Court Opinion

ID: 9494955
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:51:23.738031+00
Date Added: 2024-06-11T17:56:44.264667
License: Public Domain

EDITH H. JONES, Circuit Judge,
dissenting:
This is a complex case legally but not factually. The legal difficulties, and my disagreements with the panel majority, will be stated shortly. Factually, the case concerns the government’s effort to inflict severe penalties on HUD-subsidized low-income apartment owners because there *691were (1) roaches (in the deep South, no less), (2) broken doors and windows (caused partly by tenants), and (3) crime (in a high-crime, crack-dealing neighborhood). HUD knew of this property’s problems for years before it foreclosed, but HUD’s policy, confirmed by the evidence in this case, was to work with the owners to seek remedies gradually. There is no evidence of concealment or wrongdoing by the property owners. The property owners never collected a dime in profit after fiscal year 1993 and spent all of their HUD subsidies trying to keep up with the maintenance and mortgage payments. In short, HUD was complicit in any mismanagement that allowed the property to deteriorate.
According to the majority opinion, however, the owners may be liable under the False Claims Act despite the vagueness of the contractual standard and the government’s ongoing knowledge of the condition of the apartments. Moreover, the majority hold that a false claim exists as a matter of law if the defendants’ certifications of compliance with the regulatory standard were false — irrespective of the government’s knowledge of noncompliance and its failure to rely on the certifications. Given the facts of this case, the majority’s conclusion constitute a significant and unnecessary extension of the FCA. The statute was originally passed to prevent “all types of fraud” against the United States government that might result in financial loss. United States v. Neifert-White Co., 390 U.S. 228, 232, 88 S.Ct. 959, 961, 19 L.Ed.2d 1061 (1968). But “[sjince the Act is resti-tutionary and aimed at retrieving ill-begotten funds, it would be anomalous to find liability when the alleged noncompliance would not have influenced the government’s decision to pay.” United States ex rel. Mikes v. Straus, 274 F.3d 687, 697 (2d Cir.2001).
By imposing materiality as a matter of law based solely on a formalistic certification, and by constricting the .defense of government knowledge of the contractor’s actions, the majority threatens to transform the FCA into a weapon against mere breaches of contract. The majority of courts recognize, however, that
... the FCA is not an appropriate vehicle for policing technical compliance with administrative regulations. The FCA is a fraud prevention statute; violations of [agency] regulations are not fraud unless the violator knowingly lies to the government about them.
United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1019 (7th Cir.1999). The costs of government contracts are already inflated by complex rules unknown to private business transactions. This opinion will generate additional costly premiums to offset the increased risk posed by its expansion of FCA liability. Indeed, the fear of having to defend an FCA claim for non-material misstatements or problems known by the government will discourage many businesses from bidding for government contracts.
I respectfully dissent.

