On July 10, 2015, the U.S. Court of Appeals for the District of Columbia Circuit made clear that in False Claims Act cases brought under an implied certification theory, certifying compliance with the federal statute or regulation at issue must be a condition of payment.
In United States ex rel. Davis v. District of Columbia, No. 14-7060, 2015 WL 4153919 (D.C. Cir. Jul. 10, 2015), a qui tam relator alleged that the District of Columbia had failed to maintain certain records supporting certain cost reports it submitted to the District of Columbia Medical Assistance Administration, purportedly in violation of record-keeping regulations. While principally at issue in Davis was whether the relater proved a knowing violation of these regulations, as part of its analysis the Court made clear its position relative to the implied certification theory of false claims act liability. Stated succinctly, in order to establish liability under an implied certification theory, a defendant must have violated a legal obligation, certifying compliance therewith having been a condition of payment.
The Court noted that "not all failures to comply with a federal statute or regulation expose a provider to liability under the False Claims Act", stating specifically that a "false certification of compliance with a statute or regulation cannot serve as the basis for a qui tam action… unless payment is conditioned on that certification" (citing United States ex rel. Siewick v. Jamieson Sci. & Eng'g, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000)). In other words, a defendant may be held liable under the False Claims Act for falsely certifying it complied with a statute or regulation only if "certification was a prerequisite to the government action sought".
This is helpful language for FCA defendants. The Government and relators have previously and often argued that proving condition of payment was not a necessity to implied certification liability in this Circuit. The Court in Davis has essentially invalidated that argument and provides another tool for defendants - who often face over reaching efforts to extract FCA settlements and judgments based on little more than a claim that a statute or regulation was not complied with.
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