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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:
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.
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