The U.S. Supreme Court should reject the use of a legal theory that has been used to establish liability in some False Claims Act cases, the American Health Care Association and the National Center for Assisted Living argue in a brief filed with the court Jan. 25.

The implied certification theory assumes that healthcare providers have adhered to federal regulations when they submit claims for reimbursement, even if they did not expressly state that they were adherent. The AHCA/NCAL brief, filed in support of the defendant in Universal Health Services v. United States ex rel Escobar, maintains that the theory is based on a foundation of legislative history that the court previously has rejected.

Under the theory, a provider can be found in violation of the False Claims Act if it did not adhere to a certain rule or regulation, even if that regulation has not been specified as a condition of reimbursement. If the court ultimately recognizes the theory, AHCA/NCAL says, then it should strictly limits its use, because the direct and indirect consequences of False Claims Act litigation can be “profound,” with civil penalties of up to $11,000 per false claim, as well as attorney fees and other costs.

“In the healthcare context … an adverse [False Claims Act] judgment can result in the functional equivalent of the death penalty for a business,” the brief states. “Most healthcare providers depend on their participation in one or more federal healthcare programs such as Medicare and Medicaid.”

The organizations propose that, if recognized, the legal standard should “necessitate that the requirement allegedly violated be (1) a condition of federal payment [rather than a condition of participation] (2) expressly identified as such and (3) contained in a statute, codified regulation, or contract.”

Universal Health Services is asking for the reversal of an appeals court decision agreeing with the theory. Several other prominent healthcare-related organizations have filed briefs supporting Universal Health Services, too, including the American Medical Association, the American Hospital Association, the Generic Pharmaceutical Association, CareSource and the Pharmaceutical Research and Manufacturers of America.

Oral arguments have not been scheduled yet for the case, the outcome of which likely will affect the number of False Claims Act suits brought against healthcare providers and other entities.