The False Claims Act (“FCA”) is the primary tool used by the federal government to stem fraudulently obtained payments. The June 2016 Supreme Court opinion in Universal Health Services, Inc. v. United States ex rel. Escobar upheld the applicability of the FCA to a defendant who falsely implied that it was in compliance with health care licensure and supervision requirements in order to obtain Medicaid payment. In a unanimous opinion, the Justices affirmed the validity of this “implied certification” theory but warned that misrepresentations must meet the demanding standard of being “material” to the government’s decision to pay. Without citing to the extensive appellate case law, and relying little on the statutory text, the Justices declined to set bright-line rules, opting instead for a fact-intensive, common-sense approach to determining materiality. However, the opinion left open many questions regarding the definition of materiality, as well as the issue of which of the vast number of possible misrepresentations should be encompassed within FCA liability.
This Article aims to provide guidance regarding the types of misrepresentations that should suffice for FCA liability under implied certification. Given the sheer number of regulatory requirements applicable to the federal health care programs, it is difficult to argue that each and every instance of noncompliance should be actionable under the FCA. Ultimately, while the implied certification theory survived Escobar, without more definitive guidance the lower courts will be left to sort out confusing, highly fact-specific cases.
The full text of this Article is available to download as a PDF.