Public Contract Law Journal

Striving for Consistency: Implied False Certification Theory after Escobar

by Christina Parel

Christina Parel (cparel@law.gwu.edu) is a J.D. Candidate at The George Washington University Law School and an Articles Editor on the Public Contract Law Journal. She thanks Professor Collin Swan and Notes Editor Roya Motazedi for their invaluable help and guidance throughout the Note-writing process. She also thanks her family, friends, and boyfriend for their support and encouragement.

I. Introduction

Yarushka Rivera died after experiencing an adverse reaction to a medication for bipolar disorder.1 Prior to her death, Ms. Rivera received treatment from Arbour Counseling Services (Arbour), a subsidiary of Universal Health Services, Inc.2 Arbour employees diagnosed Ms. Rivera with bipolar disorder and prescribed the medication that ultimately led to her death.3 Remarkably, an unlicensed psychologist diagnosed Ms. Rivera, and a nurse lacking authority to independently issue prescriptions prescribed the medication.4 Not only did Arbour permit unqualified practitioners to treat Ms. Rivera, but Arbour also submitted her treatment claims to the Massachusetts Medicaid program for payment.5

After Ms. Rivera’s death, her parents filed suit against Universal Health Services under the False Claims Act (FCA)6 — the “fundamental federal statute with the goal of promoting honesty in dealing[s]” with the government.7 Ms. Rivera’s parents argued Arbour defrauded the Massachusetts Medicaid program by submitting false claims for reimbursement for their daughter’s treatment.8 Ms. Rivera’s parents asserted that Arbour’s claims for reimbursement were false because Arbour did not disclose that Ms. Rivera’s treatment involved important and material violations of the Medicaid program’s regulations.9 In short, Ms. Rivera’s parents asserted the implied false certification theory of liability, in which liability under the FCA is triggered when a defendant does not disclose a “violation of a material statutory, regulatory, or contractual requirement.”10

The scope and meaning of the FCA has been contentiously litigated.11 The Supreme Court has ruled on FCA related cases “no less than [twenty-four] times since 1986, and in 2015 alone, federal courts of appeal interpreted elements of the FCA more than [ninety] times.”12 In the fiscal years of 2014 and 2015, 700 and 638 FCA cases were filed, respectively.13 Since 2009, the government has recovered $31.3 billion from FCA case settlements and judgments, with $4.7 billion stemming from the 2016 fiscal year alone.14

One of the Supreme Court’s latest forays into the interpretation of the FCA was its ruling in Universal Health Services Inc. v. United States ex rel. Escobar (Escobar), the suit brought by Ms. Rivera’s parents.15 In Escobar, the Court established the viability of implied false certification theory of liability and attempted to establish its scope in the hopes of mending a split among the Courts of Appeals.16 The Court also articulated a two-step test for establishing a valid claim under the implied false certification theory of liability.17

Prior to the Court’s opinion, the Courts of Appeals disagreed as to both the validity of the implied false certification theory of liability and its application.18 Even after Escobar, several recent court decisions suggest the parameters for applying the implied false certification theory, including whether the two-step test articulated by the Court is mandatory19 and the scope of the materiality requirement, remain unclear.20 It remains uncertain whether the Court succeeded in its latest attempt to establish clear FCA parameters.

This Note argues that the two-step test articulated by the Supreme Court in Escobar is mandatory for the application of the implied false certification theory of liability, but that the test’s materiality prong should be interpreted broadly to remain consistent with the FCA’s goal of preventing fraud and upholding the government procurement system’s legitimacy. Part I of this Note introduces the issues. Part II explores the background of the FCA and the implied certification theory of liability, including an overview of the circuit split. This Note then analyzes the Escobar decision itself. Part III analyzes how the Escobar opinion should be interpreted. First, it argues Escobar established a mandatory two- part test. It then argues the test’s materiality prong should be broadly interpreted and cautions against overemphasizing the government’s response in determining whether a misrepresentation is material. Part IV provides a brief conclusion.

II. Background

The following section discusses the FCA’s history and implied false certification theory of liability. This section also discusses the disparate application and acceptance of implied false certification prior to Escobar, followed by the history and overview of the Escobar opinion itself. This information provides the context necessary to analyze the meaning and scope of the Supreme Court’s Escobar opinion. Of particular importance are the policy rationales that underlie not only the FCA but also the various iterations of the implied false certification theory of liability adopted by several Courts of Appeal prior to the Court’s decision in Escobar. The following discussion of the Escobar decision and its history is critical in understanding the ambiguities and uncertainties remaining on the application of the implied false certification theory of liability.

A. Brief Overview of the False Claims Act

Congress originally enacted the FCA in 1863 in an effort to stop rampant fraud committed by defense contractors during the Civil War.21 The FCA remained mostly unchanged until the 1940s.22 In 1943, Congress amended the FCA to bar qui tam actions based on information already in the government’s possession.23 However, the 1943 amendment significantly weakened the FCA’s efficacy as a tool for combating fraud.24 Congress addressed this in 1986 by amending and strengthening the FCA.25 The version of the FCA promulgated in 1986 is the Act’s modern version.26 The FCA is “divided into two sections: the Civil False Claims Act, 31 U.S.C. § 3729, et seq., and the Criminal False Claims Act, 18 U.S.C. § 287.”27

The purpose of the modern FCA is to “enhance the [g]overnment’s ability to recover losses sustained as a result of fraud against the [g]overnment”28 by ending the “‘conspiracy of silence’ among contractor employees” engaging in fraud.29 The FCA is the “fundamental federal statute with the goal of promoting honesty in dealing[s]” with the government.30 This honesty is crucial to the procurement process, which requires contractors to “follow exemplary standards of conduct.”31 The importance of preserving legitimacy is underscored by the Act’s “essentially punitive [] nature.”32

Under the FCA,33 the Attorney General or a qui tam relator34 can pursue a civil lawsuit against anyone who commits certain acts of fraud against the government.35 Several acts of fraud can trigger liability under the FCA, but the act is used most commonly to prosecute “any person who knowingly presents or causes to be presented a false or fraudulent claim for payment or approval to the federal government.”36 The FCA permits treble damages and a civil penalty,37 allowing relators to recover substantial sums.38 However, a defendant may be awarded reasonable attorneys’ fees and expenses if the government declines to intervene, the defendant “prevails,” and the court “finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.”39

B. Implied False Certification Theory of Liability

There are three theories of liability under the FCA: (1) traditional FCA liability, (2) express certification theory, and (3) implied false certification theory.40 Traditional FCA liability generally involves claims that are “factually false,” meaning they request payment for goods and services that were never provided or provided in a different form.41 Generally, this entails the submission of invoices to the government that contain “on their faces false statements or descriptions.”42 For instance, using the facts of the Escobar case, Arbour would have triggered traditional FCA liability if it submitted claims to the Massachusetts Medicaid program for treatments Ms. Rivera never received.

