Law360 Quotes Partner William A. Escobar on Supreme Court’s FCA Liability Ruling

Partner William A. Escobar is quoted in the Law360 article Attys React To High Court’s FCA Liability Ruling.” Mr. Escobar comments on the U.S. Supreme court’s ruling that FCA liability will go into motion when there is a statutory, regulatory, or contractual obligation that was substantial to a payment of the claim. This will expand ligation under federal and state claims acts. 

In Universal Health, the Supreme Court resolved a conflict among the Courts of Appeal on the issue of implied certification liability. The court held that liability under the FCA can attach when a defendant is shown to have violated a statutory, regulatory or contractual obligation that was material to the payment of a claim by the federal government. The decision takes an expansive view of the somewhat nebulous concept of implied certification and rejects the narrower view that a false claim must relate to an express false statement that leads to payment of a claim. Under this decision, an entity that is subject to statutory, regulatory or contractual obligations implicitly certifies with each submission of a claim that it is complying with all those obligations. Failure to disclose non-compliance with any such obligation can constitute a false claim. Recognizing that this holding, coupled with a vast regulatory system imposing a wide array of obligations on entities that engage with the federal government, could expose companies to substantial liability and litigation, the court took pains to emphasize that the regulatory or contractual violation has to be material to the decision to pay the claim. While the court tries to provide some guidance on the necessary showing of materiality, the reality is that this decision will expand litigation under the federal and state false claims acts and encourage the false claims plaintiffs bar.”

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