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SATURDAY, NOVEMBER 25, 2017
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Issue:  False Claims Act

Universal Health Services v. United States ex rel. Escobar

15-7

QUESTION(S) PRESENTED

The False Claims Act ("FCA") makes it unlawful to present a "false or fraudulent" claim for government reimbursement. 31 U.S.C. § 3729(a)(1)(A). A claim can be "factually false" because, for example, the contractor has not provided the products or services for which reimbursement is sought. Some courts have held that a claim can be "legally false" for purposes of the FCA because the contractor, while providing the products or services for which reimbursement is sought, did not comply with a condition of payment imposed by statute, regulation, or contract. This latter theory of FCA liability is divided into two categories: "express certification" and "implied certification." The viability and scope of the latter theory is at issue here.

Respondents' complaint alleged that petitioner's reimbursement claims were legally false because petitioner's services did not comply with several specific regulatory provisions with which petitioner impliedly certified compliance. The district court dismissed the complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) because none of the regulatory provisions alleged in respondents' complaint, or otherwise cited by respondents in the proceeding, imposed conditions of payment, except one, and respondents did not plausibly allege any violation of that provision.

The First Circuit below reversed, holding that respondents' complaint (1) alleged conduct that violated a regulation neither pled in respondents' complaint nor cited by respondents at any point in the proceedings below, and that (2) compliance with this unpled and uncited regulation was a condition of payment. According to the First Circuit, respondents thus stated a claim for legal falsity under the FCA. Although the First Circuit has eschewed labels used by other circuits in describing different types of FCA claims, it applied an "implied certification" theory of legal falsity.

The questions presented are:
1. Whether the First Circuit, by sua sponte identifying and relying upon a regulatory provision not invoked by respondents at any point in the proceedings below to reverse the district court's dismissal of respondents' complaint, has so far deviated from the adversary system's party presentation rule "so as to call for an exercise of this Court's supervisory power" under this Court's Rule lO(a).

2. Whether the "implied certification" theory of legal falsity under the FCA-applied by the First Circuit below but recently rejected by the Seventh Circuit-is viable. 3. If the "implied certification" theory is viable, whether a government contractor's reimbursement claim can be legally "false" under that theory if the provider failed to comply with a statute, regulation, or contractual provision that does not state that it is a condition of payment, as held by the First, Fourth, and D.C. Circuits; or whether liability for a legally "false" reimbursement claim requires that the statute, regulation, or contractual provision expressly state that it is a condition of payment, as held by the Second and Sixth Circuits.
 

DECISION

Decided June 16, 2016 HOLDING

The implied false certification theory can be a basis for FCA liability when a defendant submitting a claim makes specific representations about the goods or services provided, but fails to disclose noncompliance with material statutory, regulatory, or contractual requirements that make those representations misleading with respect to those goods or services. Contrary to Universal Health’s contentions, FCA liability for failing to disclose violations of legal requirements does not turn upon whether those requirements were expressly designated as conditions of payment.

Agree image Justice Sotomayor
Agree Sotomayor
Agree image Justice Breyer
Agree Breyer
Author image Justice Thomas
Author Thomas
Recused image Justice Scalia
Recused Scalia
Agree image Chief Justice Roberts
Agree Roberts
Agree image Justice Kennedy
Agree Kennedy
Agree image Justice Ginsburg
Agree Ginsburg
Agree image Justice Alito
Agree Alito
Agree image Justice Kagan
Agree Kagan

THOMAS, J., delivered the opinion for a unanimous Court.

Text of Opinion
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ORAL ARGUMENT

Argued April 19, 2016

Appearences
On Behalf of Petitioner Universal Health Services, Inc.
Roy T. Englert, Jr., Esq.
On Behalf of Respondents United States and Massachusetts, ex rel. Julio Escobar and Carm
David C. Frederick, Esq.
On Behalf of United States as amicus curiae
Malcolm L. Stewart, Deputy Solicitor General
Transcript
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Merit Briefs
Brief for Universal Health Services, Inc (pdf download)
Brief for United States and Massachusetts, ex rel Julio Escobar and Carmen Correa (pdf download)
Reply Brief for Universal Health Services, Inc (pdf download)
Amicus Curiae Briefs
Amicus Brief of American Medical Association, et al supporting Petitioner (pdf download)
Amicus Brief of Catholic Charities of the Diocese of Joliet, Inc supporting Petitioner (pdf download)
Amicus Brief of Coalition for Government Procurement supporting Petitioner (pdf download)
Amicus Brief of National Association of Criminal Defense Lawyers supporting Petitioner (pdf download)
Amicus Brief of Chamber of Commerce of the United States of America, et al supporting Petitioner (pdf download)
Amicus Brief of Washington Legal Foundation supporting Petitioner (pdf download)
Amicus Brief of Generic Pharmaceutical Association supporting Petitioner (pdf download)
Amicus Brief of Pharmaceutical Research and Manufacturers of America, et al supporting Petitioner (pdf download)
Amicus Brief of Association of Private Sector Colleges and Universities supporting Petitioner (pdf download)
Amicus Brief of Interested Healthcare Providers supporting Petitioner (pdf download)
Amicus Brief of American Hospital Association, et al supporting Petitioner (pdf download)
Amicus Brief of CTIA-The Wireless Association supporting Petitioner (pdf download)
Amicus Brief of CareSource supporting Petitioner (pdf download)
Amicus Brief of American Health Care Association and the National Center for Assisted Living supporting Petitioner (pdf download)
Amicus Brief of US Senator Charles E Grassley supporting Respondents (pdf download)
Amicus Brief of Law Professors and Senior Lecturers of Law supporting Respondents (pdf download)
Amicus Brief of The Commonwealth of Massachusetts supporting Respondents (pdf download)
Amicus Brief of States of Illinois, et al supporting Respondents (pdf download)
Amicus Brief of Mark McGrath supporting Respondents (pdf download)
Amicus Brief of AARP supporting Respondents (pdf download)
Amicus Brief of Taxpayers Against Fraud Education Fund supporting Respondents (pdf download)
Amicus Brief of the Judge David L Bazelon Center for Mental Health Law, et al supporting Respondents (pdf download)
Amicus Brief of National Whistleblower Center supporting Respondents (pdf download)
Amicus Brief of Professor David Freeman Engstrom supporting Respondents (pdf download)
Amicus Brief of the United States supporting Respondents (pdf download)
Amicus Brief of Professor Joel D Hesch supporting Respondents (pdf download)

CERTIORARI STAGE

Granted December 4, 2015

Certiorari Stage Documents
      Petition for Certiorari (pdf download)
Brief in Opposition (pdf download)
Petitioner's Reply (pdf download)

PROCEEDING BELOW

United States Court of Appeals for the First Circuit
Decided March 17, 2015
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