On June 16, 2016, a unanimous Supreme Court blessed the implied false certification theory of False Claims Act (FCA) liability, resolving a circuit split on the theory’s legitimacy. The Court held that implied certification will succeed as a theory of liability where (1) the claim makes specific representations about the goods and services being provided and (2) the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those misrepresentations misleading. The Court then provided guidance on the appropriate materiality standard, which will most certainly dominate FCA litigation in the coming years.

Although the Universal Health decision on its face appears to be a victory for relators, potential FCA defendants can take some heart in the Court’s analysis. In shifting the focus to the facts and circumstances surrounding a misrepresentation, rather than regulatory and contractual strictures, the Court stressed that the materiality standard is “demanding,” and that the FCA is not an “all-purpose” antifraud statute, or a vehicle for punishing “garden-variety breaches of contract or regulatory violations.” By rejecting an expansive theory of materiality in favor of this common sense, fact-based approach, Universal Health becomes a tool for imposing liability only when the violation at issue actually matters to the government.