United States: U.S. Supreme Court Agrees To Review The Validity Of 'Implied Certification' Liability Under The False Claims Act

On December 4, 2015, the U.S. Supreme Court granted certiorari in Universal Health Services, Inc. v. United States ex rel. Escobar, No. 15-7, to review the so-called "implied certification" theory of liability under the federal False Claims Act (FCA). That theory, which both the federal government and private "relators" have invoked with increasing frequency, finds an FCA violation for those who seek funds from the government while in violation of a legal or contractual obligation—even when they have not expressly verified their compliance with that legal or contractual obligation. Given the breadth of circumstances in which the implied certification theory has been, and can be, applied, the Court's ruling in Universal Health Services could bring far-reaching changes to the scope of FCA liability.

The FCA, which targets particular forms of fraud committed against the federal government, reaches virtually every aspect of the economy because it extends to those who seek and receive federal funds. Specifically, the statute imposes liability—along with treble damages and substantial civil penalties—for knowingly presenting (or causing to be presented) a "false or fraudulent claim" for payment on the federal government, or for making a false "record or statement material" to a "false or fraudulent claim" for payment. 31 U.S.C. § 3729(a)(1)(A), (B). The FCA does not, however, define "false or fraudulent" for purposes of this provision, so courts have adopted their own theories of falsity. One of those theories is the "implied certification" theory, which most circuits have adopted in one form or another. Under that theory, a defendant can be liable where a claim for payment is made to the government while the defendant is in violation of a statutory, regulatory or contractual provision—even if the defendant has not communicated to the government or anyone else that it is in compliance with such a provision. In this circumstance, the defendant is found to have implied its compliance when it (or someone at its behest) makes a claim for payment.

Many circuits have approved this theory even where the law or contract at issue does not expressly state that compliance with it is a condition of getting paid. See United States v. Triple Canopy, Inc., 775 F.3d 628, 636 (4th Cir. 2015), petition for cert. filed, No. 14-1440 (U.S. June 5, 2015); U.S. ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 387 (1st Cir. 2011); United States v. Sci. Applications Int'l Corp. (SAIC), 626 F.3d 1257, 1269 (D.C. Cir. 2010). Some circuits, by comparison, require that the law or contract expressly state that compliance is a condition of payment. See Chesbrough v. Visiting Physicians Ass'n, 655 F.3d 461, 468 (6th Cir. 2011); Mikes v. Straus, 274 F.3d 687, 699 (2d Cir. 2001). And at least one circuit has rejected the implied certification theory altogether. United States v. Sanford-Brown, Ltd., 788 F.3d 696, 711-12 (7th Cir. 2015) petition for cert. filed, No. 15-729 (U.S. Dec. 2, 2015).

The relaxed burden of proving the implied certification theory explains its use by relators and the government in an extraordinarily wide variety of circumstances, including:

  • Defense contractor's alleged non-compliance with its contractual "responsibilit[y]" to ensure its security personnel had received proper weapons training (Triple Canopy, 775 F.3d 628)
  • Health care provider's alleged non-compliance with industry standards based on Medicare regulations governing radiology studies (Chesbrough, 655 F.3d 461)
  • College's alleged non-compliance with regulations governing recruitment of students (Sanford-Brown, 788 F.3d 696)
  • Government contractor's violation of contractual provisions prohibiting conflicts of interest relating to recycling of radioactive materials (SAIC, 626 F.3d 1257)
  • Cycling companies' alleged non-compliance with international cycling organizations' rules and regulations, in breach of sponsorship agreements with U.S. Postal Service (U.S. ex rel. Landis v. Tailwind Sports Corp., 51 F. Supp. 3d 9 (D.D.C. 2014))

In Universal Health Services in particular, the parents of a patient who died of a seizure following treatment at a mental health clinic run by the defendant's subsidiary sued the defendant under the FCA. The parents claimed that the defendant violated the FCA by seeking Medicaid reimbursement despite its subsidiary's violation of state regulations governing the hiring and supervision of staff. The district court dismissed the parents' complaint, but the First Circuit reversed. 780 F.3d 504 (1st Cir. 2015). The court of appeals acknowledged that there was no evidence that the subsidiary explicitly represented compliance with any regulatory provisions. Id. at 514 n.14. And the staffing regulation at issue did not expressly state that compliance with it was a condition of Medicaid reimbursement. But under the First Circuit's own precedent, neither express statements of compliance by a defendant, nor an express condition of payment set forth in the law or contract at issue, was required to make out an FCA claim—allegations of regulatory noncompliance, coupled with claims for payment, were enough. Id. at 512-14.

With the Supreme Court's grant of certiorari in Universal Health Services, the very existence of the implied certification theory could now be in play. The Court accepted two questions for review—(1) whether the theory is valid at all and, if it is, (2) whether it applies only where the defendant fails to comply with a statute, regulation, or contractual provision that expressly provides that compliance is a condition of receiving payment from the government. In resolving the first question, the Court conceivably could rule that implied certification is not a viable basis for FCA liability under any circumstances. Although such a ruling may not be the most likely outcome, there are grounds to support it. For one thing, as a leading commentator has explained, "allowing liability to be imposed because of false implied certifications has the practical effect of eliminating the government's burden of proving that a defendant knowingly submitted a false claim to the government. Instead, such cases are based on the allegation that a defendant knowingly and falsely implied that it never fell out of compliance with certain laws, regulations, or contract terms." See 1 John T. Boese, Civil False Claims and Qui Tam Actions § 2.03[G], at 2–151 (3d ed. Supp. 2009-2).

As for the second question, even if the Court accepts the implied certification theory, it may determine that the theory will only apply where the law or contractual provision at issue clearly states that compliance is a condition of getting paid by the government. Such a "clear statement" requirement arguably is essential to give recipients of funds fair notice as to what they will be impliedly certifying compliance with when they ask for payment. It also serves to ensure that the FCA is not wielded as a "sweeping instrument to promote regulatory compliance" (U.S. ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 697 (4th Cir.), cert. denied 83 U.S.L.W. 3185 (U.S. 2014)), by imposing its punitive remedies on violations of often-times obscure legal or contractual duties (U.S. ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 268 (5th Cir. 2010) ("express" condition of payment requirement "maintain[s] a crucial distinction between punitive FCA liability and ordinary breaches of contract")). While this result would not eliminate the theory altogether, it would narrow substantially the theory's scope.

Of course, the Supreme Court also could fully embrace the implied certification theory without any "clear statement" limitation. That result likely will provide the impetus for an expansion of FCA litigation and, correspondingly, enhanced exposure for those who do business with the government. Given the stakes, an out-pouring of amicus curiae support on all sides is anticipated. The Court likely will ask the solicitor general for his views on the theory as well. Oral argument is anticipated in March or April 2016, with a decision on the merits expected before the end of the term in late June or early July.

Our Reed Smith team will continue to monitor this important case closely and report on further developments as they unfold.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.