1 False Claims Act (FCA), 31 U.S.C.A. §§ 3729-3733 (West 2011); Susan C. Levy, et al., The Implied Certification Theory: When Should the False Claims Act Reach Statements Never Spoken or Communicated, but Only Implied?, 38 PUB. CONT. L.J. 131, 132 (2008)Google Scholar.

2 CIVIL DIV., U.S. DEP't OF JUSTICE, FRAUD STATISTICS–HEALTH AND HUMAN SERVICES (2011) [hereinafter FRAUD STATISTICS], available at http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Statistics.pdf.

3 Levy et al., supra note 1, at 134.

4 Id.

5 See New York v. Amgen Inc., 652 F.3d 103, 105 (1st Cir. 2011) (alleging that a non-submitting drug manufacturer used kickbacks to encourage healthcare providers to purchase its drugs and to present false Medicaid claims).

6 “Any company that does business with the government—even indirectly—may face FCA damages and penalties.” WILMER HALE, FALSE CLAIMS ACT ALERT 2 (2012). For a more detailed discussion of how courts have treated these claims, see discussion infra Part III.

7 See generally Mikes v. Straus, 274 F.3d 687, 697-700 (2d Cir. 2001) (setting forth the theories of express and implied certification and holding that implied certification requires an express precondition of payment in a law or regulation); First Circuit Rewrites False Claims Act Requirements and Significantly Expands Potential Liability, SIDLEY AUSTIN LLP (Aug. 1, 2011), http://m.sidley.com/first-circuit-rewrites-false-claims-act-requirements-and-significantly-expands-potential-liability-08-01-2011/ [hereinafter SIDLEY AUSTIN].

8 Amgen, 652 F.3d at 111.

9 United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 392 (1st Cir. 2011); see also Amgen, 652 F.3d at 110.

10 Blackstone, 647 F.3d at 385-86 (“The text of the FCA … does not refer to ‘certification’ at all. In light of this, and our view that these categories may do more to obscure than clarify the issues before us, we do not employ them here.” (internal citations omitted)).

11 False Claims Act (FCA), 31 U.S.C.A. §§ 3729-3733 (West 2011); H.R. REP. NO. 111-97, at 2 (2009).

12 31 U.S.C.A. § 3729(a)(1)(A).

13 Id. § 3729(a)(1)(C).

14 Levy et al., supra note 1, at 133.

15 The FCA originally called for a penalty ranging from $5000 to $10,000, but the range was increased by the Department of Justice to adjust for inflation. See 31 U.S.C.A. § 3729(a)(1).

16 Id.

17 Id. § 3730(b)(1).

18 Id. § 3730(b)(2).

19 Id. § 3730(b)(4).

20 Id. § 3730(d)(1).

21 Id. § 3730(d)(2).

22 FRAUD STATISTICS, supra note 2 (showing a general increase in the number of qui tam actions over the last twenty-five years). The number of qui tam actions continues to increase also because of loosened standards for bringing such actions. Pashke, Carolyn, Note, Qui Tam Provision of the Federal False Claims Act: The Statute in Current Form, Its History and Its Unique Position to Influence the Health Care Industry, 9 J.L. & HEALTH 163, 173-74 (2005)Google Scholar.

23 H.R. REP. NO. 111-97, at 2 (2009).

24 Id. Companies that sold supplies to the Union Army would fraudulently obtain government funds for fewer supplies than promised or for supplies already delivered. The False Claims Act: History of the Law, ALL ABOUT QUI TAM, http://www.all-about-qui-tam.org/fca_history.shtml (last visited Mar. 9, 2012).

25 H.R. REP. NO. 111-97, at 3.

26 Id.

27 Id.

28 Id.

29 Id.

30 Id. The requirements would later be changed in 1943 to include a government knowledge bar and again in 1986 to include a public disclosure bar. See infra notes 31, 39 and accompanying text.