I. The payment vouchers were not material to HUD’s decision making.

The majority hold that when certification of statutory or regulatory compliance is an express prerequisite to receiving a benefit from the government, a false certification is material and renders the claim false as a matter or law. I disagree with this excessively broad conclusion and with the majority’s dalliance, in dicta, with an “outcome materiality”/“claim materiality” dichotomy advocated by the government. I would hold that no genuine issue of fact exists concerning the materiality of these defendants’ monthly certifications to HUD *692that the apartments were decent, safe and sanitary.
No ambiguity exists in this court’s recent reaffirmation that the civil FCA “interdicts material misrepresentations made to qualify for government privileges or services.” United States ex. rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir.1997) (quoting United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 461 (5th Cir.1977)). Weinberger’s 25-year-old requirement of materiality is just as straightforward as is Thompson’s holding.1 Moreover, other circuits have continued to state that materiality is required in a civil FCA claim. See, e.g., Luckey v. Baxter Healthcare Corp., 183 F.3d 730, 732 (7th Cir.1999); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785, 788 (4th Cir.1999). A recent district court decision, after conducting the most extensive survey to date of the history, legislative background and caselaw interpreting the FCA, concluded that materiality remains an element of a civil FCA claim. See United States ex rel. Wilkins v. North Am. Const. Corp., 173 F.Supp.2d 601, 618-30 (S.D.Tex.2001).2
According to the majority opinion, however, the precise definition of materiality remains open to question in this court based on a government theory never before accepted by a federal court.3 The majority’s mischievous dicta demand a brief response. The majority suggest that “materiality” has two plausible meanings. The accepted definition at common law and in false statement statutes similar to the civil FCA equates materiality with “hafying] a natural tendency to influence, or [being] capable of influencing, the decision of the decisionmaking body to which it was addressed.” United States v. Wells, 519 U.S. 482, 489, 117 S.Ct. 921, 926, 137 L.Ed.2d 107 (1997) (brackets in original) (internal quotation marks omitted) (quoting Kungys v. United States, 485 U.S. 759, 770, 108 S.Ct. 1537, 1546, 99 L.Ed.2d 839 (1988)). The district court relied on this definition, which the government and the majority dub “outcome materiality.” This understanding of materiality is implicit in Thompson and explicit in Weinberger. *693The government and the majority discern another FCA-specific phenomenon known as “claim materiality,” whereby a falsehood that “bears upon” the claimant’s entitlement to receive money or property is material — irrespective of the statement’s capability of influencing, or actual influence on, the government’s decision. The government’s briefing, like the majority opinion, offers no legislative history, logic, caselaw or grammatical argument in support of “claim materiality.” The government’s definition waters down materiality to a subjective or self-fulfilling concept: a representation becomes “claim material” if the government says so, since the government defines the representations made when filing a claim. No showing of government reliance or that the false statement had the capability of influencing the government’s decision is necessary.
The government’s advocacy of claim materiality flies in the face of the Supreme Court’s seminal case on the definition of materiality. In Kungys, the Court imported into a statute revoking citizenship the definition of materiality, quoted above, that had been uniformly adopted by lower federal courts in criminal false statement prosecutions. Kungys, 485 U.S. at 769-70, 108 S.Ct. at 1546. As to revocations of citizenship, the Court noted that
Neither the evident objective sought to be achieved by the materiality requirement, nor the gravity of the consequences that follow from its being met, is so different as to justify adoption of a different standard. “Where Congress uses terms that have accumulated settled meaning under either equity or the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.”
Kungys, id. (citations omitted). Later, the Court restates the materiality test as asking “whether the misrepresentation or concealment was predictably capable of affecting, i.e., had a natural tendency to affect, the official decision [to grant citizenship].” Kungys, 485 U.S. at 778, 108 S.Ct. at 1547. In sum, the government’s proffered test of “claim materiality” is ingenious but wrong. There is even less reason for courts to adopt a variant standard of materiality in the context of the punitive civil FCA4 than there might have been in regard to immigration violations. Fortunately, the majority’s discussion, as dicta, cannot detract from the force of our prior cases.
After toying with the concept of claim materiality, the majority conclude that the owners’ signed certifications on the HAP vouchers were material as a matter of law. In other words, when the appellees certified the Jackson Square apartments as, inter alia, decent, safe and sanitary each month on their voucher for HUD reimbursement, their certifications, if false, constitute false claims because the certifications are prerequisites to payment under the pertinent Section 8 program. See Thompson, 125 F.Bd at 902. I find this conclusion insupportable on several counts.
First, even the government acknowledges that “if there is a traditional ‘materiality1 requirement, the district court erred in granting summary judgment on this point.” Traditional materiality is a mixed question of law and fact. The government grudgingly understands, if the majority does not, that the facts must be considered.
*694Second, I am troubled by the superficiality of equating false certifications with materiality as a matter of law. In Thompson, this court stated that to create liability under the FCA, a false certification of compliance must be a “prerequisite” to obtaining a government benefit.5 Unlike the majority, I interpret this language as requiring more than a formalistic connection to the payment decision.6 I would agree that in many instances, certifications required by the government along with payment vouchers should be presumed to be material to the government’s decision to pay a contractor. But what if the facts show that the certifications were not actually a “prerequisite” to the payment and had no tendency to influence the decision-maker? None of the previous cases that analyzed the connection between FCA civil liability and false certifications involved facts like those before us.7 On the other hand, courts in several cases have rejected civil FCA liability where defendant contractors arguably submitted “false” certifications but were engaged in cooperative or *695supervised undertakings with the government that rendered the certifications irrelevant to ongoing payment decisions.8 Similarly, Kungys rejected the lower court’s attempt to formulate a distinct standard of materiality for immigration cases, in part because “the judgment in question does not lend itself to mechanical resolution.” 485 U.S. at 771, 108 S.Ct. at 1546. There are probably thousands, if not tens of thousands, of government certification requirements in connection with payment and reimbursement vouchers of every sort. We paint with entirely too broad a brush to generalize that
