Annals of Health Law
READY OR NOT
necessity” condition of payment137 when in fact the services provided
allegedly did not meet the medical necessity condition upon which
certification was based. 138 This theory of liability essentially attempts to
equate medical necessity with medical quality. 139 Pursuant to the implied
certification theory, however, a provider is allegedly falsely representing
that the facility is in substantial compliance with all federal and state laws
that impact its condition to participate in government payment programs. 140
Both false certification theories were initially successful, 141 but the more
recent trend has witnessed a decline in these theories’ favorable
outcomes. 142 The courts have generally rejected the notion that compliance
with quality standards should be seen as a precondition to receiving
payment. 143 Specifically, most courts are not willing to equate medical
necessity with a quality guarantee under express certification. 144 Moreover,
courts largely reject implied false certification theories in what is the typical
absence of any underlying statute or regulation that expressly requires
payment to be based on compliance therewith. 145
In contrast, in the Value Based Purchasing context, quality data
submission to earn a bonus or avoid a financial penalty would not implicate
137. Every claim submitted to CMS for reimbursement of a Medicare service includes a
certification that the services for which reimbursement is sought were “medically indicated
and necessary for the health of the patient.” See CMS Form 1500, available at
also 42 U.S. C. § 1395y(a)( 1)( A) (imposing the requirement that all services paid for by
Medicare be “reasonable and necessary for the diagnosis or treatment of the illness or
138. See Schindler, supra note 133, at 401.
139. See id.
140. See id.
141. See Schindler, supra note 133, at 402-03 (discussing case law upholding the false
142. See John T. Brennan & Michael W. Paddock, Limitations on the Use of the False
Claims Act to Enforce Quality of Care Standards, J. HEALTH AND LIFE SCI. L. 37, 38-71
(2008) (discussing the shortcomings of false certification theories).
143. See id.
144. See Schindler, supra note 133, at 402-05. The landmark case of Mikes v. Straus
viewed a defendant’s certification of medical necessity as a legal representation that the
procedure was in fact medically necessary, but the Court was unwilling to go further and
evaluate the standard of care delivered with the procedure. Mikes v. Straus, 274 F. 3d 687
(2d Cir. 2001) (discussing the certification of medical necessity).
145. See Schindler, supra note 133, at 403-04. Critics of a far-reaching false
certification theory argue that boundaries placed on the reach of the FCA by the courts are
desirable from a policy perspective because to link the FCA to conditions of participation
would empower the FCA with a federal malpractice arm, competing with or largely
replacing the compliance oversight generally relegated through state or private credentialing
entities, or otherwise compromising the regulatory discretion afforded CMS under the Social
Security Act to respond to issues arising out of certification diligence. See id. at 389-93, 403-