U.S. Supreme Court agrees to hear False Claims Act Case

The Supreme Court agreed to hear a case involving Universal Health Services who is accused of violating the False Claims Act. The Court agreed to decide whether an implied certification theory is viable cause of action under the FCA. The Seventh Circuit Court of Appeal, which reviews district court cases including those out of the Northern District of Illinois, which includes Chicago, has found that a theory of implied certification is not a viable theory under the False Claims Act, even though other circuits such as the First Circuit have permitted such theories. The Supreme Court also agreed to decide, if an implied certification theory is viable, if claim can be false if the defendant failed to comply with a rule or regulation even if that rule or regulation does not state that compliance with it is a condition of payment.

The Seventh Circuit in United States v. Sanford-Brown found that an implied certification theory cannot be pursued under the False Claims Act since those types of claims are best left up to the agency to enforce. While the First Circuit, which heard the case against Universal Health Services, United States, ex rel. Escobar et al. v. Universal Health Services, Inc., permits cases based on an implied certification theory to proceed.

According to Universal Health Services’ Petition of Writ of Certiorari to the Supreme Court, the jurisdictions that have recognized the theory of implied certification differ on whether compliance with the rule has to be a condition of payment of whether the rule can be a condition of payment even it does not expressly state that payment will not be made unless there is compliance with the rule.

For more information about the False Claims Act contact, Michael C. Rosenblat.