American Journal of Law & Medicine

Am I Liable? the Problem of Defining Falsity under the False Claims Act


    A. Historical Background
    B. Legislative and Legal Background
    C. Continuing Problem of Fraud
    A. Express and Implied Certification
       1. Circuit Courts Adopting Implied Certification Theory
       2. Circuit Courts Refusing to Address Implied
          Certification Theory
       3. Other Circuit Court Approaches
    B. First Circuit Rejection of Categorical Distinctions
       1. Blackstone
       2. Amgen
    A. Supreme Court Should Grant Certiorari
       1. Fraud Against the Government is a Continuing Problem
       2. A Supreme Court Grant of Certiorari in Amgen
          Will Clear Up Circuit Confusion in Determining Falsity
       3. A Supreme Court Grant of Certiorari in Amgen Will
          Ensure More Uniform Outcomes in False Claim Cases
    B. Supreme Court Should Adopt the First Circuit's Interpretation
       1. First Circuit's Simpler Standard
       2. Consistency of the First Circuit's Interpretation With
          the FCA's Purpose


The Federal False Claims Act (FCA) creates civil liability (1) for entities that falsely or fraudulently contract with the government to provide services or goods in exchange for federal funds. FCA cases often arise in healthcare contexts in which the government pays entities for providing products and services to eligible beneficiaries. With the growth of Medicare and Medicaid funding for healthcare services, there has been a corresponding increase of false claims and FCA cases, in the healthcare context. For instance, of the over $30 billion recovered by the government for FCA cases in the last fifteen years, recoveries from Health and Human Services constitutes over $20 billion. (2)

An FCA case may involve a false representation that a service has been provided when in fact it has not. (3) Such a case may also involve a false representation of compliance with underlying governmental requirements for payment. (4) Recently, there has been growing confusion as to how to address cases in which the defendant is not the party actually submitting the allegedly false claim, but the party that caused the false claim to be filed. In these cases, the submitting party is a third-party entity, such as a healthcare provider, whereas the actual defendant in the case is an entity, such as a drug manufacturer, that causes the third party to submit a false claim. (5) Regarding these cases, courts have found that such third-party defendants may still be liable under the FCA. (6) Courts are divided, however, over how to treat liability under the FCA. These debates revolve around the differences between factually false and legally false claims, and, particularly, the theories of express certification and implied certification, which fall into the legally false category.7 In two recently decided cases, however, the First Circuit declined to apply these categorizations and instead chose to apply a "fact-intensive and context-specific inquiry." (8)

In rejecting such strict categorizations, the First Circuit instead looked at two factors in determining whether a sufficient FCA violation claim had been presented: (1) whether the claims at issue misrepresented compliance with a precondition of payment, and (2) whether such misrepresentations were material. (9) In applying this standard, the First Circuit avoided complex court-created categorizations and instead returned to an interpretation more in line with the underlying purpose of the FCA. (10) Despite its own clarity, the First Circuit's test further added to the circuit courts' different treatment of falsity, and the question of the proper standard to apply in treating falsity remains unresolved. Because of this circuit split, the Supreme Court should address the issue of what constitutes falsity under the FCA, and by doing so, follow the First Circuit's rejection of complex categorizations and similarly establish a standard that follows the underlying purpose of the FCA in prohibiting fraud against the government.

This Note will address the current disparity of how courts treat falsity for FCA actions in which the entity submitting the claim is a third party that has not been accused of the wrongdoing. Part II will provide background on the FCA, beginning with a brief overview of its historical roots and delving into a discussion of its subsequent legislative and legal histories. Part III will discuss legal treatment of "falsity" under the FCA and will delve into the current circuit splits on the issues of factual and legal falsity. It will then discuss the categories of express and implied false certification, which fall under the broader umbrella of legal falsity, and how circuit courts have treated these certification theories in different ways. Finally, Part IV will argue that the United States Supreme Court should grant certiorari in a recent First Circuit case to resolve this circuit split, thus doing away with confusing categorizations and setting a uniform standard. It will further argue that the Court should follow the First Circuit's rejection of "express and implied" certification and instead establish a standard for falsity that is more consistent with the underlying purpose of the FCA, which is to prevent fraud against the government.


