Supreme Court Imposes New "materiality" Requirement for False Claims Act Liability

In an opinion on June 16, 2016, the United States Supreme Court took the False Claims Act in yet another direction, imposing a “materiality” requirement on the providers who submit bills to federally funded healthcare programs.  Specifically, the nation’s highest court held that providers must “know” that a condition of payment is “material” to the Government’s payment decision.  Although a provider may be held liable for both express and implied certifications with laws, False Claims Act enforcement should be limited to compliance with laws that have a “natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”  In other words, a provider may be liable (1) if a reasonable person would attach importance to the billing requirement in determining his or choice of action in the transaction or (2) if the provider knew or had reason to know that the Government attaches importance to the specific matter in determining his or her choice of action.  Of course, only time will tell how the lower circuits will apply “materiality” to the cases at hand.