United States, ex rel. Escobar v. Universal Health Services, Inc.

Relators’ daughter died of a seizure after receiving mental health treatment at Arbour Counseling Services, a facility in Massachusetts owned and operated by Universal Health Services (UHS). When Relators learned that Arbour had employed unlicensed and unsupervised personnel, in violation of state regulations, they brought a qui tam action against UHS under the False Claims Act (FCA), alleging that UHS had fraudulently submitted reimbursement claims to the Commonwealth despite knowing that it was in violation of state regulations (a theory of FCA liability known as the “implied false certification theory”). The district court dismissed the complaint, concluding that the regulatory violations were not conditions of payment as required for a claim to be actionable under the FCA. The First Circuit reversed, holding that the regulatory violations at issue were conditions for payment and that Relators appropriately stated a claim with particularity under the FCA. On certiorari, the Supreme Court held that the implied false certification theory can be a basis for FCA liability but remanded the case for further consideration of whether the complaint sufficiently alleged that the regulatory violations were material to the government’s payment decision. The First Circuit again reversed the district court’s grant of UHS’s motion to dismiss after applying the Supreme Court’s guidance on the question of whether UHS’s misrepresentations were material, holding that Relators’ complaint sufficiently stated a claim under the FCA. View "United States, ex rel. Escobar v. Universal Health Services, Inc." on Justia Law