31 H.R. REP. NO. 111-97, at 3.

32 Id.

33 Id. at 3-4.

34 The amount awarded to relators was considerably less than the fifty percent award of the original FCA, and under these amendments there was no minimum amount guaranteed to a relator. Id. at 4.

35 Id.

36 Id. (“Indeed, from 1943 to 1986, only about six to ten False Claims Act cases were brought each year. Notably, as the number of qui tam suits decreased, fraud against the Government was again rampant by the 1980’s.”)

37 Id.

38 Id. at 5.

39 Id.

40 Id. This sixty-day seal requirement is still part of the current FCA. See 31 U.S.C.A. § 3730(b)(2) (West 2011).

41 H.R. REP. NO. 111-97, at 3.

42 Id.

43 Id. at 5-7 (discussing Supreme Court cases, as well as lower district court cases, which severely restricted liability under the FCA).

44 Id. at 6 (“Congress expressly stated that the public disclosure bar was intended to bar only truly parasitic qui tam lawsuits; the provision was not intended to bar suits solely because the Government already knew of the fraud or could have learned of the fraud from information in the public domain … .”).

45 See id. at 15-27. See also the discussion of the current provisions of the FCA at the beginning of Part II herein.

46 Pub. L. No. 111-21, 123 Stat. 1617 (2009) (to be codified in scattered sections of 18 and 31 U.S.C.).

47 31 U.S.C.A. § 3729(b)(2)(A)(ii) (West 2011); see also WILMER HALE, supra note 6, at 3.

48 31 U.S.C.A. § 3730(h); see also WILMER HALE, supra note 6, at 3.

49 Pub. L. No. 111-148, 124 Stat. 119 (2010) (to be codified primarily in scattered sections of 42 U.S.C.).

50 31 U.S.C.A. § 3730(e)(4); see also WILMER HALE, supra note 6, at 3 (“[D]efendants can no longer use information in certain types of public sources (such as state and local administrative reports) to demonstrate that a relator's claim was publicly disclosed prior to the complaint.”).

51 31 U.S.C.A. § 3730(e)(4)(B); see also WILMER HALE, supra note 6, at 3 (“[T]he relator [may] have ‘independent knowledge that materially adds to the publicly disclosed allegations’ instead of ‘direct knowledge.’”).

52 See Walecia Konrad, As Medicare Fraud Evolves, Vigilance Is Required, N.Y. TIMES, Sept. 11, 2012, http://www.nytimes.com/2012/09/12/business/retirementspecial/medicare-fraud-victimizes-patients-and-taxpayers.html (“The Centers for Medicare and Medicaid Services reported that $4.1 billion was recovered in 2011, a record amount for a single year. But … government and law enforcement agencies have a long way to go before they can catch up with the rampant abuse schemes.”).

53 See Medicare Fraud: A $60 Billion Crime, CBS NEWS, Sept. 5, 2010, http://www.cbsnews.com/8301-18560_162-5414390.html (“In fact, Medicare fraud – estimated now to total about $60 billion a year – has become one of, if not the most profitable, crimes in America.”).

54 See Konrad, supra note 52 (noting that CMS estimates that Medicare and Medicaid made more than sixty-five billion dollars in improper federal payments in 2010 and as much as ninety-eight billion dollars in 2011).

55 See discussion infra notes 57-60.

56 Gardiner Harris, Doctor Faces Suits over Cardiac Stents, N.Y. TIMES, Dec. 5, 2010, http://www.nytimes.com/2010/12/06/health/06stent.html?pagewanted=all.

57 Id. (“[A] series of articles in The Baltimore Sun said that Dr. Midei … had inserted stents in patients who did not need them, reaping high reimbursements from Medicare and private insurance.”).

58 42 U.S.C.A. § 1320a-7b (West 2011).

59 31 U.S.C.A. §§ 3729-3733.

60 See, e.g., GIBSON DUNN, 2011 YEAR-END FALSE CLAIMS ACT UPDATE (2012).

61 Id. at 2 (“And with this amount, total recoveries under the FCA since the 1986 amendments have risen to more than $30 billion.”).

