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Theories of Legal Falsity
A. Express Certification
In deciding whether the rule violated in an FCA case was important, courts have focused on whether the defendant "certified" compliance with that rule in connection with its request for payment. [FN24] Courts reasoned that an express certification of compliance with the rule provided evidence that the parties considered the rule in question important to the claim for payment, such that falsely certifying compliance with that rule constituted a false claim under the Act. [FN25] This theory of legal falsity became known *113 as the "express false certification" theory of liability under the FCA. [FN26]
Over time, the express certification theory gained traction as the premiere judicial construct for legal falsity in FCA cases. [FN27] This development is unsurprising given that the theory is, in most cases, easily applied. However, the theory also acquired talismanic effect in connection with FCA liability. Specifically, the legal community, both courts and litigants, began to treat the existence of an express certification as the sine qua non of liability, [FN28] while conversely treating the absence of an express certification as an automatic shield from liability under the Act. [FN29]
United States ex rel. Conner v. Salina Regional Health Center, Inc. [FN30] plainly demonstrates the excessive reliance that litigants placed on the express certification theory. Likewise, Conner also made it evident that the courts needed to reign in the certification construct. [FN31] There, a hospital had expressly certified compliance with "all applicable laws and regulations" in its cost reports (a means of claiming government funds), although it had violated many of those laws and regulations. [FN32] A physician sued the hospital under the FCA, claiming that the hospital's "false" express certification*114 rendered the hospital's claims false and actionable under the FCA. [FN33] The district court rejected the relator's position and dismissed all pertinent counts of his complaint; [FN34] the United States Court of Appeals for the Tenth Circuit affirmed that dismissal. [FN35]
Recognizing that the hospital had expressly certified compliance with all applicable laws and regulations in its cost report as alleged by the physician relator, the Tenth Circuit held that such an express certification of compliance was nevertheless too broad to form the basis for liability under the FCA because there was no evidence that payment by the government was contingent upon (or material to) compliance with all certified laws and regulations. [FN36] In other words, the Court recognized that having an express certification, without more, could not be the sine qua non of materiality or liability under the FCA. [FN37] The Court reasoned that this approach*115 to an express certification theory would over-expand liability under the FCA beyond what the Act intended. [FN38]
As cases similar to Conner transpired in the FCA arena, Courts began to realize the need to define and circumscribe the purview of the express certification theory by imposing additional requirements for liability under the theory. [FN39] Specifically, courts began to enumerate the types of rules with which a false express certification of compliance had to be made in order to form a basis for liability under the FCA, holding that liability would attach only if an express false certification was made with a statute, regulation, or contract term, as long as they were a condition to payment. [FN40] Different iterations of the foregoing list appear in subsequent cases, however, suggesting that express certification claims could exist when compliance with other conditions was expressly stated in authoritative sources other than statutes, regulations, and contracts, such as programs and other specifications. [FN41]
*116 These necessary adjustments to the express certification theory, however, failed in two respects. The adjustments neither resolved the remaining questions the theory raised, nor did they correct the analytical problems the theory's talismanic approach engendered. For example, what made a rule a ""condition to payment" for FCA liability, as required by the theory, remained undefined. Further, whether this condition to payment requirement was the same as the old materiality requirement under the Act became a murky proposition. Indeed, although some courts interpreted the "condition to payment" equirement as an expression of materiality to payment, [FN42] other courts held that this "condition to payment" requirement was something unrelated to the concept of materiality that appeared in the Act. [FN43] Additionally, decisions regarding express certification did not clarify whether a rule must declare itself to be a condition to payment in order to be a basis for FCA liability or whether the courts could surmise that the rule was a condition to payment based on other circumstances. [FN44]
The bottom line with the express certification theory, even as modified by Conner and subsequent cases, is that while the theory sought to simplify the materiality inquiry and prevent potential over-reaching under the FCA, the theory did not create a reliable paradigm that properly or consistently guided courts or litigants in FCA cases. To the contrary, courts' constant tweaking of the theory *117 made it an unreliable predictor of liability under the FCA and created division among the courts. [FN45]
B. Implied CertificationAnother problem with the express certification theory revealed itself over time; in its attempt to prevent over-reaching under the FCA, the theory excessively limited the FCA's reach. [FN46] Specifically, while the theory imposed extra requirements for liability to prevent over-reaching in cases like Conner, the theory shielded from liability other cases in which rules material to payment had been violated simply because the defendant had not expressly certified compliance with those rules. Courts sought to correct this problem through the creation of the implied certification theory of liability.
