We have previously written several articles regarding the circuit courts’ application of the so-called “implied certification” theory of liability under the False Claims Act (FCA). That theory is the subject of a petition for certiorari in the case of United States v. Triple Canopy, on which we have previously reported.
Under the implied certification theory, a government contractor submits a false claim to the government by impliedly misrepresenting compliance with a legal obligation, upon which the government conditions payment. Contractors do not affirmatively represent compliance with said legal obligation, but they are deemed to be aware of all legal obligations that condition payment upon their compliance. In February, the Fourth Circuit formally adopted the implied certification theory for the first time in United States v. Triple Canopy, Inc. It also joined the First and D.C. Circuits in rejecting defendants’ arguments that conditions of payment be “expressly stated.” The Fourth Circuit’s holding has demonstrated the difficulty in evaluating the existence of “implied” conditions of payment through at least one district court decision.
By contrast, in June, the Seventh Circuit decided United States v. Sanford-Brown, Ltd., becoming the first court of appeals to reject implied certification as a viable theory of falsity altogether, concluding that implied certification was inconsistent with the primary purpose of the FCA: curbing fraud against the government.
In the face of these inconsistencies, the losing parties in both Triple Canopy and Sanford-Brown have now sought further appellate review. Triple Canopy petitioned for certiorari on June 8, 2015. The relator in Sanford-Brown, meanwhile, has petitioned for rehearing en banc, arguing that the panel’s decision should be reversed because no other court has rejected implied certification. The United States has signed onto the relator’s petition, filing an amicus brief in support of rehearing on July 9, 2015. A decision on both petitions is pending.
If the Supreme Court does take up Triple Canopy’s certiorari petition, we could see the Supreme Court speak to the viability and scope of implied certification for the first time. The significance of any Supreme Court pronouncement on this issue is massive. For example, FCA cases are often based upon allegations that health care providers have provided medically unnecessary care to Medicare and Medicaid beneficiaries (a theory of relief rooted in implied certification). Whether an FCA plaintiff can succeed in such a case is dependent on the validity of the implied certification theory – and whether and how courts conclude that a legal obligation is a condition of payment.
A Supreme Court ruling on implied certification could also impact FCA claims arising out of alleged Stark Law and alleged Anti-Kickback Statute (AKS) violations. As we noted last week in our discussion of the Tuomey case, implied certification cases relying on the Stark Law can result in astronomical damages calculations. And as we noted last month in our discussion of the government’s settlement with Hebrew Homes Health Network, Inc., the same is true for cases based upon AKS violations.