Fifth Circuit Passes On Opportunity To Join Seventh Circuit in Rejecting Implied False Certification Theory

Last month, the Seventh Circuit bucked the trend of several other circuits in expressly rejecting the theory of implied false certification under the FCA.  See  United States v. Sanford-Brown, Limited, No. 14-2506 (7th Cir. June 8, 2015) (opinion here).  The Fifth Circuit recently had an opportunity to decide whether to follow the Seventh Circuit’s lead.  But acknowledging that, “[f]or over a decade, this court has avoided deciding whether to recognize the implied certification theory,” the Fifth Circuit declined – again – to decide the issue.  After concluding that the relator’s allegations would fail to satisfy Rule 9(b) even if the theory was valid, the court once again declined to decide whether the theory should be recognized.  Thus, the opinion provides helpful guidance on the pleading standards applicable to implied certification claims in the Fifth Circuit – assuming the theory is viable in the first instance.

The relator’s basic allegation was that the defendants, military contractors, violated the Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) by utilizing airplane parts acquired from airplanes that had been involved in accidents.  But as the court noted, the relator could not “plausibly allege” that the contract at issue contained specific provisions of the FAR because “he has not seen the [ ] contract,” and because the Court could not assume that every provision of the FAR or DFARS was incorporated into every contract.  The failure to allege that the contract included the specific FAR provisions the relator alleged were violated was therefore fatal to his claim, “because materiality is a required element of an FCA claim.”  Furthermore, the court noted, even assuming for argument sake that the provisions were incorporated into the contract, the relator “merely lists them and has not pleaded how they were violated.”  In so holding, the court rejected as conclusory allegations that the parts used were “non-conforming” or “unapproved.”

The 5th Circuit’s opinion in U.S. ex rel. Gage v. Davis S.R. Aviation LLC can be found here.