Whether and to what extent the doctrine of implied false certification is a viable means of establishing FCA liability may finally be taken up by the Supreme Court if the Justices vote at conference on December 4 to grant petitions for certiorari in two FCA cases, Triple Canopy, Inc. v. United States ex rel. Badr and Universal Health Services, Inc. v. United States ex rel. Escobar. Those petitions are asking the Supreme Court to resolve a split among the circuits regarding the FCA’s recognition of implied certification liability, which has been used with increasing frequency by the government and relators as a tool for policing non-fraudulent regulatory noncompliance. 

The judicially-created doctrine of implied certification is generally relied upon to establish FCA liability in two kinds of cases: the first where a party expressly certifies its compliance with certain conditions of payment and then impliedly certifies its continued compliance with those conditions with each subsequent request for payment, and the second where a party that participates in a federal program is alleged to have violated some law, regulation, government policy, or contract provision governing its participation in that program. Under the first scenario, an implied certification theory is required because the subsequent requests for payment may not have contained the express representations of compliance. An implied certification theory must be relied upon in the second scenario because in those cases the defendant has not expressly certified in its claim for payment that it is in compliance with the applicable contract terms, laws, regulations, or policies it is alleged to have violated. 

While the majority of circuits recognize, to varying degrees, the validity of the implied false certification doctrine, there is wide disagreement among these courts as to its scope and application. The Second, Third, Sixth, Ninth, Tenth, and Eleventh Circuits have held that the implied false certification theory may be used to establish FCA liability only if the defendant fails to comply with a precondition of payment that is expressly stated in the statute, regulation, or contract provision upon which the relator relies. The First, Fourth, and D.C. Circuits have taken a much more expansive view, holding that conditions of payment need not be expressly stated; rather, FCA liability attaches to knowing violations of any potentially applicable statute, regulation, or contract provision, even if compliance is not expressly tied to the payment of claims. 

Deepening the split, the Seventh Circuit rejected outright an implied certification theory of FCA liability in its June 2015 decision in United States v. Sanford-Brown, Ltd., concluding that it would be unreasonable to hold that an institution’s continued compliance with the thousands of pages of federal statutes and regulations incorporated by reference into the institution’s program participation agreement with the Department of Education were conditions of payment for purposes of liability under the FCA. In so holding, the Seventh Circuit noted that it was joining the Fifth Circuit, which had stated in dicta in United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 270 (5th Cir. 2010) that although it had not definitively ruled on the cognizability of implied false certification claims, it had accepted the predominant view among circuit courts that certifications must be an express prerequisite of payment.

Given this ever-widening circuit split, and the Supreme Court’s recent interest in FCA matters as evidenced by its May 2015 decision in Kellogg Brown & Root Services, Inc., et al. v. United States ex rel. Carter, No. 12-1497 (May 26, 2015) resolving important questions about the application of the Wartime Suspension of Limitations Act to civil FCA cases and the FCA’s “first-to-file” requirement, it seems likely that the Supreme Court will grant review in one or both of these cases. With relators becoming increasingly aggressive in their pursuit of FCA claims, the need for clear guidance from the Supreme Court regarding this doctrinal uncertainty has never been greater. Until the Supreme Court weighs in, one can expect a continued proliferation of qui tam cases alleging technical regulatory violations, and a continued proliferation of protracted litigation over the viability of these claims.