Under the express certification theory, liability is triggered when an invoice submitted to the government “contains a false affirmative declaration of compliance with a contract provision, statute, or regulation material to the government’s decision to pay.”43 The false affirmation makes the claim legally false.44 For example, using the facts of the Escobar case, Arbour would have triggered liability under the express certification theory if it submitted invoices to the Massachusetts Medicaid program explicitly stating it complied with certain regulations that it had not complied with. Traditional FCA liability and express certification theory of liability are well-established theories of liability under the FCA.45

Implied false certification theory is “a relatively new theory of liability” under the FCA.46 The theory stems from the 1994 U.S. Court of Federal Claims decision in Ab-Tech Construction v. United States.47 Under implied false certification theory, when a defendant submits an invoice to the government, it “impliedly certifies” that it has complied with all the important and “material statutory, regulatory, or contractual requirement[s].”48 If the claim for payment does not “disclose the defendant’s violation of a material statutory, regulatory, or contractual requirement,” the claim is a false claim under the FCA.49 In other words, the claim is legally false.50 Implied false certification theory of liability differs from express certification theory of liability because under the implied false certification theory, defendants submitting claims for payment may be liable even though their claim explicitly does not state they are complying with certain regulations.51

Consider this hypothetical as an example of liability under the implied false certification theory. There was a contract between the government and a government contractor to build a facility. The contract has a material provision requiring that all components for the facility be purchased in the United States. Despite the provision, the government contractor buys steel beams for the facility from China. The contractor then submits a claim for payment to the government for the steel beams but fails to disclose it purchased the beams from China, not the United States. Under the implied false certification theory of liability, the government contractor’s claim for payment implicitly certified that the contractor complied with material contract provisions, including the provision requiring the contractor to buy only materials from the United States. The contractor’s failure to disclose the purchase from China makes its claim for payment to the government a false claim — triggering liability under the implied false certification theory of liability.

Prior to the Court’s opinion in Escobar, the acceptance and application of the implied false certification theory widely varied between circuits.52 Seven circuit courts adopted the implied false certification theory but applied the theory in disparate fashion.53 The Eleventh Circuit appeared to adopt the implied false certification theory’s rationale in an opinion, although the court did not explicitly mention the theory.54 Two circuit courts suggested in dicta that the implied false certification theory of liability is valid.55 The Seventh Circuit, however, outright rejected the implied false certification theory of liability.56 The circuit split meant the viability of an implied false certification claim varied greatly depending on where a case was filed.57

1. The Seventh Circuit Rejected the Implied False Certification Theory as a Theory of Liability

In United States v. Sanford-Brown, Ltd., the Seventh Circuit rejected the theory of implied false certification.58 In Sanford-Brown, the relator sued the defendant, the parent company of a for-profit college company and for-profit colleges, on the basis that it received subsidies under the Higher Education Act without complying with the “panoply of statutory, regulatory, and contractual requirements” the subsidies were conditioned on.59 The relator and government argued that because compliance was a “condition[] of payment,” the defendant’s failure to comply constituted a violation of the FCA.60 The court rejected this application of the FCA, finding the conditions of payment are “not a trigger set to impose liability if violated in the future” but “merely conditions of initial participation.”61 Additionally, the court found the FCA is not the “proper mechanism” for addressing a contractor’s failure to adhere to conditions of payment.62 The court argued the relator and government’s version of the implied false certification theory of liability “lack[ed] a discerning limiting principle.”63 The court further emphasized that under the FCA, “a mere breach of contract” is insufficient to trigger liability.64

2. Several Courts Held That Implied False Certification Theory Is Viable If Compliance Is a Condition-of-Payment

Several Courts of Appeals explicitly held that an implied false certification theory with a condition-of-payment requirement was valid. Under this interpretation of the implied false certification theory, a defendant is liable if: (1) it submits a claim for payment that fails to disclose “a knowing violation of a contractual, statutory, or regulatory provision material to the government’s decision to pay,” and (2) compliance with the violated provision was an express condition-of-payment.65 The courts explicitly adopting this theory of liability include the Second Circuit, Third Circuit, Sixth Circuit, and Tenth Circuit.66 The Eleventh Circuit appeared to adopt this rationale — although, it did not do so explicitly.67 The Fifth Circuit and Ninth Circuit suggested in dicta that this theory of liability was valid.68

For example, in Mikes v. Straus, the Second Circuit explicitly recognized an implied false certification theory with an express condition-of- payment requirement.69 In that case, the relator argued that the defendants violated the FCA when they submitted claims for reimbursement to Medicare “for spirometry procedures not performed in accordance with the relevant standard of care.”70 The court acknowledged the FCA “was intended to embrace at least some claims that suffer from legal falsehood.”71 However, the court also held “implied false certification is appropriately applied only when the underlying statute or regulation upon which the plaintiff relies expressly states the provider must comply in order to be paid.”72 The court reasoned that this interpretation of the implied false certification theory — unlike a more expansive interpretation — did not “improperly broaden the Act’s reach.”73 The court also cautioned against a more expansive interpretation of the implied false certification theory in the Medicare context, arguing that such an interpretation “would promote federalization of medical malpractice.”74

3. Several Courts Held That Implied False Certification Theory Is Viable If Materiality and Scienter Requirements Are Satisfied

