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

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?

Background

Escobar dealt with the Medicaid program, a joint state-federal program in which health care providers serve indigent or disabled patients and submit claims to the government for reimbursement. In Escobar , the contractor was Arbour Counseling Services (Arbour), a mental health facility in Lawrence, MA, owned and operated by a subsidiary of Universal Health Services (Universal Health). Arbour submitted claims to the government for mental health services provided to a teenaged beneficiary of Massachusetts' Medicaid program, Yarushka Rivera. Medicaid paid the claims. But, as it turned out, many of the those who provided services to Rivera did not have the qualifications and licenses required for payment under the Medicaid guidelines and regulations. For example, Arbour had submitted claims for services it provided to Rivera that indicated that services were provided by individuals who had earned National Provider Identification numbers, which are provided by the federal government upon proof of certain qualifications and licenses. In fact, however, those service providers did not have the required qualifications and licenses.