The Theory of Implied Certification Post-Escobar

Strategic Perspectives: Where Once Was a Question of Implied Certification, Now Is a Question of Materiality
– Health Law Daily

Manatt’s Jacqueline Wolff, co-chair of the firm’s corporate investigations and white collar defense practice, was interviewed by Health Law Daily for an article on implied certification in cases since Universal Health Services, Inc. v. U.S. ex rel. Escobar.

The publication notes that in the case, the Supreme Court confirmed that implied certification can be a basis for False Claims Act liability when a provider fails to disclose noncompliance with requirements resulting in misleading representations about the provided goods or services. It has been more than a year since the Supreme Court handed down its Escobar decision, and since then, similar cases heard by district and appellate courts that address the theory of implied certification now face the issue of what constitutes materiality.

“An FCA claim is a fraud claim and, therefore, has always had to be pled with particularity,” Wolff told the publication when asked what factors must be included in a complaint when addressing materiality and scienter in implied certification to ensure the FCA claim is not denied. “Prior to Escobar, in certain jurisdictions, such as the First Circuit, pleading a failure to disclose a violation of a regulation such as one relating to good manufacturing practices may have been sufficient to defeat a motion to dismiss.”

When asked about trends in how courts are approaching cases that invoke the theory of implied certification since Escobar, Wolff explained, “There is no need for a debate anymore as to whether a relator can invoke the theory. The debate is now whether materiality has been sufficiently pled.”