The D.C. Circuit, First Circuit, and Fourth Circuit recognized the broadest version of the implied false certification theory of liability by declining to adopt an express condition-of-payment requirement.75 Their decisions declined to adopt an express condition-of-payment requirement and emphasized materiality — closely resembling the analysis adopted by the Supreme Court in Escobar.76 For example, in United States v. Science Applications International Corp., the government sued the defendant, a government contractor, alleging the defendant violated the FCA by simultaneously failing to follow “contractual provisions governing potential conflicts of interest” and requesting payment from the government.77 The defendant argued that because compliance with the conflict of interest provision was not a condition-of-payment, it was not liable under the FCA.78

The D.C. Circuit rejected this argument and held that “requests for payment can be ‘false or fraudulent’ under the FCA when submitted by a contractor that has violated contractual requirements material to the government’s decision to pay regardless of whether the contract expressly designates those requirements as conditions of payment.”79 The court required a “rigorous” materiality standard under which “the plaintiff must prove by a preponderance of the evidence that compliance with the legal requirement in question is material to the government’s decision to pay.”80 The D.C. Circuit stressed the “strict enforcement” of the scienter requirement, arguing the requirement was necessary to ensure that FCA liability attaches only for “false or fraudulent claims” and not simple breaches of contract.81

The D.C. Circuit rejected a condition-of-payment requirement because such a requirement created “a counterintuitive gap” in the FCA.82 The condition-of-payment requirement creates such a gap because a defendant would be able to avoid liability even when the defendant “knows that it violated a contractual requirement,” knows “compliance with that requirement is material to the government’s decision to pay” whether or not it is explicitly labeled as such, and “submits claims for payment that omit any mention of the requirement.”83 The court also noted that the FCA does not expressly mention a condition-of-payment requirement.84

Similarly, in United States v. Triple Canopy, Inc., the government and relator sued the defendant, a government contractor, alleging the contractor violated the contractual requirement to ensure its employees satisfied a marksmanship requirement and falsified records to hide its violation.85 The Fourth Circuit found that implied false certification theory was a valid theory of liability under the FCA where the materiality and scienter requirements were satisfied.86 The court justified its opinion on the basis that the FCA “is intended to protect the treasury against the claims of unscrupulous contractors, and it must be construed in that light.”87 However, the Fourth Circuit also noted that “[e]xpress contractual language” could be dispositive of materiality.88 The court stressed the importance of not allowing plaintiffs to “shoehorn a breach of contract claim into a [FCA] claim” through the strict enforcement of the materiality and scienter requirements.89

C. The Escobar Case

The Escobar case originated in the First Circuit90 and involved the treatment ofMs. Rivera at Arbour Counseling Services, a mental health facility operated by a subsidiary of Universal Health Services, Inc.91 Ms. Rivera’s parents brought the case pursuant to the FCA under the implied false certification theory of liability.92 Prior to the Supreme Court granting certiorari, the First Circuit held that the implied false certification theory of liability was triggered when a defendant submitted a claim for payment and “knowingly misrepresented compliance with a material precondition of payment” that is either express or implied.93 The court also held that “noncompliance with conditions of payment is sufficient to establish the falsity of a claim for reimbursement.”94

The Supreme Court in Escobar held that the implied false certification theory of liability is a valid theory of liability and rejected the condition-of-payment requirement.95 In doing so, the Court attempted to reconcile the disparate opinions of the Courts of Appeals regarding the application and validity of implied false certification theory of liability.96 However, the contours of the scope of this theory of liability remain unclear. The Court did not resolve whether Ms. Rivera’s parents satisfied the requirements of the implied false certification theory of liability but remanded the case for reconsideration.97

The Supreme Court granted certiorari in Escobar to (1) determine whether implied false certification theory is a valid theory of liability under the FCA, (2) ascertain the scope of implied false certification theory, and (3) resolve the circuit split.98 First, the Court held that the implied false certification theory of liability is valid in “at least” some circumstances.99 The Court declined to decide “whether all claims for payment implicitly represent that the billing party is legally entitled to payment.”100 Instead, the Court held that implied false certification theory of liability was valid where two elements were met. “[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.”101

Second, the Court rejected the idea that implied false certification theory is triggered only if the violated contractual, statutory, or regulatory provisions are “expressly designated a condition-of-payment” by the government.102 The Court found that neither the Act’s text nor the common-law meaning of fraud supported the express condition-of-payment requirement103 that a majority of the Courts of Appeals had adopted.104 The Court further emphasized that the FCA’s materiality and scienter requirements frustrated such an interpretation.105 The FCA requires that a misrepresentation be material to trigger liability.106 The Court argued that simply because a requirement is labeled a condition-of-payment does not mean it is “automatically material” and vice versa.107 Similarly, the Court noted the scienter element may be triggered, despite a requirement not being labeled a condition-of-payment, if the defendant has “‘actual knowledge’ that a condition is material.”108

The Court then limited the scope of liability under the implied false certification theory by requiring application of a “demanding” materiality standard.109 Materiality under the FCA “means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”110 The Court asserted that a demanding materiality standard is required because the “False Claims Act is not ‘an all- purpose antifraud statute …’ or a vehicle for punishing garden-variety breaches of contract or regulatory violations.”111 For this reason, “minor or insubstantial” noncompliance is not material.112

The Court then discussed non-dispositive factors to be analyzed in determining the materiality of noncompliance, including whether the government designated “compliance with a particular statutory, regulatory, or contractual requirement as a condition-of-payment;” whether the government could have “decline[d] to pay if it knew of the defendant’s noncompliance;” or “evidence that the defendant knows that the [g]overnment consistently refuses to pay claims in the mine run of cases based on noncompliance with the particular statutory, regulatory, or contractual requirement.”113 The Court also noted that evidence showing the government paid a claim “despite actual knowledge that certain requirements were violated … is very strong evidence that those requirements are not material.”114

III. Courts Should Interpret the Escobar Opinion as Creating a Mandatory Two-Part Test, but Also in a Way That Is Consistent with the Purpose of the False Claims Act

