Did you hear that? It was a collective sigh of relief from companies contracting with the federal government thanks to the U.S. Court of Appeals for the Fifth Circuit’s decision in United States ex rel. Steury v. Cardinal Health, Inc. In Steury, the Fifth Circuit found that a company that contracts with the government cannot be punished under the False Claims Act – the government’s primary anti-fraud statute, and a potent one at that – by merely violating a contractual provision or federal statute or regulation. (N1) To be liable under the FCA, the court wrote, a company must falsely certify compliance with a contractual provision, statute, or regulation that is a prerequisite to payment. Unless the government’s payment was conditioned on adherence to a specific provision, statute or regulation, the “crucial distinction” between punitive FCA liability and ordinary breaches of contract would be lost.
To read more, please visit The Washington Legal Foundation blog.