Writing for a unanimous court, Justice Clarence Thomas penned what may be the most expensive opinion to come out of the U.S. Supreme Court in years. Universal Health Services v. United States ex rel . Escobar resolved a circuit split over when imperfect performance of a government contract qualifies as a fraud deserving of the False Claims Act’s punitive remedies.
Adopting the broadest parameters any lower court had suggested, the court found punishable fraud where a contractor merely requests payment despite knowing noncompliance with a statute, regulation, or contract term. The case, brought by whistleblower parents of a deceased teenaged beneficiary of Massachusetts’ Medicaid program, arose after a mental health center performing Medicaid services failed to disclose serious violations of regulations pertaining to staff qualifications. The resulting rule exposes companies doing business with the U.S. government to dramatically increased potential liability.
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