A. The Two-Part Test Articulated in Escobar Is Mandatory

Since the Supreme Court’s opinion in Escobar, there has been some disagreement as to whether the two-part test articulated in the opinion is mandatory.115 However, the two-part Escobar test should be interpreted as mandatory for the application of the implied false certification theory of liability. For example, in Rose v. Stephens Institute, the Northern District of California found in dictum that the two-part Escobar test was not mandatory to establish liability under the implied false certification theory.116 Rather, the court found that the two-part test was “sufficient” to establish liability but not an “absolute requirement[].”117 While the district court’s interpretation of Escobar in the Rose decision was not logically incorrect,118 it would nonetheless be more consistent with the Supreme Court’s purpose in granting certiorari to interpret the Escobar decision as creating a mandatory two-part test for the application of the implied false certification theory of liability.119

The Supreme Court in Escobar wanted to “resolve the disagreement among the Courts of Appeals over the validity and scope of the implied false certification theory of liability.”120 However, the Supreme Court’s desire to achieve cohesiveness among the Courts of Appeals would be stymied by interpreting the two-part Escobar test as one of many methods to determine implied false certification.121Under such an interpretation of the Escobar opinion, there would be “significant ‘white space’ left by Escobar to be filled in on a case-to-case basis.”122

Additionally, the only appellate courts substantially impacted by such an interpretation would be the Fifth Circuit, Seventh Circuit, and Ninth Circuits — which prior to Escobar, either rejected the implied false certification theory of liability or recognized it only in dicta.123 Ultimately, while the Supreme Court in Escobar does not explicitly refer to the two-part test as being mandatory, interpreting the test as optional undermines the Court’s stated purpose.

Given the volume of FCA cases, the Supreme Court should have clarified that the test articulated in Escobar was mandatory. This is particularly true given the contentiousness of FCA cases.124 If one of the appellate courts agrees with the contention that the two-part test is not mandatory, another circuit split could emerge requiring the Supreme Court’s attention.

B. Courts Should Interpret the Materiality Standard Broadly So Their Opinions Are Consistent with the Purpose of the False Claims Act

The contours and scope of the materiality standard articulated in Escobar remain unclear and unsettled; however, the materiality standard should be interpreted broadly to be consistent with the FCA’s purpose.125 The Supreme Court in Escobar held that there must be a “demanding” materiality standard.126 However, lower courts have not uniformly applied this materiality standard.127 The recent decisions from the Seventh Circuit and Eighth Circuit highlight the lack of clarity regarding the materiality standard.128 For example, upon remand, the Seventh Circuit in United States v. Sanford–Brown, Ltd. applied a narrower interpretation of the materiality standard. Specifically, the court found the relator failed the materiality prong because it failed to show that the government’s decision to pay the defendant would have changed if it had known of defendant’s failure to comply with regulations.129 This is a narrower interpretation of materiality because the court placed significant emphasis on “the government’s decision to pay.”130 Additionally, the court appeared particularly persuaded by the fact that other government agencies had investigated the defendant and decided against penalties or termination.131

Conversely, the Eight Circuit in United States ex rel. Miller v. Weston Educational, Inc. broadly construed the materiality standard articulated in the Supreme Court’s two-part test for implied false certification theory.132 The court found that “a false promise to comply with express conditions is material if it would affect a reasonable government funding decision or if the defendant had reason to know it would affect a government funding decision.”133 The court found the defendant’s failure to comply with record keeping requirements was material due to the “triple conditioning” of compliance by the government.134 The court broadly interpreted materiality by placing less emphasis on “the actual or likely effect that [defendant’s] representations had on the government’s behavior.”135

Materiality should be interpreted as broadly as possible within the bounds of the Supreme Court’s decision to be most consistent with the FCA’s purpose. As discussed previously, the purpose of the FCA is to “enhance the [g]overnment’s ability to recover losses sustained as a result of fraud against the [g]overnment”136 and “promot[e] honesty in dealing[s] with the [g]overnment.”137 In light of this purpose, no one factor discussed by the Supreme Court, such as the government’s decision to pay,138 should be dispositive. Additionally, courts should keep in mind the incentives their rulings create and whether those incentives promote legitimacy in the procurement system.

This interpretation of Escobar best supports the “goal of promoting honesty in dealing[s]” with the government.139 If materiality is interpreted too narrowly in the context of implied false certification cases, contractors who knowingly disregard contractual, regulatory, or statutory provisions will not be liable under the FCA. This would undermine the legitimacy of the government procurement system. This is particularly problematic because government contractors receiving and utilizing taxpayer money should be held to high standards of accountability. Additionally, it would disincentivize contractors from strictly adhering to contractual, regulatory, or statutory provisions.

A broad interpretation of materiality, as used in Escobar, would give a great deal of discretion to the Courts of Appeals when determining the acceptable breadth of materiality. This could potentially lead to forum shopping. This discretion could also necessitate the Supreme Court again reviewing and clarifying the issue of implied false certification theory of liability. However, some discretion among judges and disagreement among the Courts of Appeals is inevitable, and clear rules do not necessarily make good law.

C. Courts Should Not Overemphasize the Government’s Response to a Defendant’s Misrepresentation

When courts apply the materiality prong of the Supreme Court’s two-part Escobar test, they should be cautious not to overemphasize the government’s response to a defendant’s misrepresentation in order to keep the application of the theory of liability consistent with the FCA’s goal of “promoting honesty in dealing[s]” with the government.140 The Supreme Court, in its discussion of non-dispositive factors that indicate whether a defendant has made a material misrepresentation, lists many factors relating to the government’s response to a misrepresentation.141 For instance, the Court found whether the government paid a claim “despite actual knowledge that certain requirements were violated … is strong evidence that the requirements are not material.”142

The Supreme Court’s opinion could be interpreted as strongly emphasizing the government’s response to the misrepresentation.143 However, this is not the proper interpretation of the Court’s opinion in Escobar. Rather, the Court’s opinion should be interpreted as trying to preclude liability under the implied false certification theory for “minor or insubstantial” noncompliance.144 This interpretation is more consistent with the FCA’s purpose of “promoting honesty in dealing[s]” with the government or encouraging contractors “follow exemplary standards of conduct.”145 Courts overemphasizing government response also risk opening the door to excusing contractor fraud due to the government’s error or inefficiency. Therefore, courts, in applying the materiality prong, should not overemphasize the government’s response to the detriment of the FCA’s purpose.

