Mike Chow –

Volume 70, Issue 2, 573-594

In Universal Health Services, Inc. v. United States ex rel. Escobar, the United States Supreme Court resolved a longstanding circuit split by holding that implied false certifications—transactions involving a failure to disclose noncompliance with material ancillary requirements—can expose government contractors to liability under the False Claims Act. But in seeking to clarify the materiality requirement for such claims, the Court opened the door to further circuit splits. This Note examines one such split: whether, and to what extent, the government’s decision to continue to pay a claim despite knowledge of allegations of fraud should preclude a finding that the noncompliance was material. This Note contends that such a decision should create a rebuttable presumption against materiality, which may be defeated upon a showing that: (1) the agency’s decision to continue payment was not a commentary on the merits of the allegations; (2) the agency has withheld payment on the basis of the violation(s) at issue in the past; or (3) the violation(s) at issue is so central to the bargain that, even in the face of continued payment, no reasonable person would argue that the alleged violation(s), if true, was immaterial.