False Claims Act

The False Claims Act (FCA) allows third parties to sue on behalf of the United States for fraud committed against the United States. Per the Act a FCA complaint is kept secret “under seal” until the United States can review it and decide whether it wants to participate in the case.

In State Farm Fire and Casualty Co. v. United States ex rel. Rigsby the Supreme Court held unanimously that if the seal requirement is violated the complaint doesn’t have to be dismissed.

While the Supreme Court has yet to rule whether states and local governments can bring FCA claims, local governments, but not state governments, can be sued for making false claims against the federal government.  

This theory may help states at least indirectly in some instances.  

Fraud against the federal government is a problem for the states in particular when the fraud involves money taken from a federal-state program like Medicaid, which is what was alleged to have happened in Universal Health Services v. U.S. ex. rel. Escobar. The Supreme Court adopted a new theory of liability under the False Claims Act in this case. 

The False Claims Act (FCA) allows private individuals to sue on behalf of the United States to recover money that has been defrauded from the federal government. While the Supreme Court has yet to rule whether states and local governments can bring FCA claims, local governments, but not state governments, can be sued for making false claims against the federal government.   

What exactly is a false claim? The question for the Supreme Court in Universal Health Services v. Escobar is whether a claim for reimbursement from the federal government containing no affirmative misstatements can be deemed false because the claimant failed to disclose that it has violated a requirement of the federal program. Technically, this is called the “implied certification” theory of legal falsity.