62 See FRAUD STATISTICS, supra note 2, at 2.

63 See generally OFFICE OF INSPECTOR GEN., U.S. DEP't OF HEALTH & HUMAN SERVS., TESTIMONY OF LEWIS MORRIS (2010), available at https://oig.hhs.gov/testimony/docs/2010/morris_testimony61410.pdf (discussing the advantages of PPACA in enhancing HHS's goals of oversight and enforcement in the healthcare industry).

64 Kelly Kennedy, Health Care Fraud Prosecutions on Pace to Rise 85%, USA TODAY (Aug. 29, 2011), http://usatoday30.usatoday.com/news/washington/story/2011-08-29/Health-care-fraud-prosecutions-on-pace-to-rise-85/50180282/1 (“New government statistics show federal health care fraud prosecutions in the first eight months of 2011 are on pace to rise 85% over last year … .”); LeClairRyan, Feds Use Tougher Tactics to Fight Healthcare Fraud, PR NEWSWIRE, Sept. 7, 2012, http://www.prnewswire.com/news-releases/feds-use-tougher-tactics-to-fight-healthcare-fraud-168904666.html (noting an increase in recovery for both civil and criminal healthcare fraud cases).

65 See discussion infra Part III.A.1 (noting that most circuit courts embrace the distinctions between express and implied certification, although they do not treat these distinctions uniformly).

66 See discussion infra Part III.A.1 (pointing out that while not all circuit courts embrace the distinctions, the application and interpretation of the distinctions among circuit courts that do recognize the theories may vary in important ways).

67 United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 382 (1st Cir. 2011).

68 See id.

69 Id.; see also Cliff Katz, Amgen Seeks Supreme Court Review of Implied Certification Theory of Liability Under the False Claims Act, FCA ALERT (Oct. 6, 2011), http://www.fcaalert.com/2011/10/articles/decisions-interpreting-fca-ele/amgen-seeks-supreme-court-review-of-implied-certification-theory-of-liability-under-the-false-claims-act/.

70 Blackstone, 647 F.3d at 382.

71 Id. at 383.

72 Id.

73 See Katz, supra note 69.

74 Id.

75 Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001).

76 Id. at 699; see also Levy et al., supra note 1, at 143-44.

77 Mikes, 274 F.3d at 699 (“[T]he False Claims Act was not designed for use as a blunt instrument to enforce compliance with all medical regulations – but rather only those regulations that are a precondition to payment – and to construe the impliedly false certification theory in any expansive fashion would improperly broaden the Act's reach.”).

78 Id.; Petition for Writ of Certiorari at 16, Blackstone Med., Inc. v. United States ex rel. Hutcheson, 132 S. Ct. 815 (2011) (No. 11-269), 2011 WL 3860767 at *16 [hereinafter Blackstone Petition].

79 Blackstone Petition, supra note 78, at 18.

80 United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 306 (3d Cir. 2011) (“We now join with these many courts of appeals in holding that a plaintiff may bring an FCA suit under an implied false certification theory of liability.”).

81 Id. (pointing out that the Second, Sixth, Ninth, Tenth, Eleventh, and District of Columbia Circuits had recognized the implied certification theory).

82 Chesbrough v. VPA, P.C., 655 F.3d 461, 468 (6th Cir. 2011) (“Thus, a relator cannot merely allege that a defendant violated a standard – he or she must allege that compliance with the standard was required to obtain payment.”); United States ex rel. Augustine v. Century Health Servs., Inc., 289 F.3d 409, 415 (6th Cir. 2002) (“[L]iability can attach if the claimant violates its continuing duty to comply with the regulations on which payment is conditioned.”); Blackstone Petition, supra note 78, at 19-20.

83 Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (noting that making technical distinctions between express and implied certification theories is not necessary to find fraud); Blackstone Petition, supra note 78, at 22-23.

