## Facts

- Dr. Patricia S. Mikes, a pulmonologist employed by defendants’ medical practice, complained that office spirometry testing was performed with improperly calibrated equipment, producing unreliable results.
- She alleged defendants nevertheless submitted Medicare reimbursement claims for spirometry and, in doing so, certified compliance with applicable requirements.
- She also alleged defendants made MRI-related referrals involving financial interests but later withdrew the MRI-related FCA allegations.
- After raising concerns internally, Mikes was terminated and asserted additional employment-related claims.
- Mikes filed a qui tam action under the False Claims Act (FCA), arguing Medicare claims were false because spirometry services allegedly failed to meet professional standards and because claims submission constituted express or implied certification of compliance.

## Issues

1. Whether Medicare claims for services actually performed, but allegedly below professional standards, are “false or fraudulent” under the FCA.
2. Whether an express certification of regulatory compliance supports FCA liability when Medicare payment is not expressly conditioned on that certification.
3. Whether an implied certification theory can render claims “legally false” based on noncompliance with regulations or standards not shown to be conditions of payment.
4. Whether alleged substandard spirometry constituted “worthless services” sufficient to establish a false claim.
5. Whether defendants were properly awarded attorneys’ fees under 31 U.S.C. § 3730(d)(4) for the withdrawn MRI-related claims, and whether the amount was an abuse of discretion.

## Decision

- The Second Circuit affirmed summary judgment for defendants on the FCA spirometry claims.
- The court held that alleged noncompliance with professional medical standards, without more, did not make Medicare claims “false” under the FCA.
- The court held that false certification liability requires that the certified requirement be an express precondition to payment; that showing was not made for the alleged spirometry-related standards.
- The court rejected liability under implied certification on this record, treating the doctrine as narrow and tied to conditions of payment.
- The court rejected the “worthless services” theory because the evidence did not show services so deficient as to be the equivalent of no service at all.
- The court affirmed an attorneys’ fee award to defendants for MRI-related claims found vexatious, and rejected defendants’ cross-appeal seeking a higher award.

## Legal Principles

- The FCA targets fraudulent claims for payment, not general enforcement of medical standards of care or negligence-based disputes.
- Express false certification supports FCA liability only when the certification concerns a statutory or regulatory requirement that is a precondition to payment.
- Implied certification is limited; FCA liability cannot rest on noncompliance with rules not shown to be conditions of payment.
- “Worthless services” requires proof that the billed service was so deficient that, for practical purposes, it amounted to no performance at all; poor quality alone is insufficient.
- A prevailing FCA defendant may recover attorneys’ fees under 31 U.S.C. § 3730(d)(4) if the relator’s claim was clearly frivolous, clearly vexatious, or brought primarily for harassment; the fee amount is reviewed for abuse of discretion.

## Conclusion

The Second Circuit held that alleged substandard spirometry did not render Medicare claims false under the FCA absent a misrepresentation tied to an express condition of payment, and that the record did not support “worthless services” liability; it also upheld a limited fee award for withdrawn MRI allegations deemed vexatious.


United States ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001)