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Highest Court in the Land Expands FCA Liability

June 17, 2016

Overview

Persons or entities that enter into contracts with or invoice the Federal Government should pay close attention to this development.

On Thursday, June 16, the United States Supreme Court endorsed a theory of "implied certification" under the False Claims Act that expands liability for fraudulent claims for payment to the federal government. Liability under this theory arises if: (1) the claim makes representations about the services provided and (2) the representations made fail to disclose noncompliance with material requirements for payment. Representations are "material" if they could influence the government’s payment decision.

Implied certification includes representations of compliance with federal or state laws that are material to the services or products provided to the federal government. For example, attestations of compliance with federal or state law that bear on the quality of the services or products provided would likely be deemed material.

The Supreme Court has thus embraced a theory that makes a claim punishable as fraudulent not because the government has been cheated, but because the service or product seller has made a representation of compliance that is false or misleading and is "material" to the government's decision to pay for the product or service.

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