Supreme Court of the United States
Universal Health Services, Inc., Petitioner v. United States and Massachusetts, ex rel. Julio Escobar and Carmen Correa.
June 16, 2016579 U.S. 176
Summary
The Supreme Court held that the implied false certification theory can support False Claims Act liability when a claim makes specific representations about the goods or services provided and the submitter's failure to disclose noncompliance with material statutory, regulatory, or contractual requirements renders those representations misleading half-truths. It rejected any rule confining liability to requirements expressly designated as conditions of payment, holding that the label is relevant to but not dispositive of the Act's demanding materiality inquiry. Government payment practices carry decisive weight: payment in full despite actual knowledge of violations is very strong evidence that the requirements are not material, defeating the Government's entitlement-to-refuse-payment test. Because both courts below interpreted § 3729(a)(1)(A) differently from the Court, it vacated the First Circuit's judgment and remanded for reconsideration of the complaint's sufficiency.
Holding
- Whether the implied false certification theory can be a basis for False Claims Act liability under § 3729(a)(1)(A).. Yes, at least where two conditions are satisfied: first, the claim does not merely request payment but makes specific representations about the goods or services provided; and second, the defendant's failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.
- Whether liability for failing to disclose violations of legal requirements turns on whether those requirements were expressly designated as conditions of payment.. No. Liability does not turn upon express designation as a condition of payment; defendants can be liable for violating requirements not so designated, and conversely not every violation of an expressly designated condition of payment triggers liability. What matters is whether the defendant knowingly violated a requirement it knows is material to the Government's payment decision; the label is relevant to but not dispositive of materiality.
- How the False Claims Act's materiality requirement should be enforced.. Materiality is demanding: a misrepresentation about compliance with a statutory, regulatory, or contractual requirement must have a natural tendency to influence, or be capable of influencing, the Government's payment decision. The Government's mere option or entitlement to decline payment does not establish materiality, nor does express designation as a condition of payment; minor or insubstantial noncompliance cannot be material. Evidence that the Government consistently refuses to pay claims in the mine run of cases based on noncompliance is probative of materiality, while payment of a claim in full despite actual knowledge of violations is very strong evidence the requirements are not material.
Docket 15–7.
Cited authorities
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- United States of America v. Aegerion Pharmaceuticals, Inc.
- Wollman v. Massachusetts General Hospital Inc.