IV. Conclusion

The Supreme Court in Escobar held the implied false certification theory of liability is a valid theory of liability. It also attempted to bring some semblance of uniformity to the application and scope of the implied false certification theory. However, this attempt at a more uniform application of the theory may not have been entirely successful, as lower courts have already applied different interpretations of the theory. Although some difference in application of the implied false certification theory may be inevitable, courts should interpret the theory as requiring a mandatory two-part test. Courts should also construe the materiality prong of the test broadly and caution against overemphasizing the government’s response to fraud. Such an interpretation is more consistent with the FCA’s purpose of “promoting honesty in dealing[s]” with the government.146

Entity:
Topic:
  1. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1997 (2016).
  2. Id.
  3. Id.
  4. Id.
  5. Id.
  6. Id.
  7. JOHN CIBINIC, JR. ET AL., ADMINISTRATION OF GOVERNMENT CONTRACTS 109 (5th ed. 2016).
  8. See Universal Health Servs., 136 S. Ct. at 1997–98.
  9. Id.
  10. Id. at 1995. Under the implied false certification theory, “when a defendant submits a claim, it impliedly certifies compliance with all conditions of payment.” Id. However, if the defendant submits a claim without disclosing a “violation of a material statutory, regulatory, or contractual requirement . . . the defendant has made a misrepresentation that renders the claim ‘false or fraudulent’ under § 3729(a)(1)(A).” Id.
  11. See Tami Azorsky & Susan Mitchell, The New FCA Landscape: Contractor Risks After Escobar and DOJ’s Interim Penalty Rule, Fed. Cont. Rep. (BNA), Oct. 2016, at 349.
  12. Id.
  13. See Press Release, Dep’t of Justice, Justice Department Recovers over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015 (Dec. 3, 2015), https://www.justice.gov/opa/pr/justice-department-recovers-over-35-billion-false-claims-act-cases-fiscal-year-2015 [https://perma.cc/6JEZ-WERL]; Press Release, Dep’t of Justice, Justice Department Recovers Nearly $6 Billion from False Claims Act Cases in Fiscal Year 2014 (Nov. 20, 2014), https://www.justice.gov/opa/pr/justice-department-recovers-nearly-6-billion-false-claims-act-cases-fiscal-year-2014 [https://perma.cc/765X-3ZG4].
  14. Press Release, Dep’t of Justice, Justice Department Recovers over $4.7 Billion from False Claims Act Cases in Fiscal Year 2016 (Dec. 14, 2016), https://www.justice.gov/opa/pr/justicedepartment-recovers-over-47-billion-false-claims-act-cases-fiscal-year-2016 [https://perma.cc/WP98-R9HZ].
  15. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1997 (2016).
  16. Id. at 1998–99.
  17. Id. at 2001.
  18. Id. at 1997 (“We granted certiorari to resolve the disagreement among the Courts of Appeals over the validity and scope of the implied false certification theory of liability.”).
  19. See Brian D. Miller & Dennis J. Callahan, Sidestepping the Escobar Two-Step: United States ex rel. Rose v. Stephens Institute Rejects Two-Pronged Test, 106 Fed. Cont. Rep. (BNA), Oct. 2016, at 402, 403–04.
  20. Compare United States v. Sanford-Brown, Ltd., 840 F.3d 445, 447– 48 (7th Cir. 2016), with United States ex rel. Miller v. Weston Educ., Inc., 840 F.3d 494, 503–04 (8th Cir. 2016) (finding a broad materiality standard under the implied false certification theory because materiality standard is met for express condition if they are likely to impact government’s decision to pay).
  21. See Universal Health Servs., 136 S. Ct. at 1996 (quoting United States v. Bornstein, 423 U.S. 303, 309 (1976)).
  22. See Carolyn J. Paschke, The Qui Tam Provision of the Federal False Claims Act: The Statute in Current Form, Its History and Its Unique Position to Influence the Health Care Industry, 9 J.L. & HEALTH 163, 165 (1994) (“The statute went through a period of relative inactivity from the late 1800’s until the 1940’s.”).
  23. See United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1153 (3d Cir. 1991).
  24. See James B. Helmer, Jr. & Robert Clark Neff, Jr., War Stories: A History of the Qui Tam Provisions of the False Claims Act, the 1986 Amendments to the False Claims Act, and Their Application in the United States ex rel. Gravitt v. General Electric Co. Litigation, 18OHIO N.U. L. REV. 35, 39 (1991) (“The 1943 amendments virtually eliminated the qui tam suit as an effective weapon in combating fraud upon the [U.S.] Government.”).
  25. Id. at 44.
  26. Patricia Meador & Elizabeth S. Warren, The False Claims Act: A Civil War Relic Evolves into a Modern Weapon, 65 TENN. L. REV. 455, 461 (1998) (citing 31 U.S.C. § 3729 (2012)).
  27. RALPH C. NASH, JR. ET AL., THE GOVERNMENT CONTRACTS REFERENCE BOOK 225 (4th ed. 2013).
  28. S. REP. NO. 99-345, at 1 (1986).
  29. United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1154 (3d Cir. 1991) (quoting S. REP. NO. 99-345, at 5 (1986)).
  30. CIBINIC, JR. ET AL., supra note 7, at 109.
  31. Id. at 75.
  32. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1996 (2016) (quoting Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 786 (2000)).
  33. The False Claims Act is codified at 31 U.S.C. §§ 3729–3733 (2012). See CLAIRE M. SYLVIA, THE FALSE CLAIMS ACT: FRAUD AGAINST THE GOVERNMENT 21 (3d. ed. 2016). Section 3729 enumerates Act violations and discusses liability, section 3730 discusses “the rights and responsibilities of the parties to civil actions brought under the Act,” and sections 3731–3733 address “procedural issues.” Id. at 21–22.
  34. The False Claims Act has a qui tam provision, meaning a private person acting as a qui tam relator may bring an action on behalf of the government. 31 U.S.C. § 3730(b) (2012); see also qui tam action, BLACK’S LAW DICTIONARY (10th ed. 2014) (defining a qui tam action as “[a]n action brought under a statute that allows a private person to sue for a penalty, part of which the government or some specified public institution will receive”).
  35. See Christopher L. Martin, Jr., Reining in Lincoln’s Law: A Call to Limit the Implied Certification Theory of Liability Under the False Claims Act, 101 CAL. L. REV. 227, 229 (2013) (citing 31 U.S.C §§ 3729–3733 (2012)); see also Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 766 (2000)). The government may either elect to intervene or decline to intervene in the action. 31 U.S.C. § 3730(b)(4) (2012). If the government intervenes, the government will have the “primary responsibility for prosecuting the action.” 31 U.S.C. § 3730(c). If the government declines to intervene, the relator may still pursue the action without the government’s assistance, although the court may allow the government to intervene at a later date if it shows good cause. 31 U.S.C. § 3730(c)(D)(3).
  36. Meador & Warren, supra note 26, at 461 (citing 31 U.S.C. § 3729(a)(1)–(7) (2012)).
  37. 31 U.S.C. § 3729(a) (2012). The civil penalty is between $5,000 and $10,000 as adjusted by inflation under the Federal Civil Penalties Inflation Adjustment Act of 1990. Id.
  38. If the government elects to intervene in an action, the relator will receive between fifteen and twenty-five percent of the proceeds of a settlement. 31 U.S.C. § 3730(d)(2)–(3) (2012). If the government declines to intervene, a relator will receive between twenty-five and thirty percent of the proceeds of a settlement. Id. In both instances, the relator is also entitled to reasonable expenses and reasonable attorneys’ fees and costs, which will be awarded against the defendant. Id. The court may choose to reduce the relator’s recovery if he “planned and initiated the violation of section 3729 upon which the action was brought.” Id.
  39. Id.
  40. Martin, Jr., supra note 35, at 239–40.
  41. Id. at 230 (citing Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001)).
  42. Id. at 239.
  43. Id. (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997)); see also Michael Holt & Gregory Klass, Implied Certification Under the False Claims Act, 41 PUB. CONT. L.J. 1, 7 (2011) (citing 31 U.S.C. § 3729(a)(1)(B) (Supp. III 2009)) (“[A] claim is false or fraudulent if the contractor expressly certifies compliance with a contract term, statute, or regulation despite a breach or violation.”).
  44. Martin, Jr., supra note 35, at 239 (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997)).
  45. See Holt & Klass, supra note 43, at 27 (citing United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 380 n.3 (1st Cir. 2011); see also United States ex rel. Conner v. Salina Reg’l Health Ctr., 543 F.3d 1211, 1217 (10th Cir. 2008); Mikes, 274 F.3d at 696–97, abrogated by Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1989 (2016)).