84 See Blackstone Petition, supra note 78, at 23-24.

85 United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1169 (10th Cir. 2010) (finding that the appropriate inquiry for implied certification is whether a payee, through the act of submitting a claim, knowingly and falsely implied that it was entitled to payment).

86 McNutt ex rel. United States v. Haleyville Med. Supplies, Inc., 423 F.3d 1256, 1259 (11th Cir. 2005) (“When a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable, under the Act, for its submission of those false claims … .”); see also United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1311 (11th Cir. 2002) (“The False Claims Act does not create liability merely for a health care provider’s disregard of Government regulations or improper internal policies unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe.”).

87 United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1261 (D.C. Cir. 2010).

88 Katz, supra note 69 (noting that neither circuit court has expressly addressed the viability of the implied certification theory in cases they have decided).

89 United States ex rel. Berge v. Bd. of Trs. of the Univ. of Ala., 104 F.3d 1453 (4th Cir. 1997).

90 Id. at 1461; see also Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786 n.8 (4th Cir. 1999) (questioning the viability of an implied certification claim in the Fourth Circuit and refusing to address the validity and problems of such a theory in the instant case).

91 Harrison, 176 F.3d at 786 n.8 (“[T]here can be no False Claims Act liability for an omission without an obligation to disclose … .”).

92 United States ex rel. Marcy v. Rowan Cos., 520 F.3d 384, 389 (5th Cir. 2008) (“This Court has previously deferred [the question of whether implied certifications may be claims under the FCA], and we do so again today.”).

93 Blackstone Petition, supra note 78, at 20.

94 Id.; see also United States ex rel. Yannacopoulos v. Gen. Dynamics, 652 F.3d 818, 832 (7th Cir. 2011); United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1020 (7th Cir. 1999).

95 United States ex rel. Vigil v. Nelnet, Inc., 639 F.3d 791, 798 (8th Cir. 2011). The Eighth Circuit further found that when statutes and regulations provide detailed remedies for noncompliance, they should be enforced through administrative mechanisms. Id. at 798-99; see also Blackstone Petition, supra note 78, at 21-22.

96 For a discussion of different circuit court opinions regarding the implied certification theory of liability, see Petition for Writ of Certiorari, Amgen, Inc. v. New York, 132 S. Ct. 993 (2011) (No. 11-363), 2011 WL 4400339 [hereinafter Amgen Petition]; see also Katz, supra note 69.

97 New York v. Amgen, Inc., 652 F.3d 103, 110 (1st Cir. 2011); United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 392 (1st Cir. 2011).

98 Amgen, 652 F.3d at 111.

99 Amgen, 652 F.3d at 110; Blackstone, 647 F.3d at 392.

100 Blackstone, 647 F.3d at 392.

101 Amgen, 652 F.3d at 110.

102 Id.; Blackstone, 647 F.3d at 390.

103 Blackstone, 647 F.3d at 377 (“[T]he FCA makes no distinction between how non-submitting and submitting entities may render the underlying claim or statements false or fraudulent.”).

104 Amgen, 652 F.3d at 110 (refusing to apply express and implied categorizations previously applied by other district courts).

105 Blackstone, 647 F.3d at 378.

106 Id. at 380

107 Id. at 378-79.

108 42 U.S.C. § 1320a-7b (2006).

109 Blackstone, 647 F.3d at 379.

110 Id. at 379-80.

111 Id.

112 Id. at 386.

113 Id. at 389-90.

114 Id. at 390.

115 Id. at 392.

116 Id. at 392-93.

117 Id. at 393 (noting that the language of the agreement made clear that Medicare would not reimburse a claim whose underlying transaction violated the AKS).

118 Id. at 392.

119 31 U.S.C.A. § 3729(b)(4) (West 2011); see also Blackstone, 647 F.3d at 394.

