This summer, the Northern District of California issued an opinion in an intervened case that expanded the theory of express false certification to a startling degree. Ruling on a motion to dismiss, the court in U.S. ex rel. Dresser v. Qualum Corp. (No. 5:2012-cv-01745, N.D. Cal.) held that the defendants, owners and operators of a sleep clinic and a DME company, could be subject to express false certification liability for submitting CMS-1500 claim forms in which they certified their compliance “with all applicable Medicare and/or Medicaid laws, regulations, and program instructions for payment.” According to the court, this general legal certification was sufficient to support an express false certification claim because “by submitting the CMS-1500, Defendants falsely certified that they had complied with Medicare regulations, even though they were not complying with the personnel qualification requirement, and they made this certification knowingly.”
What stands out in the court’s opinion is that the CMS-1500 did not require the defendants to certify their compliance with the specific rule they were alleged to have violated. Express false certification typically involves “a claim that falsely certifies compliance with a particular statute, regulation or contractual term, where compliance is a prerequisite to payment.” Mikes v. Straus, 274 F.3d 687, 698 (2d Cir. 2001) (emphasis added). Dresser, by contrast, reasoned that a general certification of compliance with all applicable laws could support an express false certification claim as to a violation of any one of those laws.
The danger with this reasoning is that it imposes no limit on express false certification liability. If Dresser is correct, then any defendant that submits a CMS-1500 or makes an equivalent certification during the claim submission process has expressly certified compliance with every applicable law, regulation, and program instruction. In other words, defendants could be subject to express false certification liability for nearly every violation they could be accused of committing. Such a result would make implied false certification superfluous. Relators and the government would have no need to argue for implied false certification if express false certification already covered the field.
For defendants, this creates a problem because courts might apply a lower standard of materiality in express false certification cases. Dresser, for example, dismissed the government’s implied false certification claim where the government alleged that it would have denied the defendants’ claims “but [did] not explain why.” At the same time, Dresser accepted the government’s conclusory allegation that it would not have paid expressly false claims. We previously discussed Dresser’s materiality analysis here and here.
It bears noting that only the current version of CMS-1500 (version 02/12) contains the general legal certification at issue in Dresser. The prior version of CMS-1500 (version 08/05) did not. In fact, courts had rejected express false certification claims that involved version 08/05 for this reason. See U.S. ex rel. Hobbs v. MedQuest Assocs., Inc., 711 F.3d 707, 715 (6th Cir. 2013). Because version 02/12 has been in use only since 2014, it is likely that this express-certification issue will occur with greater frequency in the future.
Dresser did not address the implications of its express false certification analysis. Going forward, the question will be whether the apparent misapplication of the law will be limited to this single case or whether the government and relators will push other courts to recognize a theory of express certification liability that essentially swallows implied certification liability.