    There is no question but that factually false claims—payment requests for goods or services never provided—violate section (1)(A)’s prohibition of “false or fraudulent claims.” It is equally clear that a false express certification qualifies as a “false record or statement material to a false or fraudulent claim” under section (1)(B).

    Holt & Klass, supra note 43, at 27.
  46. Robert T. Rhoad et al., Feature Comment: The Emerging Scope of the Implied Certification Theory of FCA Liability—A Scalpel or a Bludgeon? 57 GOV’T CONTRACTOR ¶ 252, Aug. 19, 2015, at 2.
  47. See Martin, Jr., supra note 35, at 240 (citing Ab-Tech Constr., Inc. v. United States, 31 Fed. Cl. 429, 434–35 (1994), aff’d mem., 57 F.3d 1084 (Fed. Cir. 1995)).
  48. Universal Health Servs., 136 S. Ct. at 1995.
  49. See id. (“[I]f that claim fails to disclose the defendant’s violation of a material statutory, regulatory, or contractual requirement . . . the defendant has made a misrepresentation that renders the claim ‘false or fraudulent’ under § 3729(a)(1)(A).”).
  50. Martin, Jr., supra note 35, at 230 (citing United States ex. rel. Conner, 543 F.3d at 1217).
  51. Compare Universal Health Servs., 136 S. Ct. at 1995 (describing implied false certification theory), with Martin, Jr., supra note 35, at 230 (citing United States ex. rel. Conner, 543 F.3d at 1217) (describing express false certification theory).
  52. See Robert T. Rhoad, et al., Feature Comment: Frankenstein’s Monster Is (Still) Alive: Supreme Court Recognizes Validity of Implied Certification Theory, 58 GOV’T CONTRACTOR ¶ 219, June 22, 2016, at 3 (“At the time of the Supreme Court’s ruling in Escobar, eight of the 13 U.S. courts of appeals had accepted the implied certification theory in some form, but the approving circuits had articulated varying tests for its application.”).
  53. See infra Part II.B.2–3.
  54. See infra Part II.B.2.
  55. See infra Part II.B.2.
  56. See infra Part II.B.1.
  57. See Rhoad et al., supra note 46, ¶ 252, at 5 (“[W]here a relator files suit—and the scope of the implied certification theory that will be applied—can be outcome-determinative.”).
  58. 788 F.3d 696, 711–12 (7th Cir. 2015), vacated sub nom. United States ex rel. Nelson v. Sanford-Brown, Ltd., 136 S. Ct. 2506 (2016), and opinion reinstated in part, superseded in part sub nom. United States v. Sanford-Brown, Ltd., 840 F.3d 445, 447 (7th Cir. 2016), abrogated by Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989 (2016).
  59. Id. at 701.
  60. Id. at 709–10.
  61. Id. at 710.
  62. Id. at 712 (citing Mikes v. Straus, 274 F.3d 687, 699 (2d Cir. 2001)).
  63. Id. at 711.
  64. Id. at 710 (quoting United States ex rel. Yannacopoulos v. Gen. Dynamics, 652 F.3d 818, 824 (7th Cir. 2011) (internal quotation marks omitted).
  65. Martin, Jr., supra note 35, at 243.
  66. See, e.g., United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011) (citing United States ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir. 2008)) (“[A] claim is legally false when the claimant knowingly falsely certifies that it has complied with a statute or regulation the compliance with which is a condition for [g]overnment payment.”); U.S. ex rel. Conner, 543 F.3d at 1219 (citing United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266–67 (9th Cir. 1996)) (finding application of implied false certification theory requires relator to demonstrate defendant failed to comply with a condition-of-payment he certified compliance with); United States ex rel. Augustine v. Century Health Servs., Inc., 289 F.3d 409, 415 (6th Cir. 2002) (finding implied false certification “liability can attach if the claimant violates its continuing duty to comply with the regulations on which payment is conditioned”); Mikes, 274 F.3d at 697 (citing United States ex rel. Siewick v. Jamieson Sci. & Eng’g, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000)) (finding implied false certification theory of liability is a valid theory of liability “only where a party certifies compliance with a statute or regulation as a condition to governmental payment”); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786 (4th Cir. 1999); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997) (“Thus, where the government has conditioned payment of a claim upon a claimant’s certification of compliance with, for example, a statute or regulation, a claimant submits a false or fraudulent claim when he or she falsely certifies compliance with that statute or regulation.”); United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996).
