bring suit against every government contractor who violates the False Claims Act, an individual can bring a whistleblower claim on behalf of the government, and the government can then choose to intervene. Defendants violating the False Claims Act face steep civil penalties “essentially punitive in nature.”

A claim under the FCA requires a situation demonstrating the following:

1. A false statement or fraudulent course of conduct
2. Conduct displaying scienter, or deliberate action with reckless and knowing disregard
3. Conduct is material in nature
4. Results in the government paying out or forfeiting moneys due.

The United States Supreme Court took the case and decided in June 2016 that the theory of implied certification was a valid theory. The implied certification theory is simply explained as requiring persons who bill the government for charges, such as Medicare or Medicaid, to represent at the time of submitting the bills that the health care relationship and arrangements behind the bills are compliant with state and Federal law.

The Supreme Court held that, if the non-compliance that resulted in the bills is material, then the submission of each bill is a false claim, bringing treble damages, interest, penalties and attorneys’ fees.

The situation is heightened in the healthcare industry, where providers submit thousands of bills to the government. With the strict requirements of the Stark Law and Anti-Kickback Statute, it is easy for a provider to be out of technical compliance. The risk becomes important when the non-compliance becomes material. For example, if ownership in a laboratory by physicians does not fall within an exception to the Stark Law, it is possible that the bills submitted to the government would be deemed false claims.

The solution is a compliance audit by an attorney who is familiar with the rules and regulations, along with an accountant and fair market valuation firm to round out the audit. A written compliance policy must be produced along with training sessions for all employees of the practice.

Bruce Howell counsels clients on a broad array of health law issues, including reimbursement, fraud and abuse, managed care issues, physician practice management issues and the Affordable Care Act of 2010. He handles cases involving genetics, organ transplant technology, laboratory matters, clinical research and healthcare insurance coverage. Bruce also helps providers and businesses comply with and find financial opportunities in connection with the Affordable Care Act.

Bruce has represented companies and individuals in healthcare governmental investigations and counseled clients in structuring transactions to comply with health law regulatory requirements. He has also created compliance programs and consulted on corporate governance matters and tax enforcement matters in nonprofit tax/healthcare work. Bruce is experienced in litigating cases related to healthcare insurance, Employee Retirement Income Security Act of 1974 (ERISA) issues, health law regulatory matters, and the Affordable Care Act, and has also served as an expert witness in these areas.