Recently, the Fourth Circuit held “that the Government pleads a [Medicare fraud] false claim when it alleges that the contractor, with the requisite scienter, made a request for payment under a contract and ‘withheld information about its noncompliance with material contractual requirements.’” United States ex
rel. Badr v. Triple Canopy, Inc., Case Nos. 13-2190, 13-2191, at *5 (4th Cir. Jan. 8, 2015) (quoting United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 2010)). The Court further clarified that “[t]he ‘pertinent inquiry’ is ‘whether, through the act of submitting a claim, a payee knowingly and falsely implied that it was entitled to payment.’” Id. (quoting United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1169 (10th Cir. 2010)). In so doing, the Fourth Circuit joined the chorus of circuit courts that have embraced the so-called “implied certification” theory of False Claims Act liability.
In determining whether a particular condition or regulation is material, the post-Badr courts are now likely to examine, inter alia, the defendant’s efforts to hide its noncompliance with the conditions or requirements at issue. For example, in Badr, the Fourth Circuit was particularly swayed by the defendant’s alleged efforts to conceal its noncompliance, opining that the defendants’ actions in “covering up” its alleged noncompliance suggests that the defendant viewed the requirement as material to the government’s decision to pay.
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