The Supreme Court has agreed to hear a case involving the implied certification theory under the False Claims Act. Implied false certification occurs when an entity has previously undertaken to expressly comply with a law, rule, or regulation, and that obligation is implicated by submitting a claim for payment even though a certification of compliance is not required in the process of submitting the claim. Many relators have tried to use this theory to turn a regulatory violation into a false claim–with its concomitant treble damages and statutory damages.

There has long been a split in the circuits regarding the viability of the implied certification theory. As recently as June 2015, the Seventh Circuit rejected the theory, stating that the “FCA is simply not the proper mechanism for government to enforce violations of conditions of participation contained in—or incorporated by reference into—a PPA [Program Participation Agreement].” Rejection of this theory recognizes that there administrative procedures designed to address regulatory violations.

In contrast, the Ninth Circuit has embraced the implied certification theory, stating “”[i]t is the false certification of compliance which creates liability when certification is a prerequisite to obtaining a government benefit.” The problem in the health care arena is that facilities promise to comply with a myriad of regulations when entering into PPAs, and certify compliance when submitting bills. Thus, under this theory, every single regulatory violation can turn into a false claim.

The health care industry will be closely watching the Supreme Court’s ruling on this important issue.