SCOTUS Rules On "Implied Certification" Theory Of Liability Under Federal False Claims Act

Yesterday, the US Supreme Court decided that, "at least in certain circumstances," the so-called "implied false certification theory of liability" under the federal False Claims Act, 31 U.S.C. § 3729 (FCA) can be a basis for liability. Universal Health Services, Inc. v. Escobar, 579 U. S. ____ (2016). Writing for a unanimous Court, Justice Thomas found that the theory is applicable where "the defendant knowingly violated a requirement that the defendant knows is material to the Government's payment decision." While not spelling out precisely how a statutory, regulatory or contractual requirement would be material, the Court stated that the materiality standard is "demanding" and "rigorous" and would not be met simply because the Government designates a requirement as a payment condition. Even though the Court provided some guideposts regarding materiality, implementation of this standard by lower courts is bound to be case-specific, with divergent outcomes that