The FCA is an anti-fraud statute that Congress passed for the purpose of deterring both the false or fraudulent solicitation and receipt of funds from the government. (11) The FCA creates civil liability for anyone who "knowingly presents [to the government], or causes to be presented, a false or fraudulent claim for payment or approval." (12) Although the FCA prohibits other forms of fraud against the government, such as conspiracy to commit fraud, (13) the actual presentation of a false or fraudulent claim to the government is the most common type of violation. (14) An entity that violates the FCA is liable to the government for three times the amount of actual damages the government sustains (15) in addition to a civil penalty ranging between a minimum of $5500 and maximum of $11,000 per claim. (16)

Private individuals ("relators") may bring false claims actions on behalf of the government under the FCA's qui tam provision. (17) Once a qui tam action is filed, a copy of the complaint is delivered to the government under seal for sixty days, while the government decides whether to intervene. 18 The government may choose to proceed with the action and effectively take over, or decline to proceed with the action and allow the relator to continue on her own as a private individual. (19) If the government takes over the action, the relator may remain a party to the action and is entitled to between fifteen and twenty-five percent of any proceeds. (20) If the government does not take over the action and the relator continues privately on her own, she is entitled to between twenty-five and thirty percent of any civil penalties imposed upon the defendant. (21) Such qui tam actions are thus attractive to individuals, as well as attorneys, and not surprisingly, the number of qui tam actions has continued to increase over the years. (22) The qui tam provision also reflects the FCA's main purpose of deterring fraud by encouraging private individuals to assist in fraud investigations and prosecutions. (23) In this way, the government seeks to ensure effective prevention and prosecution of fraud committed against it.


The FCA, historically called "Lincoln's Law," was first enacted in 1863 to remedy fraudulently obtained government payments during the Civil War. (24) Like the current law, it offered a reward to the informer of falsity under a qui tam provision. (25) The original Act imposed a $2000 civil penalty on the defendant for each false claim. (26) It also required the entity that committed the fraud to pay double the amount of damages sustained by the government as a result of the fraud. (27) Furthermore, private individuals who brought qui tam actions pursuant to the law were entitled to half of the government's recovery. (28) Such individuals proceeded with the action on their own, since the original law did not allow the government to intervene in the case. (29) The FCA also did not impose any formal limitations or requirements on the source of the relator's information. (30) Therefore, a relator could bring a suit based on information that was already known to the public or to the government. This early version of the FCA established a great incentive for private individuals to bring false claims actions, while imposing limited restraints on such whistleblowers.


During World War II, the FCA underwent drastic changes. The 1943 amendments required the relator to be an original source of information and introduced a government knowledge bar. (31) Under these amendments, courts were prohibited from hearing cases in which the government already possessed the information at the time the relator brought suit. (32) Additional amendments included a government intervention option, in which the government could elect to take over a case and thus have exclusive control. (33) The award to relators was also lowered considerably. If the government took over the case, the relator could only collect up to ten percent of any proceeds; (34) if the government did not intervene, however, the relator could collect up to twenty-five percent. (35) These amendments effectively acted as disincentives for private citizens to bring qui tam actions and resulted in far fewer relators coming forward.

Because of these disincentives, Congress amended the FCA in 1986 after fraud against the government once again became prevalent.36 The 1986 amendments to the FCA involved a number of changes, including increasing penalties from double damages to treble damages, (37) as well as changing the government knowledge bar to the public disclosure bar. (38) This public disclosure bar prohibited qui tam actions based on information in current government investigations or in the news media. (39) The amendments also required qui tam actions to be filed under seal for sixty days and made available only to the government, (40) and allowed relators to continue to participate in an action in which the government had intervened. (41) A new and important development in the amendments was the anti-retaliation provision, which protected employees against employer retaliation for bringing or assisting FCA claims. (42)

Since the 1986 amendments were enacted, various federal court rulings severely undermined the purpose of those amendments. (43) Such judicial interpretations and limitations on FCA claims prompted Congress to propose amendments to broaden the scope of FCA liability and restore the FCA's original purpose of encouraging compliance with the federal anti-fraud statute and deterring fraud against the government. (44) Thus, further amendments were made in 2009 to once again expand the reach of FCA civil liability. (45) The Fraud Enforcement and Recovery Act (FERA), (46) for example, added liability for submitting false or fraudulent claims to entities administering government funds. (47) It also extended anti-retaliation protection to agent and contractor relators. (48) Furthermore, the Patient Protection and Affordable Care Act (PPACA) (49) amended the FCA again in 2010. PPACA narrowed the public disclosure bar (50) and expanded what constitutes an original source of information. (51) These amendments reflect the current law governing FCA actions.


Despite increased efforts to deter fraud, such as heightened incentives for whistleblowers and more aggressive investigations, fraud against the government continues to be a problem. …

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