*118 By way of example, in Ab-Tech Construction, Inc. v. United States, [FN47] the Court of Federal Claims faced a situation where the plaintiff submitted payment vouchers that contained no express representations regarding their compliance with the eligibility requirement of the federal small business program in question. [FN48] The lack of certification clearly would have placed fraudulent conduct in the submission of those vouchers outside of the reach of the FCA under the express certification theory. [FN49] However, without an express certification to rely on, the Court concluded the plaintiff's submissions of payment vouchers implicitly certified adherence with the eligibility requirements of the program, making their conduct actionable under the FCA. [FN50] Many courts thereafter adopted the Ab-Tech framework, and thus the theory of implied certification was born. [FN51]
An implied false certification claim is "based on the notion that the act of submitting a claim for reimbursement itself implies compliance with governing federal rules that are a precondition to payment." [FN52] The idea behind the theory is that contractors should not ignore important rules that are conditions to payment simply because they did not make it into some form that required express certification by the contractor. In reality, most cases that call for application of the implied certification theory for liability under the FCA involve situations where the rule did make it into some condition of participation certified by the contractor at a different time from the time of payment. For example, a party might expressly certify compliance with certain conditions of participation in a *119 government program but later fail to comply with prior express certifications when it seeks payment. [FN53]
Because it corrected some of the unintended effects of the express certification theory, the implied certification construct was a welcome addition to the legal falsity paradigms available to the courts. However, the implied certification theory raised some problems of its own. Namely, in its attempt to cure the under-inclusion problem created by express certification, implied certification once again raised the specter of over-reaching FCA liability--the very thing that the express certification theory sought to correct. Accordingly, like the express certification theory, implied certification required and received significant modifications from the courts. For example, in the health care context, where the great majority of FCA cases arise, the Second Circuit considered the application of implied certification and cautioned that the construct could not be used expansively because it could improperly become a "blunt instrument to enforce compliance with all medical regulations . . . [as opposed to] those regulations that are a precondition to payment . . . ." [FN54] Instead, citing concerns with the federalization of medical malpractice under the guise of implied certification theories of liability, the Second Circuit added that implied certification*120 could only be used when the "underlying statute or regulation upon which the plaintiff relies expressly states [FN55] [that] the provider must comply in order to be paid." [FN56] To clarify, in contrast with the express certification theory, which required a false express certification with a statute, rule, or contract (arguably among other sources) that was a condition of payment (however determined), [FN57] the implied certification theory required a violation with a condition of payment expressly stated as such in a statute or a regulation--at least according to the Second Circuit. [FN58]
Not surprisingly, the implied certification construct did not unify FCA jurisprudence across the federal courts. Some courts followed the Second Circuit's implied certification construct, which allowed liability only if a statute or regulation expressly stated that compliance was a pre-condition to payment. [FN59] Those *121 courts misguidedly reasoned [FN60] that only by requiring such an express announcement in the regulation could the defendant receive sufficient notice to justify liability under the FCA. [FN61] Some courts, however, rejected the implied certification theory altogether as a basis for FCA liability, [FN62] while still others deferred ruling on its validity. [FN63] Further, some courts that subscribed to the implied certification construct eventually came to redefine it. [FN64] Though modification of the theory was necessary, the evolution of the construct *122 made the theory as much of a moving target and a source of division among courts as its predecessor, express certification.For example, in United States v. Science Applications International Corp. (SAIC II), [FN65] the United States Court of Appeals for the District of Columbia considered and rejected the Second Circuit's implied certification rule that the underlying statute or regulation must explicitly state payment was conditioned upon compliance with the statute or regulation in question. [FN66] Indeed, in a unanimous decision, the Court correctly noted that the FCA contained no such requirement and that reading it into the statute was a judicial gloss unsupported by the FCA's plain text. [FN67]