... once a claimant has made a certification of compliance with a statutory or regulatory provision or a provision of a contract mandated by statute or regulation, the claimant is subject to liability under the Act for submitting a false claim if that certification of compliance is known by the claimant to be false.
Majority Opinion at 680 (emphasis in original). Even more disturbing, the majority’s rule seems to jeopardize its recognition that “not all statutory, regulatory or contractual violations necessarily give rise to FCA liability.”9 The government need only incorporate boiler-plate “certifications of compliance” with “all” statutes and regulations to put in play punitive FCA sanctions for most government contractors or beneficiaries.
Third, based on the facts well articulated by the district court, I agree with its conclusion that the appellees’ certifications of compliance with the decent, safe and sanitary standard on their monthly HUD vouchers were in no way a “prerequisite” to receiving reimbursement and did not in fact influence the agency’s decision to pay. The majority has wisely refused to rely on the only factual evidence supporting the government’s materiality position, the deposition of Quentin Lewis. Lewis, a HUD employee responsible for reviewing and approving the defendants’ and hundreds of other payment vouchers, testified only that he would not have approved the vouchers if the certifications had not been signed by the defendants or their agent. Lewis also testified that he had not read the certification in any depth and had never heard of the phrase “decent, safe and sanitary” until the date of his deposition. As the district court observed, “there is nothing in the record to show that Lewis, or anyone else with HUD, took into account the actual substance of the certifications in deciding whether to approve the vouchers.” 95 F.Supp.2d at 638-39 (emphasis added). If Lewis had testified that he or some other governmental official took the truth or falsity of the defendants’ certifications into account in deciding whether to approve the vouchers, it would be a different matter. Thus, without the majority’s helpful declaration of materiality as a matter of law, the government has no evidence to support its position.
In contrast, the district court found, “amply supported” by “undisputed evi*696dence,” that HUD’s decision to pay appel-lees’ HAP vouchers “was not linked to their certification as to the condition of the apartments.” United States v. Southland Mgmt. Corp., Inc., 95 F.Supp.2d 629, 637 (S.D.Miss.2000). The court’s assessment of the undisputed evidence is worth quoting at length:
It is clear from the evidence that HUD, in accordance with the terms of its standard HAP contract, may elect to discontinue housing assistance payments if an owner, after notice by HUD that the property is not “decent, safe, and sanitary,” fails to implement a corrective action plan acceptable to HUD. However, it is equally clear not only that that discontinuance of payments is not required but also that even when HUD considers that a property is not “decent, safe, and sanitary, ” it is HUD’s normal practice, in keeping with the parties’ respective rights and obligations under the HAP contract, to allow owners to continue to receive subsidies while working to correct deficiencies that HUD has identified. Indeed, it is evident from the proof that HUD makes housing assistance payments with the expectation that the owner/recipients will use those payments to bring their property up to standard. Further, as the Government points out in its own submission, in view of the practical realities of Section 8 housing programs, HUD often elects to continue payments for a particular property despite knowledge that the property, contrary to the owners’ HAP voucher certification, does not meet HUD’s “decent, safe, and sanitary” standard since the alternative— discontinuance of payments — may work to the detriment of tenants. The point, of course, is that because the evidence reflects that HUD, as a matter of policy and practice, admittedly routinely makes Section 8 housing assistance payments to owners of Section 8 property irrespective of whether the property is in a “decent, safe, and sanitary” condition, then the owners’ certification as to the condition of the property would not be “material” to HUD’s decision to pay.
On this issue, the evidence positively demonstrates beyond reasonable question that at the time of defendants’ submission of the challenged vouchers and HUD’s approval of those vouchers, HUD, based on its own annual inspections of the property, knew full well of the very conditions of the property which it now claims made the property not “decent, safe, and sanitary.” HUD, through its contract inspector, Management Solutions of America, Inc., conducted annual inspections of the Jackson Apartments for each of the years defendants’ HAP Contract was in effect; and for each of the years from August 1993 to May 1997, based on conditions found to exist at the property by HUD’s inspector, the apartments received “below average” or “unsatisfactory” physical inspection reports from HUD. HUD’s inspector furnished to HUD’s project manager responsible for the apartments a copy of his inspection report in which he detailed his specific findings and indicated repairs which needed to be made in order that the property would satisfy HUD’s minimum housing quality standards. Vicki Gross, the project manager for the time period at issue, in turn, furnished the inspection report to her superiors who, in turn, forwarded the inspection reports to defendants or their managing agent, and advised defendants and/or their agent of those repairs which were required to be made and requested that defendants and/or their agent inform HUD of the actions that would be taken, *697along with a timetable, to correct the deficiencies which HUD had identified. At her deposition, Vicki Gross, who testified as HUD’s representative, explained that properties receiving “below average” and “unsatisfactory” physical condition ratings in inspection reports are not “decent, safe, and sanitary.” And indeed, the conditions upon which the Government makes its affirmative allegation that the Jackson Apartments were not in a “decent, safe, and sanitary” condition are those same specific deficiencies which HUD’s inspector identified and which led him to assign the apartments the “below average” and “unsatisfactory” ratings. From this evidence, there can be no question but that HUD was fully aware of the conditions of the apartments, and specifically, of those deficiencies which it asserts made the apartments not “decent, safe, and sanitary.” And yet HUD, which was aware that defendants continued to submit HAP vouchers and receive payments throughout this time, allowed those payments to continue. HUD’s knowledge of the true conditions utterly belies HUD’s contention that the certifications were material, confirms HUD’s policy and practice of allowing housing assistance payments on properties that it knows are not decent, safe and sanitary, and dooms its claim against defendants.
95 F.Supp.2d at 637-40 (footnotes omitted) (second and third emphases added). HUD followed its usual procedures, paid the subsidies year after year, acquiesced in the owners’ plowing the entire rent subsidy into the property, and now claims to be defrauded! As a sister court of appeals put it, this claim is “absurd.” Lamers, 168 F.3d at 1020. Simply, there can be no finding of materiality, much less materiality as a matter of law, on this record.

