Today’s denial of cert. in Blackstone
Many were watching this morning’s conference to see if the petition for certiorari would be granted in Blackstone Medical, Inc. v. U.S. ex rel. Hutcheson, but it was not. The issue in Blackstone was whether a medical device company that paid illegal kickbacks to prescribing physicians could be liable under the False Claims Act (FCA) for causing false claims to be submitted to Medicare. The FCA is the rare statute that is what it sounds like – basically, if you submit claims for federal monies, the claims cannot be false or fraudulent. If they are, the federal government can recover large fines for each false claim as well as treble damages. The statute includes a qui tam relator provision that encourages whistleblowers to come forward with information about false claims; if they are successful, they share in the government’s bounty. The civil FCA has become the DOJ weapon of choice for fighting healthcare fraud, and circuit splits abound regarding the interpretive details of this statute. In part, this is because whistleblowers tend to push the envelope of false claims theory. To wit, in this case, the claim is not “factually false” (which would indicate that the services were not actually provided), it is “legally false,” which means the services are provided as claimed, but another law for which the filer has certified compliance is being violated.
A grant in Blackstone would have been notable, as the Roberts Court has decided five False Claims Act cases in five terms (October Term 2006-2010), as compared to four such decisions in the eleven years of the natural Rehnquist Court, making this potentially the sixth in seven terms. It is hard to say if the Court is hearing so many FCA cases organically, or if something more is afoot. But, the FCA decisions illustrate at least four big picture issues.
First, separation of powers. The Court is having a conversation with Congress that seems to further a clear statement rule project. The Court has consistently read the FCA narrowly, forcing Congress to include the language it wants to see in the statute. Twice Congress has responded, and quickly, by re-expanding the scope of the FCA, and in a third case, PPACA had already addressed the issue. (Seems fraud is one of the few things Congress can agree on these days…) The problem is that such rules are lost on whistleblowers, who dominate FCA prosecutions. Second, the cases seem to support the theory that the Roberts Court is business-friendly, as a glance at the amicus briefs reveals. The problem is that “business friendly” does not necessarily inform meaningfully or even predict outcomes. For instance, the Chamber of Commerce often sides with healthcare providers, and it advocated for narrowing the scope of the FCA in the cases before the Court, which keeps whistleblowers out of court. But in Douglas v. ILC (to which I’ll return in my next post) the Chamber advocated for hospitals, which would keep the courthouse doors open. Third, the five cases reveal a docket clearing exercise that is consistent with the theory that the courthouse doors are being closed by the Roberts Court, irrespective of the business-friendly question. Fourth, the Court’s interpretation of the FCA, and Congress’s response to the Court, will likely facilitate an increase rather than a decrease in the number of whistleblower actions brought under the FCA. PPACA will increase the number of claims flowing through federal healthcare programs, and federal money flowing into the state insurance exchanges will be subject to the FCA too.
So, even if the Court does not grant the petition in the other FCA case on the docket (Amgen, Inc. v. New York), it’s a safe bet the Roberts Court will be telling us more about the FCA soon.