Instead, the D.C. Circuit identified contracts as an equally valid place where conditions to payment could be found for purposes of the implied certification theory. [FN68] The D.C. Circuit's pronouncement was then followed by the First Circuit, which also held that a claim could be legally false under the FCA due to an implied certification of compliance with a condition to payment that was not expressly stated in a statute of regulation. [FN69]
*123 In sum, some circuit courts of appeal required that, in order for FCA liability to attach under the implied certification theory, the violated rule must be in a statute or regulation that expressly declared such rule a pre-condition of payment. [FN70] In contrast, other circuits, finding that a contract would suffice, did not require a statute, a regulation, or an express declaration that the rule was a pre-condition to payment. [FN71]
C. The Return to MaterialityAgainst this backdrop of a divided jurisprudence related to FCA falsity, [FN72] it is not surprising that the concept of materiality finally resurfaced in the 2011 case, United States ex rel. Hutcheson v. Blackstone Medical, Inc. [FN73] In that case, a medical device manufacturer was charged with causing the submission of false claims when recipients of the manufacturer's kickbacks, namely, a hospital and physicians, submitted claims for reimbursement to the government. [FN74] The relator reasoned that the claims were legally false under the FCA because they violated the anti-kickback statute, a material pre-condition to payment. [FN75] The relator's complaint contained no allegations regarding express or implied certifications. [FN76] Instead, it alleged that the hospital and the physicians signed a provider*124 agreement and a cost report, both of which expressly conditioned payment on compliance with the anti-kickback statute, among other laws. [FN77]
Relying on the then-prevailing framework for liability under the FCA that centered heavily on certification theories discussed in this Article, the defendant moved to dismiss the relator's complaint. [FN78] Specifically, the defendant argued that there were only three ways for a claim to be false under the FCA: if it misstated facts, [FN79] incorrectly certified compliance with a statute or regulation, [FN80] or failed to meet an express condition of payment stated in a statute or regulation. [FN81] Since the complaint had not alleged factual falsities or certifications (express [FN82] or implied), the district court, accepting Defendant's argument, dismissed the case because the relator failed to plead actionable false claims under the FCA. [FN83]
In deciding that the relator had not stated a legally cognizable claim, the district court enumerated the elements of liability under the FCA as consisting of (1) knowingly presenting or causing to be presented, (2) a false claim, (3) to the United States Government, (4) knowing its falsity, (5) which was material, (6) seeking payment from the federal treasury. [FN84] The district court then *125 defined the "false claim" requirement (the second element in the court's analysis) as one arising exclusively under the three-fold construct of falsity advanced by the defendant: to wit, a factually false claim, a claim that fits in the express certification theory, or a claim that fits in the implied certification theory provide the sole means of recovery. [FN85] Finally, the district court treated "materiality" (the fifth element in the court's analysis) as an element separate from "falsity," defining the former as "'the natural tendency to influence, or be capable of influencing, the payment of receipt of money or property"' from the government. [FN86] In doing so, the district court clearly adopted the Second Circuit's conclusion that "falsity" and "materiality" are separate and distinct requirements under the FCA. [FN87]