II. The defendants did not “knowingly” present false claims for payment.

A defendant may be liable for a civil false claim by “knowingly” presenting such a claim, 31 U.S.C. § 3729(a)(1), but specific intent to defraud is not required, 31 U.S.C. § 3729(b). The question here is whether the government’s knowledge of the falsity of a statement in a claim can defeat FCA liability for that statement on the ground that the claimant did not act “knowingly.” The majority hold that government knowledge need not defeat a civil FCA claim, but that government knowledge may be relevant to whether a defendant had the mens rea required by the statute.10 Applying this standard, the majority conclude that there is an issue of material fact as to whether these defendants had the requisite mens rea.
The majority and I differ over the scope of the government knowledge defense rather than its existence. Citing no authority, the majority arbitrarily cabins this defense, excluding from the Act’s coverage in a claim brought by the government (as opposed to a qui tarn action)
primarily ... the rare situation where the falsity of a claim is unclear and the evidence suggests that the defendant actually believed his claim was not false because the government approved and paid the claim with full knowledge of the relevant facts.
*698Majority Opinion at 686 (emphasis in original). As I read the cases, however, the impact of government knowledge is (a) fact-specific, (b) not susceptible to a tidy formula, and (c) based on the understanding that the FCA reaches only the “knowing presentation of what is known to be false.” Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1478 (9th Cir.1996) (citation and internal quotation marks omitted). There is no statutory or caselaw basis for distinguishing, as the majority do, between government-initiated and qui tarn FCA cases. And there is no basis for limiting the defense as the majority has done. The majority’s reticence cannot be squared with caselaw. It is plain that government knowledge can defeat an FCA claim at the summary judgment stage. Id. at 1477-79. From my perspective, only two possibilities would seem to justify imposing liability in the face of government knowledge that a claim is false: either the person making the statement did not know that the government knew it was false, or the person making the statement was colluding with a government employee who also knew the claim was false. In these situations, the claimant would be “knowingly” submitting a false claim. Here, however, the defendants knew that the government knew the true' condition of their property. Compare United States ex rel. Durcholz v. F.K.W., Inc., 189 F.3d 542, 545 (7th Cir.1999) (“If the government knows and approves of the particulars of a claim for payment before that claim is presented, the presenter cannot be said to have knowingly presented a fraudulent or false claim. In such a case, the government’s knowledge effectively negates the fraud or falsity required by the FCA.”).
Contrary to the majority’s finding of a material fact issue on whether the defendants acted “knowingly”, there is no doubt that the government was aware that this apartment house was deteriorating for several years preceding its foreclosure. HUD inspectors repeatedly rated the property as “below average” or “unsatisfactory.” HUD’s inspector found the management employees cooperative, however, and the record reflects that when the management was advised to make certain improvements and repairs, it often did so to the extent money was available. The types of problems now emphasized by the government as creating substandard living conditions were not hidden defects — photographs of the property taken by the mortgagee inspectors are in the record, and HUD reviewed the mortgagee inspections. Nevertheless, HUD continued to subsidize the operation of these apartments. Evidence of foot-dragging by the apartment management may exist, but that is not the same as concealment. The yearly inspection reports show that repairs were being made regularly, and HUD knew this, as it also knew that its rent subsidies were insufficient to allay the deterioration.
In finding a fact issue as to government knowledge, the majority reason that HUD knew something about the apartments’ condition, but that the owners knew more. This is unpersuasive. The district court correctly parried the government’s similar contention by pointing out that HUD now relies on exactly the deficiencies stated in its annual inspection reports to condemn the owners’ certifications of compliance with the “decent, safe and sanitary” standard.11 HUD may not have known as much about the property, but because its knowledge was sufficient to undergird this civil FCA case — and it still subsidized the *699apartments for years — summary judgment should be affirmed. The owners did not knowingly submit false claims.

