In May, we wrote about how U.S. Supreme Court Justice Antonin Scalia’s death might impact a key whistleblower case brought under the False Claims Act. It turns out that Justice Scalia’s presence might not have made much of a difference: The eight remaining Justices came through with a significant—and unanimous—victory for whistleblower plaintiffs, and delivered a strong rebuke to government contractors that would defraud taxpayers through misleading omissions and then evade responsibility by hiding behind technicalities and legalese.

In Universal Health Services Co. v. United States ex rel. Escobar, the Supreme Court held that a federal contractor that uses “misleading half-truths” to conceal its failure to comply with an important legal or contractual requirement—i.e., by making an “implied false certification” of compliance by submitting a claim to be paid—can be found liable for defrauding the government under the False Claims Act. This may seem like common sense, and while most federal courts faced with the issue have agreed, last year the Seventh Circuit Court of Appeals (covering Illinois, Indiana and Wisconsin) held that contractors could only be held liable for their express, affirmative falsehoods. So the Supreme Court stepped in to resolve the issue.

In Escobar, a 17-year-old girl who sought care at Arbour, a Massachusetts mental health facility that participated in MassHealth (the state’s Medicaid program), died after being diagnosed with bipolar disorder by an Arbour “psychologist”—who was unlicensed—and taking medicine prescribed by an Arbour “psychiatrist” who wasn’t even a doctor. In all, 23 Arbour employees provided unlicensed prescriptions and counseling, in violation of MassHealth regulations.

The girl’s family filed a qui tam suit under the False Claims Act against Universal Healthcare Services, Arbor’s parent company. The False Claims Act allows individuals to sue government contractors that knowingly submit “false or fraudulent” claims for payment. (The individuals are known as “relators” and share in the penalties recovered from fraudsters.) The relators and the United States argued that while Universal didn’t lie about the Arbour staff’s qualifications, when it billed MassHealth it used payment codes corresponding to specific licensed mental health services and mental health job titles. By using these codes, the plaintiffs argued, Arbour fraudulently represented that its licensed staff provided licensed services.

The Supreme Court agreed this was more than just a mere omission: Universal’s representations about Arbour’s services and providers were “clearly misleading in context.” Such “misleading half-truths,” the Court held, can support False Claims Act liability.

After unanimously deciding that implied certifications can give rise to False Claims Act liability, the Court also resolved whether the implied certification theory can only apply for express conditions of payment.  Writing for the Court, Justice Clarence Thomas refused to define exactly what rules and regulations would trigger liability and made clear that government contractors should not focus on whether a particular rule is designated a “condition of payment,” writing: : “If the Government failed to specify that guns it orders must actually shoot,” then a contractor that bills the government for guns it knew did not shoot could be liable under the implied false certification theory. Whether the government has expressly labeled a provision a condition of payment “is relevant to but not dispositive of the materiality inquiry.”

“Justice Thomas’ opinion in Escobar sends an important message to government contractors,” says whistleblower attorney Jeffrey F. Keller of Keller Grover LLP.  “The rule has long been that contractors need to ‘turn square corners’ when they deal with the government.  Escobar hasn’t changed that rule at all. Instead, it has reinforced in a unanimous decision that contractors can be held liable when they know what they are selling the government is not what the government bargained for.”