There is a split in the circuits on the important question of whether a medical opinion can be false within the meaning of the False Claims Act (FCA). I wrote about this last month, https://www.videntpartners.com/blog/2020/dueling-expert-opinions-create-triable-issue-false-claims-act-case-defeating-summary, in connection with a recent Third Circuit case. The Ninth Circuit has just joined the Third and Tenth Circuits in holding that a medical opinion can indeed be false. Winter v. Gardens Regional Hospital, https://cdn.ca9.uscourts.gov/datastore/opinions/2020/03/23/18-55020.pdf (3/23/2020).
The plaintiff-relator in Winter was the former director of care management at Gardens Regional Hospital. Her job included reviewing patients’ medical records and applying established criteria to evaluate the medical necessity of hospital admissions. An owner-operator of area nursing homes had acquired a controlling interest in the management company that oversaw operations at Gardens Regional. The plaintiff discovered that, immediately after that acquisition, there was a dramatic increase in the admission of patients from those nursing homes to Gardens Regional – especially Medicare patients. As the Ninth Circuit explained,
Winter alleges that [the nursing home owner and the management company] – including the individual owners of both entities – “exerted direct pressure on physicians to admit patients to [Gardens Regional] and caused false claims to be submitted based on false certifications of medical necessity.” Winter’s complaint details sixty-five separate patient admissions…that Winter alleges did not meet Gardens Regional’s admissions criteria and were unsupported by the patients’ medical records. She alleges that none of the admissions were medically necessary….Winter estimates that in less than two months…Gardens Regional submitted $1,287,701 in false claims to the Medicare program.
(Parenthetically, hats off to the plaintiff’s attorney for scrupulous observance of Fed.R.Civ.P. 9(b)’s requirement that the factual basis for a claim of fraud be pleaded “with particularity.”)
The district court granted the defendants’ motion to dismiss for failure to state a claim. The court held that “to prevail on an FCA claim, a plaintiff must show that a defendant knowingly made an objectively false representation”; consequently, a statement that implicates a doctor’s clinical judgment can never state a claim under the FCA, because “subjective medical opinions…cannot be proven to be objectively false.” Not so, said the Ninth Circuit on appeal:
A doctor’s clinical opinion must be judged under the same standard as any other representation. A doctor, like anyone else, can express an opinion that he knows to be false, or that he makes in reckless disregard of its truth or falsity….Opinions are not, and have never been, completely insulated from scrutiny. Under the common law, a subjective opinion is fraudulent if it implies the existence of facts that do not exist, or if it is not honestly held. [Citations and internal quotation marks omitted.]
The Seventh and Eleventh Circuits have adopted the “objective falsity” standard for False Claims Act cases involving medical opinions. The Third and Tenth Circuits, and now the Ninth, have rejected it, as has the Sixth Circuit in a different context (a criminal prosecution for Medicare fraud). FCA cases are an important category of federal litigation in which hundreds of millions of taxpayer dollars are at stake. FCA cases involving claims of Medicare fraud – and hence requiring medical expert opinion testimony – are a major subset of FCA cases. Hopefully, therefore, the Supreme Court will resolve this conflict in the not-too-distant future.