III. Are the owners’ defenses based on estoppel against the government?

The majority opinion sets up, only to pommel, what it describes as the owners’ “effective” contention that the government has waived or is estopped to rely on remedies under the civil FCA. Not only does estoppel not lie against the government, according to the majority, but the government’s enforcement alternatives would be seriously constrained by disallowing its opportunity to recover treble damages and penalties against the owners.
Unfortunately, this discussion rests on a complete mischaracterization of the owners’ position. While the owners vigorously dispute that the elements of a civil FCA claim lie against them and the impact of the government’s acquiescence and knowledge of the apartments’ condition, nowhere do they assert a waiver or estoppel argument. The majority’s position is untenable.12
Even if relevant, however, the majority’s estoppel argument proves too much. In this case, the government is suing the owners on a theory of wrongful conduct in excess of mere breach of contract, and the owners are arguing, not that the government is estopped from holding them liable on this theory, but that they are not hable as a matter of law. In other words, the owners do not raise estoppel as a defense to the government’s cause of action; they contend that in light of the government’s knowledge and its course of dealing, the government has failed to establish the necessary elements of that cause of action, namely, the “knowing” submission of “material” “false claims.” The owners’ position is thus entirely distinguishable from the cases cited in the majority opinion. All but one of those cases deal with private persons who invoked estoppel in an attempt to recover money from the government.13 In the other case, the issue (equally distinguishable from the issue in this case) was whether the government was estopped from enforcing a contract by collecting on a debt. The court held, not that estoppel was unavailable, but merely *700that the debtor had not met his burden to offer sufficient proof of equitable estoppel to withstand summary judgment. See United States v. Bloom, 112 F.3d 200, 205-06 (5th Cir.1997).
Certainly, in a conventional fraud action initiated by the government against a private party, it would make no sense to conclude that estoppel considerations require a court to disregard the government’s knowledge or conduct in considering whether the government had actually been defrauded. But that seems to be what the majority is asserting in this case. The majority’s reasoning reinforces the theme permeating the opinion that government knowledge and repeated approval of a private person’s requests for reimbursement, unaccompanied by any illegal collusion, does not bar the United States from pursuing treble damages and penalties for facts of which the government was perfectly aware when the government approved the requests.
Even if the majority’s broad estoppel rationale should apply to cases in which the government seeks money against private persons, this rationale should not apply to a civil FCA action, which involves the possibility of treble damages liability. Thus, this case is not merely one in which “the government seeks to recover funds spent contrary to the will of Congress.” Majority Opinion at 683 (emphasis in original). Instead, the government in this case seeks punitive damages from private persons in excess of any recovery of its funds. The majority concede that government knowledge is relevant to and may defeat the defendant’s “knowing” presentation of a false claim. It is inconsistent also to assert, as the estoppel argument does, that government knowledge cannot in some circumstances deprive the government of a civil FCA remedy.
Finally, the majority assert that making government knowledge a bar to FCA liability would put HUD to an election of remedies that nothing in the Section 8 subsidized housing regime — statute, regulations, or contract — necessitates. This argument simply begs the antecedent question whether a civil FCA cause of action, and thus the basis for an FCA remedy, exists in the first place when the government knew of the owners’ alleged false claims. This argument also fails to address the owners’ contention that the majority’s reading of the FCA essentially condones government threats of FCA liability to force investors in federally subsidized housing projects to contribute their own money to make up shortfalls in maintenance funds. Compare Christopher Village Limited Partnership v. Retsinas, 190 F.3d 310, 316 (5th Cir.1999).14
The majority repeatedly engage in appellate factfinding by asserting, without any foundation in the record, that the Government sought a civil FCA remedy only after the “cooperative process” between HUD and the owners had “broken down”. It is true that the owners eventually ceased making mortgage payments, but HUD continued to use their management services for several months after it had foreclosed. HUD must not have consid*701ered the owners’ services as reprehensible then as it does now. Moreover, the owners indisputably applied all of their HUD subsidies and tenant rents to service and maintain the apartments and the associated mortgage after fiscal year 1993. The government has never asserted any dishonest conduct by the owners. Apparently, HUD’s subsidies were too low to cover the project’s costs. Only by using their imagination — wholly outside the record— can the majority attribute deceptive conduct to these owners or victimization to a government agency that was either underfunded or unwilling to support the project properly. I do not suggest that these circumstances justify estoppel against the government. They do, however, counsel extreme care in applying the powerful punitive weapon of civil FCA liability.

