With certain investigations into violations of the False Claims Act (FCA), a critical issue is whether someone knew that wrongdoing was taking place. Under the FCA, “knowing” about violations creates liability for false claims. “Reckless disregard” can be at the heart of liability for a false claim. The courts have examined the issues and have shed some light on “knowing” and “reckless disregard.”
Knowing and Knowingly
What does “knowing” or “knowingly” mean in a false claims context? Put as simply as possible, it means that a person either:
- Has real knowledge of false claims (“actual knowledge”)
- Acts as if they don’t know about the false claims (“deliberate ignorance”), OR
- Acts as if they don’t know whether the false claims are true or not (“reckless disregard” of the truth).
“Knowing” in and of itself requires no specific intent to commit fraud. Basically, if the person knew, or should have known, about the information concerning fraud, they acted “knowingly” and are usually liable.
Because many FCA rules can be fairly technical, especially when they concern Medicare or Medicaid, the line between negligence (basically, an unwitting mistake) and reckless disregard (suspecting fraud but doing nothing) can get blurry.
“Reckless disregard” is often defined as being grossly negligent with no concern for others who might be injured. You might characterize reckless disregard as “turning a blind eye” to the situation or information. Think of someone who says, “Hey, it’s not my problem.”
Here’s an example of reckless disregard: a manager submits invoices for work done, but does not verify whether the work was actually done even though he has doubts. Because he ignores his responsibility to verify, especially if the verification could be easily done, he is liable for reckless disregard should fraud be in evidence.
What Do the Courts Think?
The courts have often considered “reckless disregard” to translate into actions somewhere between gross negligence (a conscious disregard of reasonable care) and intentional harm. But the line can move around. Some examples of cases are:
- Fall, 2012, United States ex rel. Williams v. Renal Care Group, Inc. The Sixth Circuit Court of Appeals found that the defendant had not acted with reckless disregard because of a number of factors, among them: the defendants sought legal counsel to help clarify the relevant rules; the legal counsel themselves sought clarification from CMS (the parent of Medicare and Medicaid) about the rules; and the defendants were aware of certain relevant factors and did their best to comply. Because the defendant “consistently sought clarification,” they were found not to have acted with reckless disregard.
- Summer, 2012, United States ex rel. Streck v. Allergan, Inc. A motion by the defendants to dismiss was partially granted by the U.S. District Court for the Eastern District of Pennsylvania concerning reckless disregard. The court held that, because the guidance from Medicaid provided “nothing that warned [the defendants] away from the view they took,” it could not be surmised that the defendants acted with reckless disregard.
- Fall, 2008. United States ex rel. Burlbaw v. Orenduff. The Tenth Circuit Court of Appeals affirmed a grant of summary judgment (a judgment is entered without a full trial) because they found that reckless disregard by the defendant, New Mexico State University, was not in evidence in a case involving a number of minority “set-aside” statutes. The university was found to have acted only in a negligent manner.
Issues involving false claims and the FCA can be exceedingly complex, especially when it comes to government health care programs like Medicare and Medicaid. The line between simple negligence and actions that involve intent can be fuzzy. If you believe you are dealing with a case that might go beyond simple ignorance of complex laws, your best course of action would be to seek skilled legal counsel to obtain clarification.
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