Supreme Court Declines to Address FCA Falsity Standard, Denying Cert in Cases from Third and Ninth Circuits

The Supreme Court has declined to take up the issue of False Claims Act (FCA) “objective falsity” in relation to medical opinions, denying certiorari in paired cases from the Third Circuit (United States ex rel. Druding v. Care Alternatives, Inc.)[1] and Ninth Circuit (Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc.).[2] With that, the Court let pass what some observers had seen as a circuit split[3] revealed by the two decisions together with the Eleventh Circuit’s holding half a year earlier in United States v. AseraCare, Inc.[4]

Because the FCA does not define “false,” the alleged falsity of statements of opinion has proven nettlesome for some courts. In decisions handed down just weeks apart last March, the two appellate panels reversed defense victories predicated on the “objective falsity” standard under the FCA, with both cases turning on whether a physician’s medical opinion can be “false” within the statute’s meaning.

In support of their allegations that the defendant hospice care provider falsely certified patients as terminally ill, the Druding relators (i.e., FCA qui tam or “whistleblower” plaintiffs) offered expert testimony. The expert opined that just over one-third of the terminal-illness certifications he analyzed in his sampling of the hospice’s records were unsupported by information in patient medical charts.[5] The district court granted summary judgment for the defendant based solely on falsity, finding that the only evidence supporting the relators’ case was their expert’s testimony—and a “mere difference of opinion between physicians, without more, is not enough to show falsity.”[6] The Third Circuit reversed, holding that “expert testimony that opines that accompanying patient certifications did not support patients’ prognoses of terminal illness” was sufficient to establish a triable issue as to falsity.[7]

In Winter, the relator alleged that the defendant hospital’s admissions surged after a new management company came on board, and the relator identified dozens of patients whose medical records allegedly did not meet the statutory and regulatory requirements for Medicare inpatient coverage.[8] The district court granted the motion to dismiss, finding the relator’s allegations were “based on subjective medical opinions that cannot be proven to be objectively false”[9] and therefore the relator failed to allege “an objectively false claim.”[10] The Ninth Circuit reversed, explaining that it is well established law that a medical certification can be false, “for the same reasons any opinion can be false or fraudulent”—including “if the opinion is not honestly held, or if it implies the existence of facts . . . that do not exist.”[11] In sum, Winter declined “to graft any type of ‘objective falsity’ requirement onto the FCA.”[12] 

Though both Druding and Winter revived relators’ complaints the respective district courts had dismissed, the two courts positioned themselves quite differently with regard to FCA jurisprudence on falsity. The difference emerged particularly starkly with respect to AseraCare. The Druding court expressed its disaccord with what it characterized, perplexingly, as AseraCare’s holding that “clinical judgments cannot be untrue.”[13] In Winter, by contrast, the Ninth Circuit took care to proclaim its holding “not directly . . . contrary” to that of AseraCare that “a clinical judgment of terminal illness” supporting Medicare hospice eligibility “cannot be deemed false, for purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment.”[14]

The Winter court’s careful harmonization of its position with that of the Eleventh Circuit in AseraCare may have helped obviate the need for the Supreme Court to take up the FCA “objective falsity” question. Still, alongside those holdings, Druding sits somewhat uneasily. It is entirely possible that Druding is actually consistent with AseraCare, which holds that “expert testimony that no reasonable physician . . . could have” reached the conclusions at issue creates a triable issue of fact on falsity.[15] In any event, defendants forced to grapple with Druding should invoke the standards for falsity of opinions enunciated by the Supreme Court in Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund,[16] along the lines we indicated in our earlier analysis.[17]