By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
Husband and wife, Ronald and Ramona Young, were terminated from their nursing jobs with CHS Middle East LLC (CHS), following reports made by the couple regarding alleged violations of the company’s contract with the United States government. The couple alleged that CHS was using expired medications, employing improperly trained and inadequate staff, and lacking protocols and guidelines. The pair filed a retaliation suit against the health care contractor (operating a U.S. Department of State outpost in Iraq) claiming that they engaged in protected activity under the False Claims Act (FCA) for blowing the whistle about such violations.
CHS contended in its motion for summary judgment that the Youngs’ conduct was not protected whistleblower activity because the couple did not assert allegations of false claims submissions by the company. Furthermore, CHS maintained that the contractor fired the Youngs due to “loud, accusatory and even threatening” behavior aimed at CHS management and fellow co-workers. The company concludes the Youngs were terminated “for very good cause.”
To read the motion in opposition filed with the court by the Youngs, click here.
This is the couple’s second go at the suit. The first attempt resulted in the case’s dismissal in 2013. However, the U.S. Fourth Circuit Court of Appeals reinstated it in 2015, with a finding that quality-of-care concerns fall under the protections offered by a recent ruling expanding FCA liability.
To read the Fourth Circuit’s full opinion, click here.
The Case That Changed the Rules.
The claims asserted by the Youngs seem to mirror allegations of FCA violations raised in United States ex rel. Badr v. Triple Canopy, Inc., Nos. 13-2190, 13-2191 (4th Cir. Jan. 8, 2015). In that case, the Fourth Circuit implemented the doctrine of implied certification under the FCA to determine liability.
Fourth Circuit Judge Dennis W. Shedd stated, “While we have guarded against turning what is essentially a breach of contract into an FCA violation, we have also continued to recognize that the FCA is ‘intended to protect the treasury against the claims of unscrupulous contractors, and it must be construed in that light.'” Id. (quoting United States ex rel. Owens v. First Kuwaiti General Trading & Contracting Co., 612 F.3d 724, 734 (4th Cir.2010). Furthermore, “to satisfy this goal, courts have recognized that ‘a claim for payment is false when it rests on a false representation of compliance with an applicable contractual term.” Id. (quoting United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C.Cir.2010) (SAIC ).
In other words, the doctrine treats a claim submitted by a contractor as an implicit representation that the contractor has accordingly complied with any relevant contract terms, laws or regulations. If the contractor knows it is in noncompliance with contractual terms, a submission for a claim renders a false representation in determining FCA liability.
To read the full opinion of the Fourth Circuit in United States ex rel. Badr v. Triple Canopy, Inc., Nos. 13-2190, 13-2191 (4th Cir. Jan. 8, 2015), click here.
In determining that implicit false statements may constitute fraud under the FCA, even in the absence of the explicit condition of payment, the Fourth Circuit further concluded that an employee raising concerns of implicit false statements may likewise constitute protected whistleblower activity.
Not All U.S. Courts of Appeals Are Embracing the Doctrine.
The U.S. Seventh Circuit Court of Appeals more recently rejected the notion of the implied certification doctrine in United States v. Sanford-Brown, Limited, No. 14-2506 (7th Cir. June 8, 2015). In that case, Brent M. Nelson, former Director of Education of Sanford-Brown College (SBC), contended that the defendants agreed to comply with all Title IV regulations by entering into a Program Participation Agreement (PPA) with the U.S. Secretary of Education. Nelson argued that due to this agreement of compliance, SBC fraudulently used Title IV benefits when they made, or caused students to make or use, applications for federal subsidies with the knowledge that they were not in compliance with Title IV restrictions.
On the flip side, SBC argued that in order to satisfy the “knowingly” component under the FCA, Nelson must offer proof of SBC’s intention to defraud the government out of subsidies upon the execution of the PPA. The Seventh Circuit relied on its prior decision in United States ex rel. Main v. Oakland City Univ., 426 F.3d 914 (7th Cir. 2005), where it concluded that “a PPA entered into by an institution qualified as a false record under the FCA where the promises of future compliance it contained were false when the parties entered into the agreement.” Id. at 916.
However, in Nelson’s case the Seventh Circuit did not embrace the implied certification theory, finding that Nelson failed to present any evidence to prove that SBC entered into the PPA in bad faith. The Seventh Circuit is less liberal in its interpretation of the doctrine stating, “fraud requires more than a breach of promise: fraud entails making a false representation, such as a statement that the speaker will do something it plans not to do.”
To read the full opinion of the Seventh Circuit in United States v. Sanford-Brown, Limited, No. 14-2506 (7th Cir. June 8, 2015), click here.
Comments?
What are your thoughts on the implied certification doctrine? Do you think FCA liability and whistleblower protections should extend to implicit false statements?
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Sources:
United States ex rel. Badr v. Triple Canopy, Inc., Nos. 13-2190, 13-2191 (4th Cir. Jan. 8, 2015).
United States v. Sanford-Brown, Limited, No. 14-2506 (7th Cir. June 8, 2015).
Young et al. v. CHS Middle East LLC, No. 13-2342 (4th Cir. May 27, 2015).
Fischler, Jacob. “Nurses Say Whistleblowing Activity at Iraq Base Protected.” Law360. Portfolio Media Inc.: 8 Jan. 2016. Web. 11 Jan. 2016.
Overley, Jeff. “Nurses’ Whistleblowing Protected Under FCA, 4th Circ. Says.” Law360. Portfolio Media Inc.: 27 May 2015. Web. 11 Jan. 2016.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.
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