  67. The Eleventh Circuit in McNutt did not explicitly adopt or even mention the implied false certification theory, but the court appeared to have adopted the theory in its rationale. See McNutt ex rel. United States v. Haleyville Med. Supplies, Inc., 423 F.3d 1256, 1258–60 (11th Cir. 2005); Martin, Jr., supra note 35, at 249. In the case, the defendants allegedly violated the Anti-Kickback Statute, despite certifying compliance when submitting reimbursement claims to Medicare. McNutt ex rel. United States, 423 F.3d at 1258–59. Compliance with this statute is a condition-of-payment by the Medicare program. Id. at 1259. The court found the government’s claim was valid because the defendants “violated the Anti-Kickback Statute[,]” “compliance with the Statute is necessary for reimbursement[,]” and the defendants “submitted claims for reimbursement knowing that they were ineligible for the payments demanded in those claims.” Id. at 1260.
  68. The Ninth Circuit and Fifth Circuit did not explicitly adopt implied false certification theory with a condition-of-payment requirement, but in dicta suggested it was a valid theory of liability. See Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 997–98 (9th Cir. 2010) (finding in dicta implied false certification theory is valid and the condition-of-payment requirement is “persuasive”); see also United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 268 (5th Cir. 2010) (finding in dicta that if implied false certification theory is a valid theory of liability there would be a condition-of-payment requirement). For example, in the Ninth Circuit case Ebeid ex rel. United States v. Lungwitz, the court held the relator’s complaint did not “plead fraud with sufficient particularity.” 616 F.3d at 996. However, the court also explicitly endorsed the implied false certification theory of liability, and although it did not adopt an express condition-of-payment requirement, it found it “persuasive.” Id. at 997–98. Similarly, the Fifth Circuit in United States ex rel. Steury v. Cardinal Health, Inc. declined to decide whether implied false certification theory was a valid theory of liability because the relator failed to state a claim under the False Claims Act. 625 F.3d at 268. However, the court suggested that if implied false certification theory was a valid theory of liability, the “contractor’s compliance with federal statutes, governregulations, or contract provisions” must be a condition-of-payment. Id. (citing United States ex rel. Willard v. Humana Health Plan of Texas Inc., 336 F.3d 375, 382 (5th Cir. 2003); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997); United States ex rel. Marcy v. Rowan Cos., 520 F.3d 384, 389 (5th Cir. 2008)).
  69. Mikes, 274 F.3d at 697.
  70. Id. at 696.
  71. Id. at 697.
  72. Id. at 700 (citing United States ex rel. Siewick v. Jamieson Sci. & Eng’g, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000)).
  73. Id. at 699.
  74. Id. at 700 (citing Patrick A. Scheiderer, Note, Medical Malpractice as a Basis for a False Claims Action?, 33 IND. L. REV. 1077, 1098 (2000)).
  75. See, e.g., United States v. Universal Health Servs., Inc., 780 F.3d 504, 512 (1st Cir. 2015), cert. granted in part, 136 S. Ct. 582 (2015), and vacated, 136 S. Ct. 1989 (2016) (citing New York v. Amgen Inc., 652 F.3d 103, 110 (1st Cir. 2011)) (holding defendant violates the False Claims Act if it “knowingly misrepresented compliance with a material precondition of payment” regardless of whether the condition-of-payment is an express condition-of-payment); United States v. Triple Canopy, Inc., 775 F.3d 628, 637 (4th Cir. 2015), vacated sub nom. Triple Canopy, Inc. v. United States ex rel. Badr, 136 S. Ct. 2504 (2016) (citing United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1269 (D.C. Cir. 2010)) (declining to require a contractual requirement be an express condition-of-payment for liability under implied certification theory of liability); Sci. Applications Int’l Corp., 626 F.3d at 1261 (finding designation of contractual provision as condition-of-payment is not required for liability under implied false certification theory of liability).
  76. Compare United States v. Universal Health Servs., Inc., 780 F.3d 504, 512 (1st Cir. 2015), with Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 2001 (2016).
  77. Sci. Applications Int’l Corp., 626 F.3d at 1261.
  78. Id.
  79. Id.
  80. Id. at 1271.
  81. Id.
  82. Id. at 1269.
  83. Id.
  84. See id. (“We decline to create such a counterintuitive gap in the FCA by imposing a legal requirement found nowhere in the statute’s language.”).
  85. See United States v. Triple Canopy, Inc., 775 F.3d 628, 632, 637 (4th Cir. 2015), vacated sub nom. Triple Canopy, Inc. v. United States ex rel. Badr, 136 S. Ct. 2504 (2016).
  86. Id. at 636 (citing Sci. Applications Int’l Corp., 626 F.3d at 1269).
  87. Id. at 632, 635 (quoting United States ex rel. Owens v. First Kuwaiti Gen. Trading & Contracting Co., 612 F.3d 724, 734 (4th Cir. 2010)) (internal quotation marks omitted).
  88. See id. at 637.
  89. Id. (citing Sci. Applications Int’l Corp., 626 F.3d at 1270; see United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 388 (1st Cir. 2011)).
  90. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1998 (2016).
  91. Id. at 1997; see supra Part I.
  92. Universal Health Servs., 136 S. Ct. at 1997.
