Reining in Lincoln’s Law: A Call to Limit the Implied Certification Theory of Liability Under the False Claims Act

Abstract

The False Claims Act is widely considered the nation’s preeminent civil litigation weapon against fraud by federal contractors. Under the Act’s newest theory of liability known as implied certification, a contractor is liable for civil penalties and treble damages if it knowingly presents a claim for payment to the government and fails to disclose its violation of a contract provision, statute, or regulation material to the government’s decision to pay the claim. While a majority of federal courts of appeals have embraced the implied certification theory, they have struggled to define the scope of a contractor’s duty to disclose in the absence of an agreement between the contracting parties. Under the default rule developed by the Second Circuit in Mikes v. Straus, liability attaches only when a contractor submits a claim and fails to disclose its violation of a material contractual, statutory, or regulatory provision that the government has expressly identified as a condition of payment. A broader default rule, enunciated by the First Circuit in United States ex rel. Hutcheson v. Blackstone Medical, Inc., imposes liability when a contractor submits a claim and fails to disclose its violation of a material contractual, statutory, or regulatory provision, regardless of whether the provision was an express condition of payment.