Is Billing Medicare for Tests a False Claim If Your Lab Has Committed a CLIA Violation?
SITUATION XYZ Labs knows that it is currently committing quality control and other Clinical Laboratory Improvement Amendment (CLIA) violations. But it continues to bill Medicare for tests. A medical technician claims the CLIA violations are compromising testing accuracy and files a qui tam suit against XYZ under the False Claims Act (FCA): QUESTION Was billing Medicare for tests when it knew it was violating CLIA an FCA violation? Yes, because CLIA compliance is mandatory for billing lab tests Yes, because it made XYZ’s certification of compliance false No, because CLIA non-compliance is not grounds for FCA liability No, because CLIA compliance is irrelevant to FCA liability ANSWER C. XYZ did not violate the FCA because CLIA violations do not make a lab liable for false claims. EXPLANATION The FCA bans providers from knowingly submitting false or fraudulent claims to Medicare. For labs, this typically means billing for tests that were not medically necessary or not provided at all. But recent years have seen the rise of a new false claim: billing for tests when you know you are not in compliance with other laws, most notably CLIA. The theory is that in billing Medicare, providers certify (usually by implication) that […]
SITUATION
XYZ Labs knows that it is currently committing quality control and other Clinical Laboratory Improvement Amendment (CLIA) violations. But it continues to bill Medicare for tests. A medical technician claims the CLIA violations are compromising testing accuracy and files a qui tam suit against XYZ under the False Claims Act (FCA):
QUESTION
Was billing Medicare for tests when it knew it was violating CLIA an FCA violation?
- Yes, because CLIA compliance is mandatory for billing lab tests
- Yes, because it made XYZ's certification of compliance false
- No, because CLIA non-compliance is not grounds for FCA liability
- No, because CLIA compliance is irrelevant to FCA liability
ANSWER
C. XYZ did not violate the FCA because CLIA violations do not make a lab liable for false claims.
EXPLANATION
The FCA bans providers from knowingly submitting false or fraudulent claims to Medicare. For labs, this typically means billing for tests that were not medically necessary or not provided at all. But recent years have seen the rise of a new false claim: billing for tests when you know you are not in compliance with other laws, most notably CLIA. The theory is that in billing Medicare, providers certify (usually by implication) that they comply with all "material" laws. So, knowing failure to disclose material violations renders not just the certification but the underlying claim false.
This scenario illustrates how courts have applied the theory. Basic rule: Breach of implied certification may be grounds for FCA liability if the violation is "material" to the government's decision to pay the claim. The few courts to address the issue have ruled that CLIA violations are not material to paying lab claims. So C is the right answer.
WHY WRONG ANSWERS ARE WRONG
A is wrong because in deciding what is and is not "material," courts distinguish between the kind of law or rule violated: conditions of participation, i.e., health and safety standards for participating in government medical programs, such as CLIA, are not material; conditions of payment, i.e., requirements governing if payment is made for particular services are material.
B is wrong because only "material" violations render certification of compliance false. And since they violate a condition of participation rather than a condition of payment, CLIA violations are not material.
D is wrong because the issue is materiality, not relevance.
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