TV. What is “decent, safe and sanitary” housing?

While refusing to rule on the disposi-tive issue, not decided by the district court, whether the governing HUD regulations are so imprecise concerning “decent, safe and sanitary housing” that they cannot provide the basis for an FCA claim,15 the majority here offers at least a ray of hope to the owners. The majority posits that while this housing standard is subject to differing interpretations, the owners escape civil FCA violations if their interpretation of the standard was not unreasonable. Further, the majority do not preclude the possibility of a grant of summary judgment on this issue on remand.
My difference with the majority opinion is narrow. In assessing the meaning of the “decent, safe and sanitary” standard, I would not focus on the number of times the owners certified the apartments as, and HUD paid their vouchers for, “decent, safe and sanitary” housing; such evidence is tautological. Instead, the inspection records and HUD’s failure ever to inform the owners that they violated the “decent, safe and sanitary” standard seem far more probative. HUD’s periodic housing inspection reports rated the apartments as merely “below average” rather than “unsatisfactory” throughout the period covered by this suit until November 1996. Further, the mortgagee’s reports found the apartments “satisfactory” until April 1997, given the high-crime neighborhood in which they were located and “the lack of funds.” HUD did not place the apartments on its list of “troubled” properties until November 1997. If the crux of this issue is whether the appellees’ interpretation of the standard is reasonable, how can a fact issue exist when HUD never told the owners during the period for which HUD now sues that the apartments violated the standard? While I concede that wholly unreasonable and self-serving interpretations of regulatory or contract provisions might run afoul of the civil FCA, private parties should not be exposed to liability when the minimum standard consists of adjectives whose meaning is fairly debatable. Lamers, 168 F.3d at 1018 (“imprecise statements or differences in interpretation growing out oí a disputed legal question are ... not false under the FCA”) (citing Hagood, 81 F.3d at 1477-78).

V. Conclusion.

For the reasons stated above, I would affirm the summary judgment granted by the district court. The majority decision is unfortunate for the owners, although I be*702lieve they have a compelling case to present at trial. It is even more unfortunate for future government contractors or beneficiaries who must reckon with the threat of punitive sanctions for breach of vague provisions in complex regulatory schemes; for non-material certifications of compliance; and for “false claims” the government knowingly (and non-collusively) paid.
I respectfully DISSENT.

. This court said in Weinberger that to prove liability — that is, "to establish that Equifax committed fraud in this manner,” 557 F.2d at 461 (emphasis added) — "Weinberger first must demonstrate that the government was misled by Equifax's application for the reporting business.” Id. (emphasis added).

