Optional_2023 Board Resources

3.2 Theories of Liability; Falsity . Given that the FCA statutory language does not define falsity, courts have created two categories to define the term: factual falsity and legal falsity. 32 Factual falsity occurs when one submits a claim for reimbursement that provides “an incorrect description of goods or services provided or a request for reimbursement for goods or services never provided.” 33 Such a factually false claim is “untrue on its face.” 34 Legal falsity, on the other hand, occurs when one “falsely represents that [he] is in compliance with a particular federal statute or regulation.” 35 Legal falsity attaches in two instances: (a) Express Certification . With respect to express certification, one signs or otherwise certifies that he has complied with “some law or regulation on the face of the claim submitted.” 36 Express certification does not require explicit or “literal certification” but can be any false statement expressly made to that effect. 37

Implied Certification. With respect to implied certification, the Supreme Court has developed a two-part test: “[F]irst, the claim does not merely request payment, but also 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.” 38

(b)

3.3 Penalties . The FCA provides for a civil penalty between about $11,000 and $23,000 per claim and up to triple the amount of damages suffered by the government. 39 3.4 Qui Tam Actions . The FCA empowers private individuals (“relators”) to act on behalf of the government and file suit for violations of the FCA, which is to be kept under seal for at least 60 days (practically, matters can be under seal for an extended period of time). 40 The relator must serve a complaint and written disclosure of all relevant information on the U.S. Attorney General and the U.S. Attorney in the judicial district where the qui tam action was filed. 41 During the period in which the suit is sealed, the government investigates the complaint and informs the court as to whether the government will intervene, or take over pursuing the case 32 See United States ex rel. Wilkins v. United Health Grp., Inc. , 659 F.3d 295, 305 (3d Cir. 2011); see also United States ex rel. Kester v. Novartis Pharm. Corp. , 41 F. Supp. 3d 323, 328-29 (S.D.N.Y. 2014); United States ex rel. Pervez v. Beth Israel Med. Ctr. , 736 F. Supp. 2d 804, 812 (S.D.N.Y. 2010). 33 Pervez , 736 F. Supp. 2d at 812 (quoting United States ex rel. Kirk v. Schindler Elevator Corp. , 601 F.3d 94, 113- 14 (2d Cir. 2010). 34 United States v. Kellogg Brown & Root Servs., Inc. , 800 F. Supp. 2d 143, 154 (D.D.C. 2011) (citing United States v. Sci. Applications Int’l Corp. (SAC II) , 626 F.3d 1257, 1266 (D.C. Cir. 2010)). 35 Pervez , 736 F. Supp. 2d at 812; Universal Health Servs., Inc. v. United States ex rel. Escobar , 136 S. Ct. 1989, 2001 (2016). 36 United States ex rel. Hobbs v. MedQuest Assocs., Inc. , 711 F.3d 707, 714 (6 th Cir. 2013). 37 United States ex rel. Lemmon v. Envirocare of Utah, Inc. , 614 F.3d 1163, 1168 (10 th Cir. 2010). 38 Escobar , 136 S. Ct. at 2001. 39 31 U.S.C. § 3729(1). 40 31 U.S.C. §§ 3730(b)(1) and 3730(b)(2). 41 31 U.S.C. § 3730(b)(2).