120 Blackstone, 647 F.3d at 394.

121 Id. at 395.

122 Id. at 392.

123 Westmoreland was a former Amgen employee. New York v. Amgen, Inc., 652 F.3d 103, 106 (1st Cir. 2011).

124 Id. at 105. This drug, Aranesp, was manufactured to treat anemia.

125 Id.

126 Id. at 111.

127 Id. at 111-12.

128 Id. at 110. The First Circuit again refused to apply the categorizations of express and implied certification, as it had in Blackstone. See id.

129 Id. at 112-13 (finding that the laws in Illinois, Indiana, Massachusetts, and New York reflected the Federal AKS and similarly prohibited kickbacks). For further information on what constitutes an illegal kickback, see the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b (2006).

130 Amgen, 652 F.3d at 113.

131 Id. at 114 (finding that California's and New Mexico's statutes similarly prohibited kickbacks in order to file reimbursement claims).

132 Id. at 115-16.

133 Id. (finding that Georgia gave no authority to bring such a claim).

134 Id. at 111.

135 Id. at 110.

136 Id.

137 Id. (“Such a rule, we held, would impermissibly narrow the scope of liability for entities that cause other entities to submit claims that do not comply with a precondition of payment.”).

138 Michael E. Paulhus, Two Petitions for Certiorari Urge the Supreme Court to Clarify the Standard for Proving Falsity Under the FCA, MARTINDALE.COM (Oct. 4, 2011), http://www.martindale.com/litigation-law/article_King-Spalding-LLP_1353518.htm.

139 Blackstone Petition, supra note 78, at iii-iv. For a full discussion of the reasons to grant the writ presented in the Blackstone petition, see id. at 14-35.

140 Id. at 27.

141 Id.

142 Id. at 30.

143 Id. at 32 (“All of the companies and individuals who do business with those claim-submitting organizations need to know when some upstream course of conduct will be considered to ‘cause’ a claim that is truthful and accurate to become ‘false’ for purposes of the FCA.”).

144 Amgen Petition, supra note 96, at iv.

145 Id. at 23 (noting that the issues of falsity presented in this case, as well as in Blackstone, are recurring and continue to be important, especially in light of the numerous qui tam actions that have been filed in recent years and that are likely to increase in number).

146 Id. at 21.

147 See id.

148 Brian P. Dunphy, Supreme Court Declines to Take up Implied Certification Under the FCA, HEALTH L. & POL’Y MATTERS (Dec. 8, 2011), http://www.healthlawpolicymatters.com/2011/12/08/supreme-court-declines-to-take-up-implied-certification-under-the-fca/.

149 Id.

150 Blackstone Petition, supra note 78, at 14-15.

151 Id.

152 Amgen Petition, supra note 96, at 24 (noting the similarities between Amgen's and Blackstone's petitions).

153 Amgen Petition, supra note 96, at i; Blackstone Petition, supra note 78, at i.

154 Dunphy, supra note 148.

155 Id.

156 After all, it is because of this continuing problem that Congress once again broadened the scope of FCA liability. See background discussion supra Part II.B.

157 See Medicare Fraud: A $60 Billion Crime, supra note 53.

158 See Konrad, supra note 52.

159 See Blackstone Petition, supra note 78, at 15.

160 See Katz, supra note 69 (noting that the Fourth, Fifth, and Seventh Circuits do not apply the implied certification theory).

161 See id. (pointing specifically to the Second, Third, and Eight Circuits).

162 See id. (pointing specifically to the Eleventh Circuit).

163 For a full discussion of each of the different circuit court's approaches to falsity, see Blackstone Petition, supra note 78, at 15-27; see also discussion supra Part III.A.

164 Amgen Petition, supra note 96, at 21.

165 Id. at 23.

166 Id. at 24.

167 See id. at 21.

168 See FY 2010 False Claims Act Settlements, TAXPAYERS AGAINST FRAUD, (Oct. 1. 2010), http://taf.org/total2010.htm (noting that as of 2010, twenty-eight states and the District of Columbia have passed their own versions of the FCA).

169 See Dunphy, supra note 148 (“[B]y declining to take up Blackstone on appeal, the Court will not give medical device and pharmaceutical manufacturers and providers guidance in this important area of the law.”).