  93. United States v. Universal Health Servs., Inc., 780 F.3d 504, 512 (1st Cir. 2015), cert. granted in part, 136 S. Ct. 582 (2015), and vacated, 136 S. Ct. 1989 (2016) (citing New York v. Amgen Inc., 652 F.3d 103, 110 (1st Cir. 2011)).
  94. Id. at 517.
  95. Universal Health Servs., 136 S. Ct. at 1995–96.
  96. Id. at 1998.
  97. Id. at 2004.
  98. See id. at 1998 (“We granted certiorari to resolve the disagreement among the Courts of Appeals over the validity and scope of the implied false certification theory of liability.”).
  99. Id. at 1995.
  100. Id. at 2000.
  101. Id. at 2001 (emphasis added).
  102. Id.
  103. Id.
  104. See supra Part II.B.2.
  105. Universal Health Servs., 136 S. Ct. at 2001.
  106. Id.; see also 31 U.S.C. § 3729(a)(1)(B) (2012) (stating that defendant triggers liability when it “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim”) (emphasis added).
  107. See Universal Health Servs., 136 S. Ct. at 2001 (citing Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309, 1318 (2011)).
  108. Id.
  109. Id. at 2003.
  110. 31 U.S.C. § 3729(b)(4) (2012).
  111. Universal Health Servs., 136 S. Ct. at 2003 (citing Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 671 (2008)).
  112. Id.
  113. Id.
  114. Id. at 2003–04.
  115. See Miller & Callahan, supra note 19, at 403–04 (discussing why the Rose court found the two-step test articulated in Escobar not to be mandatory); see also Daniel Seiden, Settlement Keeps High Court from Two-Step Resolution, Fed. Cont. Rep. (BNA), Oct. 2017, at 380, 381 (describing how a settlement of a Fourth Circuit case furthers the uncertainty surrounding whether the twostep test articulated in Escobar is mandatory).
  116. Rose v. Stephens Inst., No. 09-CV-05966-PJH, 2016 WL 5076214, at *5 (N.D. Cal. Sept. 20, 2016), motion to certify appeal granted, 2016 WL 6393513, at *1 (N.D. Cal. Oct. 28, 2016)).
  117. Rose, 2016 WL 5076214, at *5; Rose, 2016 WL 6393513, at *1–2. The Rose case is currently on appeal before the Ninth Circuit, which will have to determine whether the two-step test articulated in Escobar is mandatory. Daniel Seiden, Outlook 2018: The Five Most Important Federal Contracts Cases, Fed. Cont. Rep. (BNA), Dec. 2017, at 591, 592.
  118. See Miller & Callahan, supra note 19, at 405 (finding the Rose opinion “well-reasoned”).
  119. See id. at 405 n.20 (“To interpret Escobar to apply only to its facts—as Judge Hamilton does—makes the Supreme Court’s attempt at resolving the conflict and providing guidance to lower courts less meaningful.”).
  120. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1998 (2016).
  121. See Miller & Callahan, supra note 19, at 405 n.20.
  122. See id. at 405.
  123. See supra Part II.B.1–2.
  124. See Azorsky & Mitchell, supra note 11, at 349 (“The Supreme Court has addressed the [False Claims Act] no less than 24 times since 1986, and in 2015 alone federal courts of appeal interpreted elements of the FCA more than 90 times.”).
  125. The second prong of the two-part test articulated in Escobar states, “the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.” Universal Health Servs., 136 S. Ct. at 2001 (emphasis added).
  126. Id. at 2003.
  127. Compare United States v. Sanford-Brown, Ltd., 840 F.3d 445, 447–48 (7th Cir. 2016) (finding a narrow materiality standard under the implied false certification theory because of significant emphasis on “government’s decision to pay”), with United States ex rel. Miller v. Weston Educ., Inc., 840 F.3d 494, 503–04 (8th Cir. 2016) (finding a broad materiality standard under the implied false certification theory because materiality standard is met for express condition if it is likely to impact government’s decision to pay).
  128. Miller, 840 F.3d at 503–04.
  129. See Sanford–Brown, 840 F.3d at 447.
  130. Id.
  131. Id.
  132. Miller, 840 F.3d at 504; see Sandra B. Wick Mulvany & Christopher W. Meyers, Potential split emerges regarding the proper interpretation of the Supreme Court’s decision in Escobar, DENTONS (Nov. 15, 2016), available at: https://www.lexology.com/library/detail.aspx?g=9ccb2200-e06a-4174-bffe-826bb7f6a41c.
  133. Miller, 840 F.3d at 504.
  134. Id.
  135. See Mulvany & Myers, supra note 132.
  136. S. REP. NO. 99-345, at 1 (1986).
  137. CIBINIC, JR. ET AL., supra note 7, at 109.
  138. Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 2001 (2016).
  139. CIBINIC, JR. ET AL., supra note 7, at 109. This honesty is crucial to the procurement process, because the legitimacy of the process requires contractors to “follow exemplary standards of conduct.” Id. at 75.
  140. Id. at 109.
  141. See generally Universal Health Servs., 136 S. Ct. at 2003–04.
  142. Id.
  143. See generally id. (discussing factors determinative of whether the defendant made a material misrepresentation).
  144. Id. at 2003 (citing United States ex rel. Marcus v. Hess, 317 U.S. 537, 543 (1942); Junius Const. Co. v. Cohen, 178 N.E. 672, 674 (N.Y. 1931)).
  145. CIBINIC, JR. ET AL., supra note 7, at 109.
  146. Id.