Under Ebeid v. Lungwitz (9th Cir. 2010) 616 F.3d 993 and Universal Health Services, Inc. v. United States ex rel. Escobar (2016) 136 S.Ct. 1989, the falsity requirement of the False Claims Act may be satisfied by an implied representation of compliance with a government statute or regulation if the defendant explicitly undertook to comply with the statute or regulation and submitted claims despite not complying, and the defendant’s claim does not merely request money but makes specific representations about goods or services supplied and those representations are misleading half-truths because of omitting information about non-compliance with the statute or regulation.  Under Escobar, the fact that compliance with a statute or regulation is labeled as a condition of payment is not determinative; rather, the question is the likely effect of the claim on the governmental entity receiving it and whether it is relevant to that entity’s decision to confer a benefit.  Here, plaintiff presented sufficient facts to avoid summary judgment.  The defendant agreed not to pay incentive compensation to its recruiters as a condition of receiving federal financial aid for its students, but then violated its agreement yet submitted claims for the financial aid anyway.

Ninth Circuit Court of Appeals (Graber, J.; Smith, N.R., J., dissenting in part); August 24, 2018; 2018 U.S. App. LEXIS 23977