Argument preview: Justices to consider whether False Claims Act permits qui tam suits for “implied” falsehood

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Ronald Mann Contributor

Posted Tue, April 12th, 2016 9:12 am

Argument preview: Justices to consider whether False Claims Act permits qui tam suits for “implied” falsehood

The Court next week will hear oral arguments in what may be the highest-stakes (at least in terms of dollars potentially at stake) case of the Term, Universal Health Services v United States ex rel. Escobar. At issue is a question of great import to government contractors: whether a claim submitted to the government for payment is actionably “false or fraudulent” under the so-called “implied certification” theory of falsity.

 

For those who don’t specialize in government contracts law, the False Claims Act is a Civil War-era statute that provides for treble damages against government contractors that “knowingly presen[t] . . . false or fraudulent claim for payment.” What makes it interesting is its “qui tam” provision, which authorizes “relators” – private individuals whom government contractors characterize as bounty hunters – to bring suit if they notice a false claim that has not come to the attention of the government. If their suit turns out to unearth a claim that is actionably false, the relators get to retain a large share of the proceeds of the suit.