The decision in Universal Health upholds implied certification but strengthens False Claims Act defendants’ ability to mount a materiality defense.
On June 16, 2016 the U.S. Supreme Court issued a unanimous decision in Universal Health Services, Inc. v. United States ex rel. Escobar, No. 15-7 (U.S., Thomas, J.). As the Justices signaled at oral argument, the Court upheld the “implied certification” theory of liability under the federal False Claims Act (FCA), but rejected the broad scope of the theory applied by the First Circuit and advocated by the relator and the government. Instead, the Court reversed and remanded the First Circuit’s judgment with instructions to apply a more “rigorous materiality standard.” In this way, the Court adopted a middle-of-the-road approach to the implied certification theory.
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