On June 16, 2016, in Universal Health Servs., Inc. v. U.S. ex rel. Escobar, the US Supreme Court clarified the standard for finding FCA liability under the implied false certification theory of liability ( (June 16, 2016)).

The respondents filed a qui tam suit, alleging that Universal Health had violated the FCA by submitting claims for mental health services, even though the providers of the services failed to meet the staff qualifications and licensing requirements for those services. The district court granted Universal Health's motion to dismiss, holding that the respondents had failed to state a claim under the implied false certification theory of liability because none of the regulations violated by the provider was a condition of payment. The US Court of Appeals for the First Circuit reversed, holding that submission of a claim implicitly represents compliance with relevant regulations and that any undisclosed violation of a precondition of payment renders a claim "false or fraudulent."

Until recently, the implied certification theory has been accepted by most, though not all, circuit courts. However, even the circuit courts that adopted the theory disagreed about the extent to which it can give rise to FCA liability. The US Supreme Court resolved this split by clarifying that a party can be held liable under the FCA on an implied false certification theory of liability when at least two conditions are met:

The Court further clarified the materiality standard, characterizing it as rigorous and demanding. The FCA defines "material" as "having a natural tendency to influence, or be capable of influencing, the payment of receipt of money or property" (31 U.S.C. § 3729(b)(4)). The Court explained that a misrepresentation should not be deemed material merely because the government designates compliance with a particular statutory, regulatory, or contractual requirement as a condition of payment. Likewise, the government's option to decline payment if it knew of the defendant's non-compliance is alone insufficient for a finding of materiality, as are the cases where non-compliance is minor or insubstantial. Conversely, proof of materiality would be buttressed in cases where the defendant submitted claims knowing that the government consistently refuses to pay similar claims in cases of non-compliance with a particular statutory, regulatory or contractual requirement.

Because the Court announced a new standard for FCA liability under the implied false certification theory, the Court remanded the case for reconsideration of whether the respondents adequately pleaded an FCA violation.