By Joan H. Krause

In Universal Health Services v. United States ex rel. Escobar (UHS), the Supreme Court upheld the Civil False Claims Act (FCA) theory of “implied certification,” under which the submission of a claim for reimbursement “implies” that the claimant is in compliance with the statutes, regulations, and contract provisions necessary for that claim to be paid. Escobar was filed by the parents of a young woman who died after receiving Medicaid-covered mental health treatment from a Massachusetts clinic that violated state licensing and supervision regulations. Her parents alleged that the clinic’s claims were fraudulent because they implicitly (and falsely) represented that the facility was in compliance with the relevant provisions. A district court dismissed the suit, but the First Circuit reversed. In a unanimous opinion written by Justice Thomas, the Supreme Court held that where a defendant “makes specific representations about the goods or services provided, but knowingly fails to disclose . . . noncompliance with a statutory, regulatory, or contractual requirement[,] . . . liability may attach if the omission renders those representations misleading.”  But cautioning that such misrepresentations must be “material to the Government’s payment decision,” the Court reversed and remanded because the First Circuit had applied an impermissibly broad test.

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