• Fifth Circuit Holds "Prerequisite to Payment" is a Fundamental Requirement in Establishing "Falsity" in a False Certification Case
  • December 6, 2010 | Authors: Douglas W. Baruch; John T. Boese
  • Law Firm: Fried, Frank, Harris, Shriver & Jacobson LLP - Washington Office
  • False certification cases brought under the civil False Claims Act are based on the theory that claims for payment for goods or services delivered to the Federal government can be considered "false" under the FCA if the defendant, in the course of performance, fails to comply with a statute, regulation, contract provision or other legal requirement, and the defendant either expressly or implicitly "certifies" compliance with that legal requirement. These cases, commonly also called "legally false" claims (to distinguish them from "factually false" claims¿billing for goods or services never delivered), are among the most vigorously debated and hotly contested cases in FCA jurisprudence because the key to the cases is which legal requirements, if violated, render a claim "false," and which legal requirements do not. For many years, the battleground over which this question was fought was the concept of "materiality"¿that is, if the false certification was "material" to the government’s decision to pay the claim, then the false certification would render the claim false; if it was not "material," then the violation would not render the claim false. As more and more courts, and eventually Congress, adopted a “weaker" test of materiality, this distinction broke down, leading to the prospect that, unless the courts developed a more stringent standard in false certification cases, the FCA would become a vehicle for wanton and unfair punishment for minor legal violations in the course of performing government contracts, grants, or providing Federally-funded medical services.