There are many different types of false claims that are actionable under the False Claims Act, or FCA. At its most basic form, a false claim involves a government contractor making a request for payment for goods or services which the contractor never provided. Another type of false claim is commonly referred to as the “certification theory of liability”, also known as the legally false certification. Under the certification theory of liability, a claim constitutes a false claim for payment when it relies on the false representation of compliance with a particular federal statute, federal regulation or contractual term. The validity of a false certification claim was at issue before the DC Circuit Court of Appeals in U.S. v. Science Application Int’t Corp. 626 F.3d 1257 (D.C. Cir. 2010).

The circuit court in Science Applications recognized that courts will infer an implied certification from a government contractor’s silence “where certification was a prerequisite to the government action sought.” Id at 1266 (internal citations omitted). The jury in Science Applications found that the defendant-contractor violated the False Claims Act when it sought payment from the government while knowing it was violating contractual provisions regarding conflict of interest. On appeal, the contractor argued that it should not be liable under the False Claims Act because the contract it was working under did not designate the conflict of interest provisions as an express condition for payment. In deciding the appeal, one of the issues the court had to consider was the scope and application of the materiality requirement under the False Claims Act. As the Court recognized, to establish liability under the Act using the implied certification theory, the plaintiff must prove by a preponderance of the evidence that compliance with the relevant legal requirement is material to the decision to pay. Id at 1271.

The purpose of the Act’s materiality requirement is to prevent Government contractors from having to deal with “onerous and unforeseen” liability due to the contractor’s noncompliance with the “potentially hundreds of legal requirements” established by the contract. Id. at 1271. Courts recognize that payments made to a contractor that violate only minor contractual provisions are “ancillary to the parties’ bargain and are neither false nor fraudulent.” Id.

The appellate court in Science Applications found that there was record evidence to support the jury’s conclusion that the contract’s conflict of interest provisions were not minor or ancillary. At trial, several witnesses testified that the conflict of interest obligations were an important component of the overall contract. More important, witnesses testified that had they been aware of the contractor’s conflicts of interest, the government would not have made payments under the contract. Id at 1271.

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Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at 561 899-2111, or jcornell@clarkfountain.com.