170 See SIDLEY AUSTIN, supra note 7 (noting that the First Circuit's decisions expand liability by loosening the standard for what counts as a precondition of payment).

171 Blackstone Petition, supra note 78, at 29.

172 See id.

173 See Amgen Petition, supra note 96, at 18.

174 Id.

175 See id. at 19.

176 See discussion supra Part III.B.

177 See Dunphy, supra note 148.

178 See SIDLEY AUSTIN, supra note 7.

179 See Blackstone Petition, supra note 78, at 15-27 (discussing how the different circuit courts that have accepted the implied certification theory nonetheless apply it differently).

180 See New York v. Amgen, Inc., 652 F.3d 103, 110 (1st Cir. 2011); United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 392 (1st Cir. 2011).

181 Amgen, 652 F.3d at 110; Blackstone, 647 F.3d at 392.

182 Amgen, 652 F.3d at 110; Blackstone, 647 F.3d at 392.

183 Blackstone, 647 F.3d at 390-93 (noting the importance of avoiding a decision that would “systematically excuse from FCA liability non-submitting entities who cause the submission of claims that fail to meet that stated precondition”); see also Amgen, 652 F.3d at 110.

184 See Blackstone, 647 F.3d at 393.

185 Id. at 394.

186 See Amgen, 652 F.3d at 110 (noting that the First Circuit explicitly rejected these complex classifications in Blackstone and continues to do so here).

187 Amgen, 652 F.3d at 110; Blackstone, 647 F.3d at 392.

188 See Mikes v. Straus, 274 F.3d 687, 699 (2d Cir. 2001) (noting that implied certification requires a representation of compliance with an express precondition of payment as delineated in a law, statute, or regulation).

189 See Amgen, 652 F.3d at 110; Blackstone, 647 F.3d at 392.

190 In setting forth tests for falsity, courts have been careful not to extend their definitions too broadly as to unduly open up FCA claims. E.g., Mikes, 274 F.3d at 699.

191 31 U.S.C.A. §§ 3729-3733 (West 2011); Blackstone, 647 F.3d at 385 (pointing to the fact that the text of the FCA does not address these categorizations in supporting its determinations that such terms should not be used in determining falsity).

192 H.R. REP. NO. 111-97, at 2 (2009) (highlighting the various amendments to the FCA through which Congress broadened the scope of liability for false claims). The continued broadening of the FCA's reach in recent years further shows Congress's intent to catch all fraud. See discussion supra Part II.B.

193 H.R. REP. NO. 111-97, at 2.

194 Id. (noting that the various judicial rulings after the 1986 amendments to the FCA once again restricted the scope of liability in these cases, thus prompting Congress to amend the FCA again in 2009); see also Blackstone, 647 F.3d at 385.

195 Blackstone Petition, supra note 78, at 26-27 (“In embracing the most expansive option yet, the First Circuit has held that allegations of non-compliance by upstream third-parties can render a hospital's claim ‘false’ and actionable under the FCA regardless of the fact the hospital fully complied with its obligations and provided a truthful claim seeking payment for services actually rendered.”).

196 E.g., Blackstone, 647 F.3d at 379 (stating that the defendant company caused third-party physicians and hospitals to submit materially false or fraudulent claims for Medicare reimbursement); New York v. Amgen, Inc., 652 F.3d 103, 105 (1st Cir. 2011) (stating that defendant company included extra drugs in a single-dose vial and encouraged providers to bill the remaining free product to Medicaid).

197 These were the Second, Tenth, and Third Circuits. Blackstone, 647 F.3d at 385.

198 Id.

199 H.R. REP. NO. 111-97, at 2 (2009).

200 See Medicare Fraud: A $60 Billion Crime, supra note 53.

201 Blackstone, 647 F.3d at 388 (“The text of the FCA and our case law make clear that liability cannot arise under the FCA unless a defendant acted knowingly and the claim's defect is material.”).