Supreme Court Agrees to Review Viability of False Implied Certification and Condition of Payment Theories under the False Claims Act

The U.S. Supreme Court today granted certiorari in Universal Health Services, Inc. v. Escobar, No. 15-7.  The petition presented three questions for review, of which the Court agreed to hear two.  Specifically, the Court agreed to review:

2. Whether the “implied certification” theory of legal falsity under the FCA-applied by the First Circuit below but recently rejected by the Seventh Circuit-is viable.

3. If the “implied certification” theory is viable, whether a government contractor’s reimbursement claim can be legally “false” under that theory if the provider failed to comply with a statute, regulation, or contractual provision that does not state that it is a condition of payment, as held by the First, Fourth, and D.C. Circuits; or whether liability for a legally “false” reimbursement claim requires that the statute, regulation, or contractual provision expressly state that it is a condition of payment, as held by the Second and Sixth Circuits.

The various federal circuits have staked out divergent standards on these issues, leading to significant disharmony in application of the FCA.  With this case the Court has the opportunity to establish uniform, national standards for FCA liability, and potentially to curtail some of the statute’s more abusive applications.