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The False Claims Act After <b><i>Escobar:</i></b> A Three-Part Test

By Stanley A. Twardy, Jr. and Elizabeth A. Latif

In a unanimous opinion in Universal Health Servs. v. United States ex rel. Escobar, 195 L. Ed. 2d 348 (U.S. 2016), the Supreme Court provided a new framework for assessing false certification liability under the False Claims Act (FCA). The FCA creates civil liability for any person who knowingly submits a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government. It defines a “claim” as a demand for money or property made directly to the federal government or to a contractor, grantee, or other recipient if the money is to be spent on the government's behalf in anticipation of reimbursement by the government.

The false certification theory of liability arises when a government contractor fails to comply with contractual provisions, statutes, or regulations, and the contractor has either expressly or impliedly certified such compliance. Escobar sets forth a new framework for such claims, which can be summed up in a three-part test:

  • Does the request for payment contain a “specific” representation about the goods or services provided?
  • If yes, a) Was it false? or b) Did the representation omit that the requestor had not complied with a statutory, regulatory or contractual requirement, such that it made the representation a half-truth?
  • Was the misrepresentation material to the government's payment decision?

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