On appeal, the United States Court of Appeals for the First Circuit rejected the district court's decision, holding that the threefold construct advanced by the defendant and adopted by the district court was merely a "judicially created conceptual framework" with imposed limitations that appeared nowhere in the text of the FCA. [FN88] With respect to the express and implied certification theories, the First Circuit pointed out that "[c]ourts have created these categories in an effort to clarify how different behaviors can give rise to a false or fraudulent claim." [FN89] However, the court recognized that "[j]udicially-created categories sometimes can . . . create artificial barriers that obscure and distort those requirements. The text of the FCA does not refer to 'factually false' or 'legally false' *126 claims, nor does it refer to 'express certification' or 'implied certification"' claims. [FN90]
Declining to rely on the three-fold construct in question, the First Circuit addressed what constitutes a "false or fraudulent" claim under the Act and concluded simply that "liability cannot arise under the FCA unless a defendant acted knowingly and the claim's defect is material" to the government's payment decision. [FN91] Accordingly, the First Circuit concluded that dismissal was inappropriate because it could not decide as a matter of law that compliance with the anti-kickback statute was not material to the government's decision to pay and directed the district court on remand to engage in a straightforward analysis of falsity based on the text of the statute. [FN92]
[FN24]. The reasoning was that it is not the underlying violation of a rule, but rather the false certification of compliance with that rule for the purpose of fraudulently obtaining payment, that triggers liability under the FCA. See, e.g., United States ex rel. Rost v. Pfizer, Inc., 736 F. Supp. 2d 367, 376 (D. Mass. 2010) ("A claim cannot be false merely because the activity underlying the claims was illegal, '[i]t is the false certification of compliance which creates liability."' (quoting United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996))); United States ex rel. Franklin v. Parke-Davis, 147 F. Supp. 2d 39, 55 (D. Mass 2001) ("While Defendant's payment of kickbacks may well be illegal, a claim under the FCA will fail unless Relator alleges that [the defendant] caused or induced a doctor and/or pharmacist to file a false or fraudulent certification regarding compliance with the anti-kickback statute.").
[FN25]. See, e.g., Laymon v. Bombardier Transp. (Holdings) USA, Inc., No. 05-169, 2009 WL 793627, at *8 (W.D. Pa. Mar. 23, 2009) (stating that courts have recognized false certification of compliance with a regulation that is a condition of payment as a basis of liability under the False Claims Act); see also United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 388 (1st Cir. 2011) ("The district court appeared to employ the concept of certification such that a claim can be false or fraudulent only if the submitting entity knew or should have known of the underlying falsehood or fraudulence."), cert. denied, 132 S. Ct. 815 (2011).
[FN26]. See United States ex rel. Wilkins v. United Health Grp., Inc., No. 08-3425, 2010 WL 1931134, at *3 (D. N.J. May 13, 2010) ("A legally false claim is known as the 'false certification' theory of liability."), aff'd in part and rev'd in part, 659 F.3d 295 (3d Cir. 2011); Claire Sylvia, The False Claims Act: Fraud Against the Government s 4:33 (2010) ("The term 'false certification,' . . . generally refers to a case in which a defendant who makes a claim for payment from the United States submits a form or document expressly certifying compliance with a law, contract term, or regulation, when the defendant did not in fact comply with the requirement, rendering the certification, and therefore the claim for payment, 'false."').
[FN27]. See Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001); United States ex rel. Siewick v. Jamieson Sci. & Eng'g, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786-87, 793 (4th Cir. 1999); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997); Hopper, 91 F.3d at 1266-67.
[FN28]. See Mikes, 274 F.3d at 698-99.
[FN30]. 543 F.3d 1211 (10th Cir. 2008).
[FN33]. Id. at 1214-15. A well-known national law firm, specializing in health care law and the defense of FCA cases, represented the relator, which goes to show the widespread reach of the express certification fallacy.
[FN34]. United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 459 F. Supp. 2d 1081, 1094 (D. Kan. 2006).
[FN35]. Conner, 543 F.3d at 1214 ("Like the district court, we hold that the FCA cannot be stretched this far, and affirm the dismissal of [Relator's] FCA claims.").
