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Court overturns $11 million False Claims Act award in Medicare case

6th circuit clarifies FCA's scope with regard to Medicare regulatory noncompliance

A recent 6th Circuit decision could help suppress certain False Claims Act (FCA) cases in the health care industry.

In 2006, ex-MedQuest Associates Inc. employee Karen Hobbs filed a whistleblower suit under the FCA, which imposes liability on entities that defraud the government. Hobbs claimed MedQuest, a diagnostic company, used unapproved physicians to monitor patient tests, and therefore the claims the company submitted to Medicare were fraudulent. The Department of Justice (DOJ) later intervened in the case. 

The 6th Circuit reasoned that MedQuest’s violations dealt with a condition of participation in the Medicare program rather than a condition of payment, the latter of which would have triggered FCA liability. 

“The regulations at issue did not state that Medicare wouldn’t pay the claims if MedQuest wasn’t adhering to the regulations,” says Ellyn Sternfield, of counsel at Mintz Levin. “The company’s regulatory violations were violations of conditions of participation in Medicare. But there was nothing indicating that they were conditions of payment rendering the claims for those services false or fraudulent.” 

Ashley Post

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