Eight Circuit Affirms Summary Judgment Grant Based on Reasonable Interpretation of Ambiguous Regulation

By on August 12, 2016

The US Court of Appeals for the Eighth Circuit today issued a decision affirming a district court’s grant of summary judgment against a False Claims Act (FCA) relator in United States ex rel. Donegan v. Anesthesia Associates of Kansas City, PC, on which we previously posted.  The case involved a dispute over whether a regulation required an anesthesiologist to be present in the operating room when the patient “emerges” from anesthesia, and the district court had granted summary judgment on the grounds that the defendant had reasonably interpreted the regulation as not requiring presence in the operating room.  The district court’s decision was important because it made clear that the defendant’s interpretation of an ambiguous regulation need not be the “most reasonable” interpretation.

The Eighth Circuit agreed with the district court, holding that the relator could not establish scienter because the regulation was ambiguous, and the defendant’s interpretation was objectively reasonable.  The court held:

Here, the question is whether AAKC’s reasonable interpretation of the ambiguous regulation precludes a finding that it knowingly submitted false or fraudulent claims, even if CMS or a reviewing court would interpret the regulation differently. Relator simply failed to submit evidence refuting AAKC’s strong showing that its interpretation was objectively reasonable. Relator’s experts expressed their opinions that emergence as referred to in Step Three should end before an AAKC patient is transferred to the PACU. But Relator’s contention that the Medicare regulations be interpreted in this fashion is a claim of regulatory noncompliance, not an FCA claim of knowing fraud.  (internal citations and quotations omitted)

This result underscores the fact that an FCA case based on alleged noncompliance with a regulation that is subject to multiple, reasonable interpretations can be a risky endeavor for a relator.

Laura McLaneLaura McLane
Laura McLane serves as head of McDermott's Boston Litigation Practice Group. Laura represents national and international clients in health care, securities and other government enforcement matters, both civil and criminal. She also represents clients in professional and products liability cases and in complex commercial disputes. A significant part of Laura's practice is devoted to representing health care and other companies, as well as individuals, in government investigations and qui tam litigation based on the False Claims Act (FCA) and related statutes, including the Anti-Kickback Statute and the Stark Law. Read Laura McLane's full bio.

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