On April 19, 2016, the United States Supreme Court heard oral arguments in the case of Universal Health Services v. U.S. ex rel. Escobar.  The Universal Health Services case was brought by two relators whose child had been seeing a counselor at UHS and who came to learn that the counselor was not licensed.  The relators’ child ultimately had serious health complications and a fatal seizure and the relators pursued this False Claims litigation and argued that UHS had violated the FCA by billing for services that were not provided by licensed professionals.

The arguments before the Supreme Court are particularly notable because it is expected that the Supreme Court will provide guidance on the “implied certification” theory of liability under the FCA.  The “implied certification” theory is distinct from the typical “express certification” theory under the False Claims Act.  An express certification claim is based on the submission of an actually false claim to the Government — i.e. the claim itself contains false or fraudulent statements.  The “implied certification” theory focuses on the general compliance with applicable regulations that is expected of persons and entities who submit claims to the Government.  The theory provides that by virtue of participating in Government programs (such as Medicare), it is implied that the participant is complying with all applicable regulations, with a failure to so comply giving rise to FCA liability.

The Universal Health Services case was initially dismissed by the district court, but was reversed by the First Circuit on appeal.  The First Circuit’s opinion recognized the implied certification doctrine and furthered the existing Circuit split regarding the applicability of an implied certification of liability under the FCA.  The First Circuit, along with the Fourth Circuit and DC Circuit and others, have adopted the implied certification theory.  However, it has not been universally adopted, with the Seventh Circuit recently rejecting the application of the implied certification theory.

The Supreme Court has not previously clarified whether the implied certification theory is valid and its ruling in the Universal Health Services case should provide clarity in this critical area of FCA litigation.