Blanca Fromm Young, David Feder Address FCA Liability After High Court’s Escobar Ruling

Munger, Tolles & Olson attorneys Blanca Fromm Young and David J. Feder published an article in Law360 about the U.S. Supreme Court’s decision in Universal Health Services Inc. v. United States ex rel. EscobarEscobar recognized that liability under the False Claims Act (FCA) can arise from an implied false certification of compliance with statutory, regulatory or contractual requirements that are material to the government’s decision to pay for the goods or services provided by the defendant.

In their June 20, 2016 article, Ms. Young and Mr. Feder emphasized that the decision is significant not only because it recognizes the theory of implied certification, but because it places important limits on the application of the theory. “In Escobar, the Supreme Court endorsed this theory, but within carefully drawn limits,” they wrote.

The article notes that the Supreme Court embraced the theory in the context of an affirmative representation made by the defendant about the services provided, while emphasizing that courts should strictly apply the FCA’s “rigorous” scienter and materiality requirements in evaluating such claims.

The article also discusses questions that arise in the wake of the Supreme Court’s decision, including how the theory would apply where the defendant does not make an affirmative statement but simply submits a claim for payment and how courts are to interpret and apply the statute’s materiality and scienter standards.

Ms. Young routinely defends companies and executives in False Claims Act litigation and investigations in a wide array of industries, including energy, higher education, insurance and securities.

Mr. Feder is a litigator in Munger Tolles’ Los Angeles office. His practice focuses on appeals in the state and federal courts.