THE CONSTRUCTION LAWYER16 Winter 2018
G. Christian Roux John D. Hanover
Implied False Certi cation Liability Under the False
Claims Act: How the Materiality Standard Offers
Protection after
Escobar
By G. Christian Roux and John D. Hanover
G. Christian Roux is a partner practicing in the
Washington, DC, and Los Angeles of ces of Alston &
Bird LLP. John D. Hanover also is a partner of Alston &
Bird LLP, practicing out of the rm’s Los Angeles of ce.
The False Claims Act (FCA)
1
, initially enacted in 1863
during the Civil War, was sponsored by the Lincoln
administration to curtail the rampant fraud and excessive
pro teering being perpetuated by government contractors,
who, among other things, were selling sawdust-tainted
gunpowder to the U.S. government.2 The FCA was used
infrequently to combat such actions until 1982, when
Congress passed the current version of the law, now
codi ed as 31 U.S.C. §§3729–3732. Perceived abuses by
defense contractors—such as the $640 toilet seat—were
the impetus for the passing of the modern version of the
FCA. Congress further amended the FCA in 1986 and
it has been widely used by a number of federal agen-
cies to deter overcharges and false claims, particularly
most recently in the health care industry. Congress has
amended the FCA twice since 1986 to further sharpen
the tool.
The FCA prohibits seven types of misconduct, includ-
ing (1) submitting false or fraudulent payment claims;
(2) creating false records or statements in support of
fraudulent claims; (3) conspiring to violate the FCA; (4)
delivering less property than is owed to the government;
(5) creating and submitting a false receipt; (6) know-
ingly receiving property from an of cial not authorized
to pledge such property; and (7) falsifying records to avoid
or decrease an obligation to pay the government.3 For a
violation of the FCA, a contractor could be liable to the
government for a civil penalty of not less than $5,000 and
not more than $10,000 for each violation, plus three times
the amount of damages that the government sustains as
a result of the violation.4
A “claim” is de ned in the FCA as “any request or
demand for payment of money or property” that is pre-
sented to “an of cer, employee or agent of the United
States” or is made to a “contractor, grantee or other
recipient if the money or property is to be spent on the
government’s behalf or to advance a government program
or interest.”5 The scienter requirement of the FCA means
that the violator must make the claim “knowingly,” which
requires that party to either (a) have actual knowledge of
the false information or (b) act in deliberate ignorance of
the truth or falsity of the information or (c) act in reck-
less disregard of the truth or falsity of the information.6
The courts have found liability for a “claim” arising
from the prohibited misconduct both for making, with
scienter, an af rmative false claim to the U.S. government
as well as for concealing or avoiding an obligation to pay.
In addition to imposing liability for making a misrepre-
sentation to the government in connection with a claim
for payment of money or property (“direct false claim”),
liability also attaches when a party expressly certi es
compliance with a required contract provision, statute,
regulation, or governmental program in connection with
a claim (“express false certi cation”). In certain instances,
those to be examined in more detail here, a party also can
be liable for an implied false certi cation made without
expressly certifying compliance with a speci c contract
provision, statute, regulation, or governmental program
(“implied false certi cation”).7
An implied false certi cation claim may arise even
though the invoices themselves submitted by a contrac-
tor do not contain any factual misrepresentations. Some
examples are instructive here. For instance, if the contract
requires that the defendant dispose of wastewater from
its operations in accordance with various environmental
laws, which the contractor knowingly does not, and then
fails to disclose those violations at the time of submit-
ting a claim, the government may assert FCA liability on
an implied false certi cation theory. Or an implied false
certi cation claim may arise when a contractor submits
a claim but fails to disclose misrepresentations relating
to its small business or disadvantaged status, its failure
to pay Davis-Bacon prevailing wages, its noncompliance
ESCOBAR
Published in Construction Lawyer Volume 38, Number 1, Winter 2018 © 2018 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof
may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 1
