In an important and unanimous opinion in Universal Health Services, Inc. V. United States et al. Ex Rel. Escobar et al., the Supreme Court has upheld the “implied certification” theory of federal False Claims Act (FCA) liability. Thus, liability under the FCA does not require that a defendant certified compliance with a law or rule that is an express condition of payment from a government program.
Escobar involved a tragic set of facts where a young woman died after being treated by employees of a mental health facility who were unlicensed and/or unauthorized to provide the care they were purporting to provide. Escobar illustrates that the rules and laws governing participants in government programs exist not only to safeguard the spending of taxpayers’ money but also — and relatedly — to effectuate critical health, safety, and other objectives of the government.
Rather than focusing on the formal and technical issue of whether a defendant’s compliance with a statute or regulation is an express condition of payment, the Supreme Court focused on materiality, namely, whether the defendant’s representations, or omissions, were important and influential to the government’s willingness to pay, and whether that willingness would have changed had it known the truth. As the Court held, “the common-law meaning of fraud [does not] tether liability to violating an express condition of payment. A statement that misleadingly omits critical facts is a misrepresentation irrespective of whether the other party has expressly signaled the importance of the qualifying information.”
Most importantly, whistleblowers who are concerned about fraudulent use of government funds through deception on the government — whether implicating health and safety, the flouting of important rules to protect taxpayers, or other considerations — should feel emboldened by the Supreme Court’s unequivocal pronouncements today.
Universal Health Services, Inc. V. United States et al. Ex Rel. Escobar et al., No. 15-7 (June 16, 2016).
False Claims Act/Whistleblower Law Attorneys at Lieff Cabraser
Lieff Cabraser represents whistleblowers in a wide range of False Claims Act cases, includingmedicare and healthcare fraud, defense contractor fraud, securities and financial fraud, and many other false claims. We have the resources, experience, and skill to appropriately investigate even the largest and most complex matters and take them all the way through trial.
If you know of or suspect a fraud being perpetrated against the government, we welcome the opportunity to discuss the matter with you. There is no fee or obligation for our review of your potential case, and all information you provide will be held in the strictest confidence.