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Divided Supreme Court once again decides a case without settling it

The eight-member Supreme Court showed again Thursday it can issue rulings in significant cases without actually deciding who wins.

The justices issued a unanimous 18-page opinion in a major case of healthcare fraud that had appeared to leave them sharply divided during oral arguments in April. They achieved agreement by adopting some key arguments of each side. Then they sent the entire dispute back to a federal appeals court to take a second look.

This method of ruling without deciding has emerged in response to the death of Justice Antonin Scalia and the lack of a tie-breaking vote in closely contested cases.

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Whenever possible, the justices say they want to avoid dismissing cases on a 4-4 tie vote. Instead, they have opted to issue opinions that reject some arguments, endorse others but stop short of a final ruling.

In recent weeks, the high court disposed of – without deciding – closely watched disputes over contraceptives for women who work for religious nonprofit groups and online search engines that were accused of posting inaccurate profiles of people. In both instances, the justices told lower courts to reconsider the cases and make a decision.

At issue Thursday was a “false claims” suit filed by the parents of a Massachusetts teenager who suffered seizures and died after being treated at a mental health clinic. Only after the child’s death did the parents learn the counselors who portrayed themselves as psychologists and doctors were not trained or licensed as medical professionals.

They filed a false claims suit against Universal Health Service Inc. under a Civil War-era law that allows whistleblowers and others to expose fraud and win a windfall if the government recoups millions of dollars. In this instance, the parents alleged the healthcare provider had been billing Medicaid for providing medical services, but had fraudulently relied on “unqualified, unlicensed and unsupervised staff,” as Justice Clarence Thomas said in describing their complaint.

The U.S. appeals court in Boston cleared the way for the parents to sue on the grounds that the healthcare company had “implicitly” pledged to meet basic federal standards when it billed for medical services.

That ruling set off alarms in the healthcare industry. Its leaders feared a wave of massive claims from bounty-hunting lawyers alleging that a hospital or medical provider had failed to follow an obscure federal regulation. The law calls for triple damages against violators.

In December, the Supreme Court agreed to hear an appeal in the Massachusetts case, but Scalia died two months later.

During the oral argument in April, Chief Justice John G. Roberts voiced the fears of the industry, asking if a company could be sued for fraud over trivial violations. Regulations may say “American-made staplers” must be used, but could the company be sued if it used foreign-made staplers? he asked.

Obama administration lawyers argued for the parents. And the court’s liberal justices said they saw the failure to provide trained medical professionals as just the kind of fraud and “false claim” that the law was meant to cover.

Thursday’s opinion in Universal Health vs. United States and Escobar adopted both sides of the competing arguments, including a reference to American-made staplers.

“We first hold that, at least in certain circumstances, the implied false certification theory can be a basis for liability,” Thomas said, in a victory for the parents and other plaintiffs. If the health care company implied it was providing medical care, but did not use licensed medical professionals, that would be fraudulent and false, he said. The company cannot escape by relying on “misleading half-truths,” he added.

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In a famous example from the Civil War, Thomas said, the government could sue Army contractors for fraud for supplying guns that did not fire, even if it “failed to specify the guns it orders must actually shoot.”

But having agreed with the plaintiff’s main arguments, Thomas closed with a warning that they must prove the contractor’s shortcoming was “material” and significant. That standard is “demanding,” he said, and it does not mean contractors must comply “with the entire U.S. Code and Code of Federal Regulations.”

On that basis, the court sent the case back to the appeals court in Boston.

The parents may well have alleged violations “that are so central to the provision of mental health counseling that the Medicaid program would not have paid these claims had it known of these violations,” Thomas said, so they may have a valid claim. “But we leave it to the courts below to resolve this.”

Not surprisingly, lawyers who followed the case said the opinion offered something for both sides.

Colin Wrabley, a lawyer in Pittsburgh, called it a “dual victory” for whistleblowers and for the government because the court said companies can be sued for violating standards that are “implied” in contracts. But the court also “breathed new life into the materiality requirement,” which will limit future claims, he added.

Ty Howard, a Nashville lawyer, said the opinion “will be welcome news to healthcare providers and government contractors” because it says they are not liable for violating minor regulations.

The Supreme Court will next issue decisions on Monday. Still pending are potentially major rulings on affirmative action, abortion regulations and immigration.

On Twitter: DavidGSavage

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