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Eleventh Circuit vacates trial court's dismissal of qui tam relator's claim against defense contractor; remands for review of complaint's sufficiency under implied certification theory

On January 26, 2018, in Marsteller v. Tilton, et al, No. 16-11997, the Eleventh Circuit Court of Appeal vacated the district court’s dismissal of a qui tam relator’s complaint against a defense contractor under the False Claims Act. The complaint alleged that the defendant defense contractor misled the Government by providing material false or incomplete information at two points in the transactional relationship, the contractor’s pre-contract representations to the Government to enter the contracts and the contractor’s submission of claims for payment. The district court dismissed the complaint for failure to state a claim because the court concluded that that the complaint failed to adequately allege liability under the “implied certification” theory premised on the defendant violating an express condition of payment or a material contractual requirement and then impliedly certifying compliance when the claim for payment was submitted to the government. The district court found no provision in any of the relevant contracts that prohibited payments in the event of non-compliance with either requirement and dismissed the complaint on that basis.

During the pendency of the appeal, the U.S. Supreme Court decided Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which confirmed that the implied certification theory can apply where a party in requesting payment makes certain representations which are misleading because of the omission of violations of statutory, regulatory, or contractual requirements, even if such requirements are not express condition of payment under the contract, so long as the omission was material. On this basis, the Court of Appeals remanded the case to the district court with directions to the court to revisit whether sufficient facts were alleged in light of the Escobar decision.