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Law Offices of Elizabeth “Booka” Smith, LLC Blog

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December 4, 2015: Supreme Court Slated to Consider "Implied Certification" Theory of FCA Liability

On December 4, 2015, the United States Supreme Court agreed to weigh in on the
issue of whether companies that have contracts with the federal government can
be held liable under the federal False Claims Act for failing to comply with
the terms and requirements of the contract. This theory of FCA liability has
come to be known as the “implied certification,” and it differs from
traditional FCA liability which exists when companies bill the federal
government for non-existent services or unnecessary services. To date, the
circuit courts are split on the issue of whether and how a plaintiff can prove
FCA liability based on a theory of “implied certification.” The Seventh Circuit
Court of Appeals has basically rejected the theory, while most of the other
circuits have accepted the theory subject to rules which are inconsistent court
to court. In weighing in on the issue of implied certification, the United
States Supreme Court will review the First Circuit’s decision in United States ex rel. Escobar v. United
Health Services, Inc., 780 F.3d 504 (1st Cir. Ct. App., March 17, 2015, as amended April 14, 2015). In Escobar, the First Circuit reversed the trial court’s dismissal of the plaintiff’s FCA claim which was predicated on a theory of implied certification. The First Circuit noted that Universal Health
mental health center is required as a condition of payment under its government
contract to properly supervise its staff and properly care for all patients.
The First Circuit ruled that the relator’s allegations that grossly inadequate
care lead to the death of the relator’s daughter sufficiently alleged a viable
theory of FCA liability. It is anticipated by both the plaintiff’s and defense
bar that in considering the First Circuit’s ruling in Escobar, the Supreme Court is likely to accept the theory of implied certification and establish a set of clear rules governing proof of the
theory. Until the Supreme Court rules, whistleblowers need to carefully
evaluate whether any FCA qui tam or Section H retaliation case can be supported by a theory of implied
certification. The Law Offices of Elizabeth “Booka” Smith, LLC represents
plaintiffs in FCA lawsuits. If you believe your employer may be violating the
FCA, but are not certain, CONTACT US to schedule an appointment to discuss
potential FCA liability.

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