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Supreme Court to Rule on the Implied Certification Theory

March 14, 2016 By Andrew Howard

The U.S. Supreme Court has scheduled oral arguments in a case that will have significant implications for cases brought under the False Claims Act (FCA). In Universal Health Services v. United States ex rel. Escobar, No. 15-7, the Court will hear argument on two important questions. First, whether the “implied certification” theory of legal falsity is viable under the FCA, a question on which the circuit courts of appeal are divided. If the Court concludes the implied certification theory is viable, then the second issue it will consider is whether government contractors’ reimbursement claims can be legally “false” under that theory when the statute, regulation, or contractual provision claimed to be violated does not expressly state that its compliance is a condition of payment. The Court’s decision on this latter question also will resolve a circuit split; the First, Fourth, and D.C. Circuits each have held that liability can attach despite the absence of language in a contract or applicable rule or regulation that the contractor’s compliance with such requirement is an express condition of payment. Conversely, the Second and Sixth Circuits have held that the statute, regulation, or contractual provision must expressly state that it is a condition of payment.

This is an important case for companies doing business with the government because it will have a significant and direct impact on one of the most prolific kinds of FCA claims currently being prosecuted by relators and the government.

Filed Under: Advice to Contractors & Grant Recipients, Government Contract-Related Investigations and the False Claims Act Tagged With: False Claims Act (FCA), Implied Certification Theory, U.S. Supreme Court, Universal Health Services Inc. v. United States ex rel. Escobar

About Andrew Howard

Andy Howard is a partner in the firm’s Construction & Government Contracts Group who represents clients across a wide range of industries, including construction, health care, aerospace, energy and technology. Andy’s practice involves representing construction industry professionals and federal, state and local government contractors.

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This blog is a service of Alston & Bird’s Government Contracts team and provides insights on cases, rules, trends, and latest developments in local, state, and federal government contracting. Our attorney observations include analysis of investigations, litigation, protests and issues affecting present or prospective prime contractors, subcontractors, and grant recipients across various industries.

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