WASHINGTON – The U.S. Supreme Court ruled this week in Universal Health Services v. U.S. ex rel. Escobar that staying silent about noncompliance with government rules or agreements when billing the government for goods or services can constitute fraud under the False Claims Act.  Senate Judiciary Committee Chairman Chuck Grassley, who authored the modern-day False Claims Act and filed an amicus brief in this case, released the following statement:

“It goes without saying that a lie of omission is still a lie. So it should also go without saying that if you fail to hold up your end of a bargain, but neglect to tell the other party, you aren’t being intellectually honest. And when it involves agreements with the government, this sort of behavior is fraud against taxpayers, plain and simple.  The Supreme Court ruling in United Health Services makes clear that entities that knowingly mislead the government through half-truths and lies of omission when conducting business run afoul of the False Claims Act.  This unanimous ruling is a big victory for taxpayers and will help to better protect those who rely on quality government programs,” Grassley said.

The case was brought by the parents of Yarushka Rivera, a child who died after her health care providers at Massachusetts-based Universal Health Services, Inc., prescribed medication without proper qualifications. Her parents claimed that Universal Health Services then billed Medicaid for the health care expenses, despite several violations of state Medicaid regulations.

The Court’s ruling clarifies that anyone who knowingly submits to the government a detailed claim for payment and misrepresents by omission that it is complying with all rules, regulations or contracts associated with the transaction may be liable under the False Claims Act, regardless of whether the government stipulated that compliance with such criteria was required for payment.  This is known as the “implied false certification of theory of liability.”  Prior to this decision, courts have been split on whether such violations of rules, regulations or contracts constitute a false claim under the False Claims Act if the government hadn’t expressly required compliance as a condition of payment.

Grassley filed an amicus brief in the case arguing that the plain text and history of the False Claims Act supports the implied false certification theory.  The brief also showed that Congress has never limited the reach of the False Claims Act to so-called “express certification” cases, and that doing so would let wrongdoers off the hook for blatant fraud.   

Grassley authored key revisions to the False Claims Act in 1986 to reestablish a qui tam provision, which allows individuals, such as the parents of Rivera, to call attention to fraud against the government.  The qui tam provision has been credited for recovery of $48 billion of lost taxpayer dollars.