Key Points

• Courts have routinely observed that Medicare and Medicaid texts are among the most completely impenetrable texts within human experience.
• In recent developing case law, more than a half dozen appellate courts, based upon Supreme Court precedent, have now ruled that when a defendant has a reasonable interpretation of an ambiguous statute, regulation or contract and there is no official governmental guidance to warn defendant away from its reasonable interpretation, there can be no FCA liability.
• Courts have also observed that this reasonable interpretation doctrine serves multiple purposes, including that those charged with violating the law should have notice of the law, government agencies should not be allowed to draft amorphous rules and regulations to enhance flexibility but then use the ambiguity they created to bring fraud actions, and essentially penal statutes, like the FCA, should not be applied "through ambush."
• In light of this trending case law, companies can reduce their exposure to liability by staying actively abreast of the government's rules and regulations regarding payment and, when those rules are ambiguous, adopting a reasonable interpretation of what those rules require and documenting their deliberative process.

The federal government spends more than $1.2 trillion each year financing health expenditures, such as payments made under the Medicare and Medicaid programs.

Multiple volumes in the United States Code and Code of Federal...

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