[FN36]. Id. at 1218. Note that some courts still did not recognize that the problem with the "broad certification" was not that the certification was somehow not express, but simply that the rule with which compliance was certified was not material to the government's decision to pay. See also United States ex rel. Westmoreland v. Amgen, Inc., 707 F. Supp. 2d 123, 136-37 (D. Mass. 2010) (holding broad language in state Medicare Enrollment Application requiring compliance with "all applicable state and federal laws" was insufficient to constitute express certification of compliance with state and federal anti kickback statutes), aff'd in part and rev'd in part, 652 F.3d 103 (1st Cir. 2011); cf. United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 243 (3d Cir. 2004) ("A certificate of compliance with federal health care law is a prerequisite to eligibility under the Medicare program. . . . It follows that Schmidt alleged a violation of the FCA when he alleged that Mercy certified its compliance with federal health care law knowing that certification to be false." (citation omitted)).
[FN37]. Unfortunately, many courts failed to recognize and flesh out the need for a material nexus between the wrongful conduct and the government's decision to expend funds. Courts continued to view express certification, without more, as the yardstick of liability. This led to tortured reasoning in some cases in which an "express certification" of compliance was clearly present, but where nevertheless the courts chose to negate such a fact for the apparent purpose of limiting FCA liability. See, e.g., Westmoreland, 707 F. Supp. 2d at 136-37 (holding broad language in state Medicare Enrollment Application requiring compliance with "all applicable state and federal laws" was insufficient to constitute express certification of compliance with state and federal anti-kickback statutes).
[FN38]. Conner, 543 F.3d. at 1218.
[FN39]. See United States ex rel. Augustine v. Century Health Servs., Inc., 136 F. Supp. 2d 876, 888 (M.D. Tenn. 2000) (holding that express certification is too broad to be a basis for liability).
[FN40]. See, e.g., Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001) ("We join the Fourth, Fifth, Ninth, and District of Columbia Circuits in ruling that a claim under the Act is legally false only where a party certifies compliance with a statute or regulation as a condition to governmental payment.").
[FN41]. See United States ex rel. Carter v. Halliburton Co., No. 1:08CV1162, 2009 WL 2240331, at *12 (E.D. Va. July 23, 2009) ("An express certification claim exists 'when a government contract or program required compliance with certain conditions as a prerequisite to a government benefit, payment or program."' (quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786 (4th Cir. 1999))). The constituent parts of a "program" such as Medicare often consist of documents, which are not statutes, regulations, or contracts in the traditional sense. They include Manuals and National and Local Coverage Decisions, as well as other documents. Further, the legislative history of the FCA includes violations of "specifications" as an additional source of liability under the FCA. See S. Rep. No. 99-345, at 9, reprinted in 1986 U.S.C.C.A.N. 5266, 5274 ("[A] false claim may take many forms, the most common being a claim for goods or services not provided, or provided in violation of contract terms, specification, statute, or regulation.").
[FN43]. See Mikes, 274 F.3d at 697 ("We add that although materiality is a related concept, our holding is distinct from a requirement imposed by some courts that a false statement or claim must be material to the government's funding decision. . . . We need not and do not address whether the Act contains a separate materiality requirement." (citation omitted)).
[FN44]. See, e.g., United States v. Albinson, No. 09-1791(DRD), 2010 WL 3258266, at *13 (D.N.J. Aug. 16, 2010) ("The overwhelming majority of courts have extended FCA liability to a party's knowing false certification of compliance with applicable regulations, statutes, or contracts, when compliance with the applicable requirement is a condition of payment. The Court is persuaded that the false express certification theory should apply in this matter. . . . [T]he Statement of Work required Albinson to certify acceptance of the work performed by the contractors . . . giv[ing] rise to an inference that payment was conditioned on the Albinson's acceptance of the work." (citations omitted)).
