Addressing an issue of first impression, the First Circuit has clarified the burden to satisfy the knowledge element required in False Claims Act (FCA) cases in the context of laboratory testing and Medicare fraud. The Medicare Act permits reimbursement of diagnostic laboratory tests only if they are “reasonable and necessary” for diagnosis or treatment of illness or injury (see 42 U.S.C. § 1395y(a)(1)(A)).

In United States ex rel. Omni Healthcare Inc. v. MD Spine Sols. LLC, Omni Healthcare, Inc., a medical group, brought a qui tam action against a laboratory, MD Spine Solutions, LLC, on behalf of the government, alleging that MD Spine violated the FCA by billing for medically “unnecessary” tests when cheaper tests were available, despite the tests at issue being ordered by treating Omni-Relator physicians (160 F.4th 248 (1st Cir. 2025)).

The dispute centered on the knowledge element of the FCA. To establish liability, Omni had to show that MD Spine knowingly submitted a false claim to the government. “Knowingly” is broadly defined under the FCA and includes actual knowledge, deliberate ignorance or willful blindness, and reckless disregard. MD Spine argued that Omni failed to make that showing because the tests at issue were specifically ordered by Omni physicians and MD Spine was entitled to defer to the recommendations of treating physicians in concluding that the tests were “reasonable and necessary.” The district court granted summary judgment in favor of MD Spine,...

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