A number of amici recently filed briefs in United States ex rel. Escobar v. Universal Health Services supporting the relator and asking the Supreme Court to uphold the implied certification theory of liability.

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DOJ filed a brief emphasizing the statutory and common law arguments in favor of upholding the implied certification theory.  In contrast to the FCA provision imposing liability for a “false record or statement,” the section imposing liability for a “false or fraudulent claim for payment” does not on its face require an express statement.  DOJ argues that a claim can be “false or fraudulent” “if the claimant knows that legal or contractual requirements have not been met but seeks payment from the government without disclosing that fact.”  DOJ next turns to an analysis of the common law to support its statutory interpretation.  As DOJ explains, one can be liable for the tort of fraudulent misrepresentation based on “stating the truth so far as it goes” yet the speaker “knows or believes [the statement] to be materially misleading because of his failure to state additional or qualifying matter.”  According to DOJ, affirmative representations that payment is due “trigger the corollary principle that, ‘if the defendant does speak, he must disclose enough to prevent his words from being misleading.’”  Nor, DOJ maintains, do the FCA’s history and purpose indicate “that Congress intended to exempt from liability the sorts of implicit misrepresentations that have traditionally been viewed as fraudulent.”  Finally, DOJ invokes a plea to practicality, explaining that constraining the FCA to an express certification requirement would be inconsistent with the realities of how federal funds are disbursed.  Contractors often make periodic requests for payment, without having “to reaffirm their continued compliance with all relevant conditions.”  Yet their ongoing compliance with a variety of regulations nonetheless “lies at the heart of ‘what [the government] bargained for,’” and therefore the claimant’s submission for payment knowing of a regulatory violation can create a “false or fraudulent” claim.

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Twenty-two states submitted a brief urging the Court to reject the “false choice” of selecting either the express or implied certification theory as the outer bounds of FCA liability.  Instead, the states view the scienter and materiality standards as providing appropriate safeguards to address concerns about the breadth of the FCA.  The amici states observe that most states have analogues to the FCA, which are often interpreted in lockstep with their federal counterpart.  The FCA must sweep broadly, they explain, in order to capture continually evolving efforts to defraud.  The state of Massachusetts—where petitioner UHS is located and whose regulations regarding adequate supervision and staffing UHS allegedly violated—filed a separate brief arguing that UHS violated state regulations that were express conditions of payment.

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The National Whistleblower Center (“NWC”) filed a brief seeking to marshal legislative history in its support.  In 1861, Congress convened the Select Committee on Government Contracts, which Congress tasked with investigating fraud in procurement contracting.  This Committee continued to meet until 1863, when Congress passed the FCA.  Counsel for NWC reviewed the same underlying contracts and vouchers requesting payment that the Committee had analyzed more than 150 years earlier.  The NWC portrays these materials as “simple” documents setting forth only basic facts about the goods to be delivered.  None of the contracts, according to the NWC, included a condition of payment or participation, and the closest any vouchers come to encompassing an express certification is a statement that the “above account is correct and just” and the “services were rendered as therein stated.”  The Committee apparently grew frustrated by the repeated failure of contractors to deliver quality goods, even while staying within “the four corners of the procurement contract.”  As the NWC explains, it was this frustration that led Congress to enact the FCA, and which weighs in favor of a broad interpretation of the FCA’s scope.  Furthermore, the legislative history indicates that the drafters of the FCA contemplated liability “based on simple contracts, vouchers, and receipts containing no explicit condition of participation or payment.”

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David Engstrom, a law school professor who has amassed a database of more than 6,000 qui tam suits from 1986?2013, presented an analysis driven primarily by data, rather than legal arguments.  Professor Engstrom argues that the data do not support the suggestion that the increase in qui tam suits cited in briefs filed by the petitioner and its amici has resulted from acceptance of the implied certification theory.  According to his analysis of the data, the number of qui tam suits “remained flat or even declined between roughly 1996 and 2009,” even as the implied certification theory was gaining acceptance in a number of jurisdictions.  Indeed when Professor Engstrom analyzes federal appellate decisions approving the implied certification theory, he finds “no evident relationship between these rulings and qui tam filing counts.”  Professor Engstrom attributes the growth in qui tam suits not to the implied certification theory, but rather to factors external to caselaw, such as the 2009 FERA amendments and a growth in spending in areas frequently targeted by qui tam suits.

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A brief filed by the AARP highlights the positive non-financial byproducts of FCA enforcement.  As the AARP explains, the FCA is a critical tool for “identifying and remedying substandard healthcare, while imposing continuing compliance obligations on violators to prevent recidivism.”  According to the AARP, crafting a FCA enforcement regime that only allows for liability where clearly identified conditions of payment were violated leads to the “absurd” result of providers focusing their compliance resources only on conditions of payment.  Such focus would be to the detriment of other conditions that nonetheless may be critical to the health and safety of federal healthcare program beneficiaries.

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A copy of DOJ’s brief can be found here, the twenty-two states’ brief here, Massachusetts’s brief here, NWC’s brief here, Engstrom’s brief here, and AARP’s brief here.

The case has been set for oral argument on April 19, 2016.