[FN45]. United States ex rel. Westmoreland v. Amgen, Inc., 707 F. Supp. 2d 123 (D. Mass. 2010), aff'd in part and rev'd in part, 652 F.3d 103 (1st Cir. 2011), is an example of the theory of express certification becoming a moving target as a means of predicting liability under the FCA. There, the district court faced an express certification of the CMS-855A enrollment form by a provider that had engaged in kickbacks. Id. at 134. In that form, the provider had agreed to "abide by the Medicare laws, regulations and program instructions" and certified that "I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with . . . the Federal antikickback statute . . . ." Id. Unable to deny the existence of the express certification, as well as an express certification with a contract term, specification, statute, or regulation, the court avoided finding liability by concluding that the certification of compliance was ""forward-looking." Id. at 136. As such, it could not be a basis for liability under the FCA unless it could be shown that "when the provider signed the enrollment forms, they knew that they would be accepting kickbacks from the Defendants in violation of the anti-kickback statute. Without such pleading, there can be no 'false claim.' Therefore, Relator's Complaint fails to state a legally false claim under the express certification theory." Id.
[FN46]. The express certification theory failed to capture cases of fraud that should be actionable under the FCA, something that was later alleviated with the advent of the implied certification theory, discussed later in this Article. See Mikes, 274 F.3d at 697 ("[A] claim under the Act is legally false only where a party certifies compliance with a statute or regulation as a condition to governmental payment."); see also United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211, 1214 (10th Cir. 2008) (denying FCA liability based on a lack of express certification).
[FN47]. 31 Fed. Cl. 429 (1994), aff'd, 57 F.3d 1084 (Fed. Cir. 1995).
[FN51]. See Shaw v. AAA Eng'g & Drafting, Inc., 213 F.3d 519, 532 (10th Cir. 2000) (discussing the reasoning of the Ab-Tech court); see also United States ex rel. Hendow v. Univ. of Phx., 461 F.3d 1166, 1172-73 (9th Cir. 2006) (adopting the implied certification theory set forth in Ab-Tech).
[FN52]. Mikes v. Straus, 274 F.3d 687, 699 (2d Cir. 2001) (citations omitted) ("Foundational support for the implied false certification theory may be found in Congress' expressly stated purpose that the Act include at least some kinds of legally false claims and in the Supreme Court's admonition that the Act intends to reach all forms of fraud that might cause financial loss to the government.").
[FN53]. The rationale behind implied certification liability can be seen in United States ex rel. Main v. Oakland City Univ., 426 F.3d 914 (7th Cir. 2005), although the court did not address the theory by name. There, a university obtained a certification of eligibility for government subsidies in phase one of a multi-phase program by expressly certifying that it would "refrain from paying recruiters contingent fees for enrolling students." Id. at 916. In phase two, the university applied for grants even though it was in violation then of the contingent fee rule with which it had certified adherence in phase one. Id. Finding liability under the FCA, Judge Easterbrook held that the phase two disbursements were contingent upon the certificate of eligibility in phase one and that liability attached to each claim submitted thereafter given the violation. Id. In other words, the university had implicitly certified that it was in compliance with the contingent fee rule when it submitted requests for grants in phase two. The court explained that "[i]f a false statement is integral to a causal chain leading to payment, it is irrelevant how the federal bureaucracy has apportioned the statements among layers of paperwork." Id.; cf. United States ex rel. Westmoreland v. Amgen, Inc., 707 F. Supp. 2d 123, 136-37 (D. Mass. 2010) (addressing the same scenario but rejecting liability under the express certification theory), aff'd in part and rev'd in part, 652 F.3d 103 (1st Cir. 2011).
[FN54]. Mikes, 274 F.3d at 699.
[FN55]. Id. at 700 (first and second emphasis added). Although the Second Circuit's "precondition to payment" statement seems to call for a materiality analysis as a means to cabining FCA liability, the Second Circuit never couched its opinion in such terms.
[FN56]. Id. In a different context--one involving the question of whether a person may be liable under the implied certification theory for causing a legally false claim to be submitted where the party submitting the claim is an innocent third party--a U.S. District Court in Massachusetts imposed yet another limitation on the use of the implied certification theory of liability when it answered that question in the negative. See United States ex rel. Rost v. Pfizer, Inc., 736 F. Supp. 2d 367, 375 (D. Mass. 2010); see also United States ex rel. Hutcheson v. Blackstone Med. Inc., 647 F.3d 377, 379 (1st Cir. 2011) (rejecting the Rost limitation on implied certification and holding that, in fact, a person could have liability under the implied certification theory for causing legally false claims to be submitted by an innocent third party), cert. denied, 132 S. Ct. 815 (2011); cf. In re Pharm. Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 12, 18-19 (D. Mass. 2007) (holding, in the same court, the opposite in connection with an implied certification case involving factual falsities as opposed to legal falsities).
