Supreme Court lays new groundwork for liability in False Claims Act cases with UHS v. Escobar decision

Theory expands as court rules what matters is whether defendant knowingly violated requirement they know is “material” to payment decision.

scotusThe Supreme Court handed down a unanimous decision today in the case of Universal Health Services vs. Escobar that could expand the use of the implied certification theory as a basis for liability under the False Claims Act, meaning the potential for more lawsuits.

Following two battles, one in Massachusetts District Court where the case was dismissed, and the lower Court of Appeals, which reversed that decision and held UHS had violated Massachusetts Medicaid regulations, the Supreme Court heard arguments in April and today sent the case back to the lower court once again. At the same time, in its decision/opinion, it laid new groundwork on which to judge the case and others like it.

Specifically, it gave new guidance on evaluating whether UHS’s omission of compliance violations made their reimbursement claims fraudulent under the implied certification theory of liability, which court documents explain “treats a payment request as a claimant’s implied certification of compliance with relevant statutes, regulations, or contract requirements that are material conditions of payment, and treats a failure to disclose a violation as a misrepresentation that renders the claim “false or fraudulent.”


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