United States: Fifth Circuit Holds Certification Of Incorrect Information Is Not Necessarily A False Claim

In a recent False Claims Act decision, United States v. Southland Mgmt. Corp., the Fifth Circuit Court of Appeals held that property owners who had entered into a contractual agreement with the U.S. Department of Housing and Urban Development ("HUD") did not submit false claims under the FCA when the owners had submitted payment vouchers incorrectly certifying that a property was in a "decent, safe, and sanitary" condition. Under the contract with HUD, the owners provided housing to low income families and were required to submit payment vouchers, which contained the standard HUD property condition certification, to obtain federal assistance payments. Both the owners and HUD were aware that the property did not meet the "decent, safe, and sanitary" requirement and the parties had worked together for a number of years to improve the property's condition. The contract between the parties specifically addressed situations when the property no longer met the "decent, safe, and sanitary" requirement and set forth corrective actions both parties should take. The court held that during the contractually mandated corrective action period, submission of claims for housing assistance payments did not result in false claims liability because the owners were still entitled to the funds under the contract. This decision may provide some analogous arguments for health care providers in FCA matters.