[FN58]. For a compilation of implied certification cases through 2008, see generally Susan C. Levy, et al., The Implied Certification Theory: When Should the False Claims Act Reach Statements Never Spoken or Communicated, But Only Implied?, 38 Pub. Cont. L.J. 131 (2008) (arguing that the implied certification theory of liability should be narrowly applied).
[FN59]. See United States ex rel. Kirk v. Schindler Elevator Corp., 601 F.3d 94, 114 (2d Cir. 2010), rev'd, 131 S. Ct. 1885 (2011) (following Mikes, 274 F.3d at 687); United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211, 1218 (10th Cir. 2008) (accepting implied certification theory under varying conditions); United States ex rel. Augustine v. Century Health Servs., Inc., 289 F.3d 409, 415 (6th Cir. 2002) (accepting implied certification theory); United States ex rel. Siewick v. Jamieson Sci. & Eng'g, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000) (adopting implied certification theory when payment is conditioned on compliance with statute or regulation); see also United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997) (finding certification where government conditioned payment on such certification).
[FN60]. Because the FCA already contains a scienter requirement that imposes liability only upon knowing submissions of false claims, injecting "notice" into what is essentially a materiality inquiry unnecessarily obfuscates the analysis.
[FN61]. United States ex rel. Westmoreland v. Amgen, Inc., 707 F. Supp. 2d 123, 137 (D. Mass. 2010) ("[L]iability based on an implied certification theory requires that the relevant statute or regulation expressly state that compliance with a particular requirement is a precondition of payment. . . . [[A]dequate notice should be given that compliance is a precondition to payment by an express statement in the relevant statute or regulation." (citations omitted)), aff'd in part and rev'd in part, 652 F.3d 103 (1st Cir. 2011).
[FN62]. See, e.g., United States ex rel. Carter v. Halliburton Co., No. 1:08cv1162, 2009 WL 2240331, at *12-13 (E.D. Va. July 23, 2009) ("Under his implied false certification theory . . . the FCA . . . attaches liability to the submission of a claim by a contractor that knows that it has not complied with a contract term, statute, or regulation. . . . constitut[ing] an 'implicit[[] certifi[cation]' that the contractor has fully performed the relevant portion of the contract. This theory . . . has not been recognized in the Fourth Circuit, which has, in fact, expressed doubt as to whether implied certification liability can exist." (citations omitted)).
[FN63]. See, e.g., United States ex rel. Marcy v. Rowan Cos., Inc., 520 F.3d 384, 389 (5th Cir. 2008) (deferring decision on the validity of implied false certification theory); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786 & n.8 (4th Cir. 1999) (declining to address the validity of implied false certification theory).
[FN64]. See discussion supra note 56.
[FN65]. 626 F.3d 1257 (D.C. Cir. 2010).
[FN66]. Id. at 1269. Finding themselves unfettered by precedent, Chief Judge Sentelle, Judge Tatel, and Judge Griffith unanimously rejected the ""express conditioning" requirement set out in the Second Circuit cases and explained that "nothing in the statute's language specifically requires such a rule, and we fear that adopting one would foreclose FCA liability in situations that Congress intended to fall within the Act's scope." Id. at 1268. Most importantly, in rejecting the modified implied certification construct, the Court circled back to the concept of materiality, further holding that, although the
existence of express contractual language specifically linking compliance to eligibility for payment may well constitute dispositive evidence of materiality . . . it is not . . . a necessary condition. The plaintiff may establish materiality in other ways, such as through testimony demonstrating that both parties to the contract understood that payment was conditional on compliance with the requirement at issue.
