For many government contractors, their biggest fear may be being debarred from seeking government contracts. One common cause of debarment is a contractor’s failure to abide by the myriads of government rules and regulations involved in government contracting. But the government realizes that every contractor may make an occasional mistake or employ a bad-apple employee. So rather than always resorting to debarment, seeking reimbursement, or criminal prosecution, the government may assess a civil penalty.
Under the doctrine of “implied false certification,” a plaintiff in a False Claims Act suit can claim that a government contract impliedly made a false certification by requesting payment without disclosing that it is in violation of government requirements. Before June 16, 2016, the U.S. Circuit Courts of Appeal were split on the question of whether implied false certification was a basis for liability under the False Claims Act. While the Fifth Circuit and Seventh Circuit held that implied false certification was not a permissible basis for liability, several circuits (including the Eleventh, which includes Alabama) held that it was. In Univ. Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. ____ (2016) (No. 15-7 October 2015 term) the U.S. Supreme Court resolved this circuit split, and held that implied false certification may, in certain circumstances, be a basis for False Claims Act liability.
More than $750,000—that’s what a federal government contractor was going to have to pay until a federal appeals court reduced the amount to $14,748.