Supreme Court to Assess the Viability of the FCA Implied Certification Theory of Liability

In early December 2015, the United States Supreme Court decided to wade into the False Claims Act (“FCA”) waters for the seventh time in fifteen years, when it granted certiorari in Universal Health Services, Inc. v. United States ex rel. Escobar. The Court agreed to assess the limits of the so-called “implied certification” theory of FCA liability to determine whether liability exists when a violated condition is not expressly labeled as a “condition of payment.”

For years, courts have held that FCA liability attaches when a defendant submits a claim to the government while violating a “condition of payment,” as opposed to a “condition of participation.” However, in recent years, courts have increasingly distanced themselves from this analysis, particularly when the violated conditions are clearly material to the government. This has caused some consternation from the FCA defense bar, particularly when the relevant terms are not explicitly labeled as “conditions of payment” in the underlying contract, regulation, or statute.

The government (and the relator) will rightly push back, arguing that FCA liability should not turn on mere labels. Instead, the government will maintain that FCA liability extends to conduct that violates all material conditions, regardless of how the conditions are labeled.

More information for whistleblowers is located at the Nolan Auerbach & White website.

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