Universal Health Services, Inc. v United States ex rel. Escobar

Escobar field a qui tam suit against Universal under an implied false certification theory. The 1st Circuit ultimately allowed the suit to proceed holding implied false certifications can be the basis for qui tam suits and contractual, statutory and regulatory requirements can be the conditions for payment which can trigger a qui tam claim. The Court, resolving a split of authority among the circuits, vacated and remanded. It first held that implied false certification can be a basis for a qui tam suit when the request for payment is accompanied by specific representations of the goods or services presented and where failure to state noncompliance with material statutory, regulatory or contractual terms makes the specific representations misleading half-truths. The Court drew these two requirements from the common law of fraud. It held that the terms do not need to be labeled as conditions of payment as there is no textual requirement for such a label and imposing the rule would induce the government to label thousands of terms as conditions which would not serve to give potential defendants notice. It held that misrepresentations must be material meaning that the representations would either be relied upon by a reasonable man or the government would rely on them in its payment decisions even if a reasonable person would not. The Court again drew this form the common law of fraud. The Court held that the government’s course of conduct can provide evidence of whether a term is material as a course of denying claims for moncom0pliant goods or services would be evidence of materiality while payment with knowledge of the noncompliance would be evidence the term is not material. As the 1st Circuit used a different test for materiality, the case was remanded for analysis of Escobar’s claim under the correct test.

Kingdomware Technologies, Inc. v United States

Kingdomware challenged the award of a Department of Veteran’s Affairs contract to a company not owned by veterans arguing 38 USC 8127(a) requires the government to award contracts to veratrin owned companies whenever the agency reasonably expects at least two veteran owned companies can provide the good or service. The Federal Circuit ultimately held that 8127(a) only applies when an agency has not yet met its goal of awarding a certain amount of contracts to veteran owned entities and Department had already met its goal. The Court reversed. It first held that while the case was moot, the capable of repetition exception applied as the two year term of the contracts at question is too short to allow judicial review, it is reasonable to believe that Department will refuse to follow 8127(a) in the future and it is reasonably likely Kingdomware will win contracts in the future under the restricted bidding process set out in 8127(a) as it had already won contracts. On the merits, the Court held 8127(a) is unambiguously mandatory as it uses “shall’ and this understanding is confirmed by the use of “may” in other parts of 8127. The Court held the preface in 8127(d) did not change the result as it only set out the goal to be achieved and did not change the mandatory nature of 8127(a) and the orders placed through Department’s procurement system are contracts under federal law and thus 8127(a) applies.

Kirtsang v John Wiley & Sons, Inc.

Kirtsang sought review of the denial of his motion for attorney fees under 17 USC 505 arguing the lower courts gave dispositive weight to the objective reasonableness of John Wiley’s defense. The Court, resolving a split of authority among circuits, vacated and remanded. Accepting the invitation to set out more guidance for district courts on exercising their discretion in awarding fees under 505, the court held that consideration of the objective reasonableness of a complaint or defense promotes the goals of the copyright act by encouraging parties with strong legal positions to litigate and encourages those with weak positions to settle while Kitsang’s position that the importance of the issue should be considered does not advance the goals as it could discourage claims in close cases when a plaintiff faces the prospect of a fee award against it and John  Wiley’s approach is more easily administered as well. The Court held that objective reasonable is not a controlling factor as district courts must view all the circumstances in light of the Copyright Act’s goals when determining if to award fees and if so how much,. The Court expressed concern about practice in the 2nd Circuit which appears to give controlling weight to objective reasonableness and therefore remanded to the district court for analysis under the clarified standard.