In a unanimous (!) and yet hardly clear false claims case last year – the infamous Escobar  case -- , the Supreme Court of the United States drew one of the murkiest lines ever written. In determining whether the failed licensure of people providing behavioral health services under Medicaid, could render a claim as false, they addressed the notion of ‘implied false claims.”  The case turned on whether implied statements in a claim (e.g., all the individuals rendering services were licensed, the facility met all the conditions of participation when the services were rendered) as opposed to explicit statements on the CMS-1500 (e.g., that the services were medically necessary or the level of CPT code was accurate) could render a claim false.  Of the Court’s two pronged test, perhaps most importantly the court said the implied statement had to be ‘material’ to the falsity of the claim. The health law bar is now watching with interest as courts apply the Escobar standard. In a case in Pennsylvania, Us ex rel Emanuele v. Medicor Associates, ED Pa No 10-cv-245, the District Court rules that at least two medical directorship agreements violated the Stark law which could lead to false claims liability.  The real problem was the absence of current and updated documentation of the physician-hospital agreements.  The defendants argued these were mere technicalities and not material. CMS itself has liberalized its rules on what constitutes a proper writing to create a contract (see our AGG Note of July 2016).  Before the case could go to trial it was settled with the parties paying $20.75 million.  The court’s findings would have been one of many interpretations of what is material versus technical.  The message here is the safest course is to dot all i’s and cross all t’s, when whistleblowers lurk in unknown places.  We will be watching and reporting on what is found to be material and not by various courts around the country in order to advise our clients.  The best approach is to get is right so no whistleblower has a claim. Check out our Fraud and Abuse Compliance Plan Development Protocol as well as our simplified and shortened version of the HCCA-OIG suggestions regarding how to measure if your compliance program is working.