So it is somewhat difficult to predict exactly where Justice Scalia would have landed in the Escobar case now pending before the Supreme Court. Escobar is intended to settle a thorny question of interpretation in the False Claims Act. Namely, if the United States government says that it will only pay for something if a certain condition is met, what happens if a company assures the government that this condition has been met, when, in fact, it hasn't? Is that a false claim?
It is a question that has divided the circuits. In Mikes v. Strauss
, the Second Circuit adopted a theory called implied certification, which held that if the government states that it will only pay if the condition has been met, then it is fraud to say that the condition has been met in order to get paid. The Sixth Circuit adopted the same theory, and it was expanded in the First, Fourth and DC circuits.
The Seventh and Ninth Circuits have a different approach. They view the issue basically as a matter of contract interpretation - is the condition material to the contract? If it is, then it is fraud to state that the condition has been met. In a case that we recently argued before the Seventh CIrcuit, U.S. ex rel. Grenadyor v. Ukrainian Village Pharmacy, Inc.
, we invited the Seventh Circuit to adopt the majority approach of implied certification. During oral argument, Judge Richard Posner asked me what the difference was in outcome between the approaches, and I was hard-pressed to come up with gaping differences. Judge Posner said he could not think of much difference, either, and his opinion reflected that. As a result, the Seventh Circuit sticks with its approach.
In statute interpretation, Justice Scalia's analysis often resembled Judge Posner's. So if Justice Scalia were still alive, chances are, his opinion would allow the circuits to maintain their varying approaches. Justice Alito, who has been historically hostile to the False Claims Act, would take a more restrictive approach, as would the more corporate-friendly justices, Roberts, Thomas and possibly Breyer. That would leave Justices Kagan, Sotomayor, Ginsberg supporting the more expansive interpretation, with Justice Kennedy as a swing vote. In that case, Justice Scalia's opinion would have tipped the balance, likely in favor of maintaining the status quo.