United States Ex Rel. Hobbs v. MedQuest Associates, Inc.
711 F.3d 707
6th Cir.2013Background
- MedQuest operates 90+ testing facilities in 13 states; three Nashville centers are central to the dispute.
- The suit was a qui tam action alleging FCA liability for two regulatory violations at the Nashville centers: improper supervising physicians and improper enrollment/transfer of ownership.
- The district court granted summary judgment finding FCA liability for both issues based on express/implied false-certification theories.
- On appeal, the Sixth Circuit held that the supervising-physician and enrollment/ownership issues do not establish FCA liability because the challenged regulations are not conditions of payment.
- The court reversed the district court’s judgment in full, concluding no FCA liability on either set of claims.
- MedQuest’s conduct violated participation rules but not payment conditions; thus the FCA does not apply to these regulatory failures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether non-approved supervising physicians support FCA liability | Hobbs argues false certification via failure to supervise | MedQuest contends supervision rules are conditions of participation, not payment | Not FCA liability; regulations are conditions of participation, not payment |
| Whether failure to update enrollment/ownership information triggers FCA liability | Hobbs argues failure to update CMS enrollment constitutes false certification | MedQuest contends enrollment updates are participation rules, not payment conditions | Not FCA liability; enrollment doesn't create payment-condition breach |
Key Cases Cited
- United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295 (3d Cir. 2011) (false certification depends on conditions of payment)
- Chesbrough v. VPA, P.C., 655 F.3d 461 (6th Cir. 2011) (false-certification depends on conditions of payment)
- Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211 (10th Cir. 2008) (implied false certification requires payment condition status)
- Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (FCA liability limits; regulation compliance not purely payment condition)
- United States ex rel. A+ Homecare, Inc. v. Medshares Mgmt. Grp., Inc., 400 F.3d 428 (6th Cir. 2005) (active role of outside actors; not all regulatory violations are FCA violations)
- Williams v. Cardinal Health, 696 F.3d 532 (6th Cir. 2012) (FDA/Medicare application standards not FCA dispositive where not payment condition)