Opinion ID: 787607
Heading Depth: 2
Heading Rank: 3

Heading: The Recycling of Repackaged Medications

Text: 40 The MC-6 form requires Pompton to certify that the services covered by this claim and the amount charged thereof are in accordance with ... [Medicaid] regulations.... Quinn argues that Pompton violated §§ 3729(a)(1) and (2) of the New Jersey Administrative Code when it submitted claims to Medicaid because the certification on the claim constituted an implied false certification that the returned medication was recycled in accordance with regulations. 41 The certification theory of FCA liability is based on a false representation of compliance with a contract term, statute, or regulation — when payment is conditioned on compliance with that requirement. See, e.g., United States ex rel. Siewick v. Jamieson Sci & Eng'g, Inc., 214 F.3d 1372, 1376 (D.C.Cir.2000). 11 We have not yet adopted this theory of FCA liability. However, other Courts of Appeals have. The Second Circuit noted in Mikes that it was joining the Fourth, Fifth, Ninth, and District of Columbia Circuits in ruling that a claim under the Act is legally false only where a party certifies compliance with a statute or regulation as a condition to governmental payment. 274 F.3d at 697 (citations omitted). 42 In Mikes, the court limited the applicability of the implied false certification theory to cases where the underlying statute or regulation upon which the plaintiff relies expressly states the provider must comply in order to be paid. 274 F.3d at 699. The court limited FCA liability, premised on a legally false certification, to those situations where a party certifies compliance with an underlying statute or regulation as a condition of payment because the FCA aims to impose liability only where a certification of compliance influences the government's decision to pay. Id. at 697 (noting that the FCA does not encompass those instances of regulatory noncompliance that are irrelevant to the government's disbursement decisions). 12 Under this approach, when an underlying regulation expressly prohibits payment upon non-compliance with its terms, the submission of a claim implicitly certifies compliance with that regulation. 43 District courts in the Third Circuit, including the court in this case, have cited Mikes in support of the concept of false certification liability. See In re Genesis Health Ventures, Inc., 272 B.R. 558, 569-70 (Bankr.D.Del.2002); 13 United States ex rel. Cooper v. Gentiva Health Servs., Inc., 2003 WL 22495607, (W.D.Pa. Nov.4, 2003); United States ex rel. Watson v. Connecticut Gen'l Life Ins. Co., 2003 WL 303142, at  10 (E.D.Pa. Feb.11, 2003). 44 In support of imposing liability under this theory, Quinn relies on § 13:39-9.15(a)(2) of the New Jersey Administrative Code, Board of Pharmacy Regulations, which provides: If a unit dose packaged medication has been stored in a medication room or secure area in the institution and the medication seal and control number are intact, the medication may be recycled and redispensed. Medicaid regulations require pharmacies to comply with Board of Pharmacy Regulations in order to participate in the Medicaid program. See N.J.A.C. § 10:51-1.2(d) (expressly incorporating the requirements of N.J.A.C. § 13:39). 45 The District Court held that failure to comply with the Board of Pharmacy regulations may disqualify a provider from participation in the program, but compliance with the regulations is not a condition to payment by Medicaid. Quinn, slip op. at 14-15. Quinn contends, however, that a finding of FCA liability, based on implied false certification theory, should not be limited to situations where the underlying regulation or statute expressly states that compliance is a condition of payment. Quinn argues that there should be FCA liability when non-compliance with the underlying regulations would disqualify the provider from participation and that there should be FCA liability here because the improper recycling of medications would disqualify Pompton from participation in the Medicaid program. 14 46 Here, the MC-6 form requires providers to certify that the pharmaceutical services comply with Medicaid regulations. The Medicaid regulations expressly incorporate compliance with the Board of Pharmacy Regulations, including N.J.A.C. § 13:39-9.15, as a condition to participation in the program. If a provider does not comply with the Medicaid regulations, by reason of not complying with the incorporated Board of Pharmacy regulations, not only will the provider be ineligible to participate in the Medicaid program, but Medicaid may seek to recover the money it paid to the provider for services covered by the claims. See N.J.A.C. § 10:49-9.8(c). 47 Quinn's arguments are compelling. Even though § 13:39-9.15 does not expressly condition payment on compliance with its terms, it hardly can be said that non-compliance with its terms is irrelevant to the government's disbursement decisions. Mikes, 274 F.3d at 697. However, even if Pompton does not qualify for Medicaid reimbursement if it dispenses an improperly recycled medication to a Medicaid patient, we cannot say that, in this case, Pompton has made any false certifications in connection with a Medicaid claim. The reason we come to this conclusion is because of the impossibility of proving from the numbers alone that a claim was made by Pompton to Medicaid for an improperly recycled medication. 48 If 100% of the medications that Pompton dispensed were paid for by Medicaid, then a fortiori, any claim for an improperly recycled medication would be paid for by Medicaid. If that claim was made on Form MC-6, it would be inevitable that Pompton had violated N.J.A.C. § 3729(a)(1) and (2), and Medicaid would be paying Pompton on the basis of a false certification. Such a situation would be similar to the one in Krizek, 192 F.3d 1024, where we know that a false claim had to have been made when 25 or more hours were being charged to Medicaid for a 24 hour day. 49 In the present case, however, Quinn cannot demonstrate either that an improperly recycled medication was paid for by Medicaid or that it was paid for by one of the other sources of payment for the medications that Pompton dispensed. Although we might hypothesize that 60% of the improperly recycled medications were paid for by Medicaid, it is impossible to rule out the chance that they were paid for by non-Medicaid sources. 15 For this reason, we agree with the District Court that even assuming that the MC-6 certified compliance with Board of Pharmacy regulations as a condition of payment, Plaintiff has not pointed to sales inconsistent with the certification. Quinn, slip op. at 14. As with our discussion on successive claims, Quinn did not provide the District Court with a single instance where Pompton submitted a claim for payment for medications recycled in violation of § 13:39-9.15. 16 For that reason, Quinn's false certification claim fails. 50