Comment by Yael Pasumansky
“Medicine is not only a science; it is also an art.” Despite the brilliance of modern medicine, diagnosing and treating patients is not always exact and often requires clinical judgment. When litigation hinges on clinical judgment and medical experts disagree about diagnoses, courts are left to make the final judgment call. Under the Medicare scheme, the United States government reimburses healthcare providers for administering services to qualified patients. The Department of Health and Human Services Center for Medicare and Medicaid Services (CMS) provides that all healthcare expenses must meet certain requirements to be eligible for reimbursement. However, reimbursement requirements often rest on a physician's clinical judgment about diagnoses or procedures. The subjectivity of clinical judgments makes the healthcare industry particularly susceptible to fraud.
The federal civil anti-fraud statute, the False Claims Act (FCA), is the main driving force in uncovering and deterring healthcare fraud. Healthcare fraud makes up a majority of all FCA litigation, accounting for sixty-eight percent of all FCA recoveries and equating to $1.8 billion during the 2023 fiscal year. The FCA imposes civil liability and damages on those who knowingly make or use a false record or statement to receive government money. Prevailing on an FCA claim requires the plaintiff to prove that the defendant “(1) made a false statement, (2) with scienter, (3) that was material, (4) causing the Government to make a payment.” Given that Congress did not define what makes a claim “false” under the first element of the FCA, courts are left to develop frameworks that capture adequate proof of falsity. The subjectivity inherent in clinical judgment makes it difficult to determine whether healthcare providers submitted false records or merely made a mistaken judgment call. In scenarios where Medicare reimbursement hinges on clinical judgment, proving falsity often hinges on a battle between expert opinions.
The United States circuit courts of appeals are split on which framework sufficiently captures falsity. Under one standard--objective falsehood--the United States Court of Appeals for the Eleventh Circuit held that evidence of dueling experts, each suggesting reasonable yet different clinical judgments, was insufficient evidence to prove falsity. In contrast, the United States Court of Appeals for the Third Circuit embraced a subjective falsity standard, holding that dueling experts challenging physician judgment may be adequate evidence of falsity for FCA purposes. Finally, the United States Court of Appeals for the Ninth Circuit posited a hybrid falsity standard. The Ninth Circuit determined that courts should not focus on objective and subjective falsehood standards but rather on whether the medical opinion was honestly held or implies facts that do not exist. Despite the three-way circuit court split, the United States Supreme Court has so far refused to grant certiorari on cases involving clinical judgment and the falsity element of the FCA. This circuit split remains relevant, however, as federal courts continue to oversee FCA cases that hinge on clinical judgment. The split among authorities about how to analyze falsity for medical judgment claims creates uncertainty for litigants and varying outcomes in different jurisdictions. While the FCA serves as an important tool for deterring Medicare fraud, an improper falsity standard may either make law-abiding practices vulnerable to frivolous claims or make it nearly impossible for plaintiffs to prove fraud.
This Comment analyzes FCA claims that turn on proving clinical judgment and how courts assess the falsity element of the FCA. It suggests that an adequate falsity analysis should consider the diagnosing physician's mindset and the language of the countervailing reimbursement statute. Few scholars have conducted doctrinal analyses of the falsity element, and this Comment is the first to propose (1) that the three-way circuit split creates three distinct frameworks for evaluating falsity and (2) that CMS should issue regulation indicating which framework courts should apply based on differing Medicare statutes. Part II explains the structure of Medicare fraud FCA claims. It discusses the history of the FCA, explains the Medicare scheme, addresses two prominent Medicare reimbursement statutes with clinical judgment provisions, and establishes a common law framework for falsity analyses. Part III analyzes the three-way circuit split in evidencing falsity in Medicare fraud claims involving clinical judgment. Part IV explains that subjective falsity deviates from common law and that courts should assign objective or hybrid falsity depending on which Medicare standard governs. Part V concludes.
About the Author
Yael Pasumansky. J.D. Candidate 2025, Tulane University Law School; B.A. 2022 Tulane University.
Citation
99 Tul. L. Rev. 683