Id. at 1269. SAIC II was reaffirmed and followed in United States v. Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d 143 (D.D.C. 2011).
[FN67]. SAIC II, 626 F.3d at 1268-69.
[FN69]. See United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 379 (1st Cir. 2011) ("First, we reject the argument that, in the absence of an express legal representation or factual misstatement, a claim can only be false or fraudulent if it fails to comply with a precondition of payment expressly stated in a statute or regulation. Second, we reject the argument that a submitting entity's representations about its own legal compliance cannot incorporate an implied representation concerning the behavior of non-submitting entities. These purported limitations do not appear in the text of the FCA and are inconsistent with our case law."), cert. denied, 132 S. Ct. 815 (2011).
[FN70]. See Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001).
[FN71]. See Ab-Tech Constr., Inc. v. United States, 31 Fed. Cl. 429, 433 (Fed. Cl. 1994), aff'd, 57 F.3d 1084 (Fed. Cir. 1995); see also United States ex rel. Wilkins v. United Health Grp., Inc., No. 08-3425, 2010 WL 1931134, at *4 (D. N.J. May 13, 2010) (holding that an implied false certification theory of FCA liability was viable), aff'd in part, rev'd in part, 659 F.3d 295 (3d Cir. 2011).
[FN72]. The Supreme Court of the United States has never endorsed nor clarified these judicial constructs.
[FN73]. 647 F.3d 377 (1st Cir. 2011), cert. denied, 132 S. Ct. 815 (2011).
[FN76]. United States ex rel. Hutcheson v. Blackstone Med., Inc., 694 F. Supp. 2d 48, 65 (D. Mass. 2010) ("The Amended Complaint contains no allegations regarding certifications . . . ."), rev'd, 647 F.3d 377 (1st Cir. 2011), cert. denied, 132. S. Ct. 815 (2011).
[FN77]. Hutcheson, 647 F.3d at 381.
[FN78]. Hutcheson, 694 F. Supp. 2d at 60-61.
[FN79]. A claim that misstates a fact would fall under the factual falsity category explained earlier in this Article.
[FN80]. Such a claim would fall under a version of the express certification theory.
[FN81]. See Hutcheson, 647 F.3d at 379. Such a claim would fall under a version of the implied certification theory.
[FN82]. Though not alleged, the district court did consider whether the provider agreement and hospital cost reports were express certifications. As to the cost report, the district court found that it was too general to constitute an express certification basis for liability, a la Conner. Hutcheson, 694 F. Supp. 2d at 65-66. As to the provider agreement, the district court found that the certification was specific to the physicians, not the device manufacturer. Id.
[FN84]. Id. at 61. It should be noted that the case was adjudicated under the pre-FERA version of the FCA. FERA amended the FCA to eliminate the presentment requirement to the U.S. Government listed by the district court as the third element of liability. In all other respects pertinent to this Article, the con tent of the FCA pre- and post-FERA is identical in content, except for some renumbering.
[FN86]. Id. at 64 (quoting 31 U.S.C. s 3729(b) (2006 & Supp. V 2011)).
[FN87]. Id. at 63 ("[A]nalysis of whether the claim is false vel non ought not be based on the materiality of the false statement.").
[FN88]. United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 379-80 (1st Cir. 2011) ("[W]e reject the argument that, in the absence of an express legal representation or factual misstatement, a claim can only be false or fraudulent if it fails to comply with a precondition of payment expressly stated in a statute or regulation. . . . These purported limitations do not appear in the text of the FCA . . . . In reaching this conclusion, we do not adopt the judicially created conceptual framework employed by the district court, nor do we adopt any categorical rules as to what counts as a materially false or fraudulent claim under the FCA." (emphasis added)), cert. denied, 132 S. Ct. 815 (2011).
[FN91]. Id. at 388 (emphasis added).
[FN92]. Id. at 395 ("[W]e reverse the district court's dismissal . . . for failing to identify a materially false or fraudulent claim within the meaning of the FCA . . . .").
