What is a false claim under the False Claims Act?

False Claims Under False Claims Act

The False Claims Act imposes civil liability on “any person who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim” paid by the Government. 31 U.S.C. § 3729(a)(1)(A) & (B).

The essential elements of an FCA claim are

a false statement or fraudulent course of conduct,
made or carried out with the requisite scienter,
that was material, and
caused the government to pay out money or forfeit moneys due.

The falsity element of a False Claims Act case “asks whether the claim submitted to the government as reimbursable was in fact reimbursable, based on the conditions for payment set by the government.” United States ex rel. Druding v. Care Alts., 952 F.3d 89, 97 (3d Cir. 2020).

Claims under the False Claims Act may be either factually false or legally false.

A factually false claim misrepresents what goods or services were provided to the Government.
A legally false claim falsely certifies that the claiman] has complied with a statute or regulation the compliance with which is a condition for payment.

A relator may show a false certification through either an express certification or an implied certification. The false certification may be express in that the claimant affirmatively represents compliance with a statute or regulation with which it did not comply. Or the certification may be implied in that the claimant seeks payment without disclosing that it violated statutes or regulations.

Whether a false certification is express or implied, it must be “material to the Government’s payment decision” for liability to attach. Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1996 (2016)).

A false certification is material only if (1) “a reasonable man would attach importance to [it]” or (2) “the defendant knew or had reason to know that the recipient of the representation attaches importance to the specific matter ‘in determining his choice of action,’ even though a reasonable person would not.” Escobar, 136 S. Ct. at 2002-03.

The materiality inquiry is holistic in that it considers all of the facts to determine “the effect on the likely or actual behavior of the recipient of the alleged misrepresentation.” Id. at 2002. Proof of materiality includes, but is not limited to:

evidence that the provision is expressly labeled a condition of payment and
evidence that the government consistently refuses to pay claims in cases where the claimant did not comply with the provision.