CACI No. 4801. Implied Certification of Compliance With All Contractual Provisions - Essential Factual Elements

Judicial Council of California Civil Jury Instructions (2020 edition)

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4801.Implied Certification of Compliance With All Contractual
Provisions - Essential Factual Elements
Under the California False Claims Act, when [a/an] [specify defendant’s
status, e.g., vendor] submits a claim to a public entity for payment on a
contract, [he/she/nonbinary pronoun/it] impliedly certifies that [he/she/
nonbinary pronoun/it] has complied with all of the requirements of the
contract, not just those relevant to the claim presented. [[Name of
plaintiff] is an individual who brings this action on behalf of [name of
public entity].] [Name of public entity] is a public entity.
[Name of plaintiff] claims that [name of defendant] presented a false claim
to [it/[name of public entity]] for payment or approval by falsely certifying
by implication that it had complied with the requirements of the
contract. To establish this claim, [name of plaintiff] must prove all of the
following:
1. That [name of defendant] had not complied with [specify
contractual terms alleged to have been breached] when it presented
a claim for payment to [name of public entity].
2. That when [name of defendant] submitted its claims for payment,
[he/she/nonbinary pronoun/it] knowingly failed to disclose that [he/
she/nonbinary pronoun/it] had not complied with all of the terms
of the contract; and
3. That [name of defendant]’s failure to comply with all the terms of
the contract was material to [name of public entity]’s decision to
make the requested payment to [name of defendant].
“Knowingly” means that with respect to the claim, [name of defendant]
1. had actual knowledge that [he/she/nonbinary pronoun/it] had failed
to disclose [his/her/nonbinary pronoun/its] noncompliance; or
2. acted in deliberate ignorance of the truth or falsity of whether
[he/she/nonbinary pronoun/it] had failed to disclose
[his/her/nonbinary pronoun/its] noncompliance; or
3. acted in reckless disregard of the truth or falsity of whether [he/
she/nonbinary pronoun/it] had failed to disclose [his/her/nonbinary
pronoun/its] noncompliance.
3. Proof of specific intent to defraud is not required.
Afailure to comply with all the terms of the contract is “material” if it
had a natural tendency to influence, or was capable of influencing, the
payment or receipt of [money/property/services] on the claim.
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Directions for Use
Under the California False Claims Act, a vendor impliedly certifies compliance with
its express contractual requirements when it bills a public agency for providing
goods or services. A False Claims Act action may be based on allegations that the
implied certification was false and had a natural tendency to influence the public
agency’s decision to pay for the goods or services. (San Francisco Unified School
Dist. ex rel. Contreras v. Laidlaw Transit, Inc. (2010) 182 Cal.App.4th 438, 441
[106 Cal.Rptr.3d 84].)
The vendor must have made the claim knowing that it had failed to disclose
noncompliance with all of the terms of the contract. (See San Francisco Unified
School Dist. ex rel. Contreras,supra, 182 Cal.App.4th at pp. 452-453 [contractor
must have the requisite knowledge, rendering the failure to disclose the contractual
noncompliance fraudulent]; see also Rothschild v. Tyco Internat. (US), Inc. (2000)
83 Cal.App.4th 488, 494-495 [99 Cal.Rptr.2d 721].) While the breach must be
material as defined, it does not have to involve the particular contractual provision
on which payment is sought. (See San Francisco Unified School Dist. ex rel.
Contreras,supra, 182 Cal.App.4th at pp. 442-444 [bus company provided school
district with student transportation, but did so with buses that did not meet the
contractually and legally required safety requirements].)
Sources and Authority
• “Under the CFCA, a vendor impliedly certifies compliance with its express
contractual requirements when it bills a public agency for providing goods or
services. Allegations that the implied certification was false and had a natural
tendency to influence the public agency’s decision to pay for the goods or
services are sufficient to survive a demurrer.” (San Francisco Unified School
Dist. ex rel. Contreras,supra, 182 Cal.App.4th at p. 441.)
• “[Defendant] initially argues its claims for payment were not false, because there
was no literally false information on the face of the invoices, which identify the
routes driven and the charges arising from each route. However, [defendant]
ultimately concedes that a section 12651, subdivision (a)(1) false claim need not
contain an expressly false statement to be actionable.” (San Francisco Unified
School Dist. ex rel. Contreras,supra, 182 Cal.App.4th at p. 448.)
• “[A]n alleged falsity satisfies the materiality requirement where it has the
‘ “ ‘natural tendency to influence agency action or is capable of influencing
agency action.’ ” [Citation.]’ ” (San Francisco Unified School Dist. ex rel.
Contreras,supra, 182 Cal.App.4th at p. 454.)
• “Plaintiffs further allege that [defendant]’s invoices impliedly certified
compliance with the material terms of the Contract, that the terms violated were
material, and that the District was unaware of the falsity of [defendant]’s implied
certification, resulting in a loss of District funds. Plaintiffs’ allegations are
adequate to survive a demurrer. Under the case law discussed above,
CACI No. 4801 CALIFORNIA FALSE CLAIMS ACT
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[defendant]’s implied certification that it had satisfactorily performed its material
obligations under the Contract, including provisions designed to protect the
health and safety of the student population, had a ‘ “ ‘natural tendency’ ” ’ to
cause the District to make payments it would not have made had it been aware
of [defendant]’s noncompliance.” (San Francisco Unified School Dist. ex rel.
Contreras,supra, 182 Cal.App.4th at p. 455, internal citation omitted.)
• “Our conclusion that the allegations in the Complaint are sufficient to withstand
a demurrer does not mean that every breach of a contract term that is in some
sense ‘material’ necessarily satisfies the materiality requirement for a CFCA
claim. That is, a false implied certification relating to a ‘material’ contract term
may not always be ‘material’ to the government’s decision to pay a contractor.
Materiality is a mixed question of law and fact, and a showing in a motion for
summary judgment or at trial that the alleged breach would not have affected the
payment decision will defeat a CFCA claim.” (San Francisco Unified School
Dist. ex rel. Contreras,supra, 182 Cal.App.4th at p. 456, internal citation
omitted.)
• “The False Claims Act is not ‘an all-purpose antifraud statute,’ or a vehicle for
punishing garden-variety breaches of contract or regulatory violations. A
misrepresentation cannot be deemed material merely because the Government
designates compliance with a particular statutory, regulatory, or contractual
requirement as a condition of payment. Nor is it sufficient for a finding of
materiality that the Government would have the option to decline to pay if it
knew of the defendant’s noncompliance. Materiality, in addition, cannot be found
where noncompliance is minor or insubstantial.” (Universal Health Servs. v.
United States ex rel. Escobar (2016) ___ U.S. ___ [136 S.Ct. 1989, 2003, 195
L.Ed.2d 348] [construing similar Federal False Claims Act].)
• “What matters is not the label the Government attaches to a requirement, but
whether the defendant knowingly violated a requirement that the defendant
knows is material to the Government’s payment decision.” (Universal Health
Servs. v. United States ex rel. Escobar,supra, ___U.S. at p. ___ [136 S.Ct. at p.
1994] [construing similar Federal False Claims Act].)
Secondary Sources
5 Witkin Summary of California Law (11th ed. 2017) Torts, § 884
40 California Forms of Pleading and Practice, Ch. 468, Public Entities and Offıcers:
False Claims Actions, § 468.21 (Matthew Bender)
4802-4899. Reserved for Future Use
CALIFORNIA FALSE CLAIMS ACT CACI No. 4801
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