Email Alert
July 14, 2011
By Elizabeth Lippincott*
On June 30, 2011, the Third Circuit partially reversed the dismissal of qui tam claims against United Health Group and its subsidiaries sponsoring Medicare Advantage (MA) Plans, AmeriChoice, and AmeriChoice of New Jersey (collectively, United) in United States Ex Rel. Charles Wilkins; Daryl Willis v. United Health Group, Incorporated; AmeriChoice; AmeriChoice of New Jersey. The court found that while alleged non-compliance with marketing regulations did not give rise to False Claim Act (FCA) liability, alleged non-compliance with the Anti-Kickback Statute (AKS) could violate FCA, even in the absence of an express certification of AKS compliance. With this ruling, the Third Circuit joined the Second, Sixth, Ninth, Tenth, Eleventh, and District of Columbia Circuits in recognizing "implied false certification liability" under FCA.
Plaintiffs' FCA Allegations
The plaintiffs claimed that United, through execution and submission of monthly certification statements to receive capitation payments from the MA Program, attested that it complied with all healthcare laws and regulations, despite known violations of Medicare marketing regulations1 and AKS.2 The plaintiffs asserted that the false certifications, in turn, gave rise to FCA violations.
Although the government ultimately decided not to intervene in the case, it also declined to exercise its right to move to dismiss the action and, notably, submitted an amicus curiae brief in support of the False Claims Act and Anti-Kickback allegations.
Claims Based on the Alleged Marketing Violations
With respect to FCA claims based on marketing violations, the court applied the doctrine of implied false certification liability. The opinion reasoned that a party can submit a false claim by making a claim for payment without disclosing violations of regulations affecting its eligibility for payment, even in the absence of an express certification of its compliance with these regulations. It then drew a distinction between types of non-compliance, noting that payments under the Medicare program were not conditioned on United's compliance with the marketing regulations.3 The court questioned "the wisdom of regarding every violation of a Medicare regulation as a basis for a qui tam suit" and noted that "[f]ederal agencies are unquestionably better suited than federal courts to ensure compliance with Medicare marketing regulations." The Third Circuit affirmed the district court's dismissal of the claims relating to the marketing regulations.
Claims Based on Alleged AKS Violations
Applying the implied false certification theory of liability, the ThirdCircuit concluded that the district court erred in finding that the plaintiffs failed to state a claim under FCA because the monthly certifications contained no explicit attestation of AKS compliance. The court reasoned that compliance with AKS is a condition of payment under Medicare Parts C and D, noting that AKS is an anti-fraud statute and that the government's contracts with MA Organizations and Part D Plan Sponsors require compliance. Therefore, the plaintiffs did not have to specify a relationship between the alleged AKS violations and the claims for payment submitted to the government. Rather, it was sufficient to allege that United knowingly violated AKS while submitting claims for Medicare payment. The court remanded FCA claims based on non-compliance with AKS.
Conclusion
The Wilkins case provides MA and Part D Plan Sponsors some insight into which compliance obligations rise to the level of conditions of payment and, therefore, could give rise to an FCA allegation. While violations of marketing regulations (and presumably other requirements for plan administration) may not support an FCA violation, the Third Circuit joined six other U.S. Courts of Appeals in ruling that an AKS violation can support an FCA allegation, even in the absence of an express certification of AKS compliance. As the Wilkins court explained, while MA and Part D Plan Sponsors do not have to ensure "perfect adherence to regulations which are not prerequisites to payment" to avoid FCA liability, they must refrain from offering or entering into payment arrangements that violate AKS while making claims for payment from the government.
1 The plaintiffs, two sales and marketing employees of United who had been terminated, both alleged that United retaliated against them after they internally reported what they perceived as illegal marketing practices. The alleged marketing violations and kickbacks included, among others, conducting marketing activities in clinic waiting rooms, "chasing" people in supermarkets to ask if they were Medicare and Medicaid eligible, soliciting door-to-door, giving out prizes in excess of nominal value limits, and paying a medical clinic $27,000 to switch beneficiaries to United Medicare and Medicaid plans.
2 The plaintiffs alleged that AmeriChoice: (1) provided kickbacks to a medical clinic to induce it to steer patients to AmeriChoice's MA and Medicaid plans; and (2) enticed doctors to provide names of patients eligible for Medicare and Medicare.
3 The court recognized that "anyone examining Medicare regulations would conclude that they are so complicated that the best intentioned plan [sponsor] could make errors in attempting to comply with them." Id. at 31 (emphasis added).
*We would like to thank Elizabeth Lippincott, Esquire (Lippincott Law Firm PLLC, Chapel Hill, NC) for authoring this email alert, and Jacqueline Penrod, Esquire (Semanoff Ormsby Greenberg & Torchia LLC, Huntingdon Valley, PA) for editing it.