. The only circuit court language contrary to a materiality rule exists in the Third Circuit’s passing observation that "perhaps Neder argues against a materiality requirement.” United States ex. rel. Cantekin v. University of Pittsburgh, 192 F.3d 402, 415 (3d Cir.1999), cert. denied, 531 U.S. 880, 121 S.Ct. 192, 148 L.Ed.2d 133 (2000).
In two cases, the Supreme Court, ruling on whether materiality was an element under certain federal criminal false statement statutes, discussed the concept of materiality in ways that may ultimately be held relevant to the civil FCA. See Neder v. United States, 527 U.S. 1, 20-25, 119 S.Ct. 1827, 1839-41, 144 L.Ed.2d 35 (1999); United States v. Wells, 519 U.S. 482, 489-99, 117 S.Ct. 921, 926-931, 137 L.Ed.2d 107 (1997). A footnote in Neder is particularly provocative on this score. 527 U.S. at 24 n. 7, 119 S.Ct. at 1840 n. 7. Further, federal case law under the criminal FCA holds that there is no materiality requirement for a violation. See, e.g., United States v. Upton, 91 F.3d 677, 685 (5th Cir.1996). Until the Supreme Court instructs otherwise, however, materiality remains an element of civil FCA claims.

.In my view, Wilkins, supra, is misinterpreted by the majority, and no other court authority exists for the "claim materiality” theory. While Wilkins's historical discussion of the materiality requirement is exhaustive, the opinion nowhere mentions, much less adopts, a "claim materiality” standard. And as a district court opinion, Wilkins does not bind this court.

. Civil FCA actions for treble damages and penalties are "punitive.” Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 784-85, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000); United States ex rel. Garibaldi v. Orleans Parish School Board, 244 F.3d 486, 491 & n. 5 (5th Cir.2001).

.In Thompson, the district court dismissed the plaintiff relator’s complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). 125 F.3d at 900. This court reversed as to some but not all of the plaintiff’s allegations. Id. at 904. After concluding that a claimant submits a false claim under the FCA by falsely certifying compliance with a statute or regulation when the Government has conditioned payment of a. claim upon such a certification of compliance, id. at 902, this court applied this standard to the allegations at issue in the case before it:
Thompson alleged that, as a condition of their participation in the Medicare program, defendants were required to certify in annual cost reports that the services identified therein were provided in compliance with the laws and regulations regarding the provision of healthcare services. He further alleged that defendants falsely certified that the services identified in their annual cost reports were provided in compliance with such laws and regulations. Thus, Thompson fairly alleged that the government's payment of Medicare claims is conditioned upon certification of compliance with the laws and regulations regarding the provision of healthcare services and that defendants submitted false claims by falsely certifying that the services identified in their annual cost reports were rendered in compliance with such laws and regulations.
Id. Instead of simply holding that the defendants’ Rule 12(b)(6) motion should have been denied, this court then noted that the parties disputed whether "the certifications of compliance contained in annual cost reports are ... a prerequisite to payment of Medicare claims.” Id. The defendants in Thompson argued that the certifications were not a prerequisite to payment because "Medicare claims are submitted for payment shortly after services have been rendered and well before annual cost reports are filed.” Id. The plaintiff argued "that such certifications are indeed a prerequisite to payment because the retention of any payment received prior to the submission of an annual cost report is conditioned on the certification of compliance contained therein.” Id. Because this court was “unable to determine from the record before us whether, or to what extent, payment for services identified in defendants' annual cost reports was conditioned on defendants' certifications of compliance,” this court elected to "deny defendants' 12(b)(6) motions as they relate to this issue and remand to the district court for further factual development ... [to] determine whether the government’s payment of defendants’ Medicare claims was conditioned on defendants’ certifications of compliance in their annual cost reports.” Id. at 902-03 (emphasis added). If the mere certifications had sufficed to establish liability, this remand would have been unnecessary.

. The Ninth Circuit requires a causal link between the false certification and the agency’s decision to pay. United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996).

. See, e.g., United States ex rel. Siewick v. Jamieson Sci. and Eng'g, 214 F.3d 1372 (D.C.Cir.2000); United States ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir.2001); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir.1999); United States ex rel. Hopper v. Anton, 91 F.3d 1261 (9th Cir.1996).

. See United States ex rel. Durcholz v. F.K.W., Inc., 189 F.3d 542, 545 (7th Cir.1999); Wang ex rel. United States v. FMC Corp., 975 F.2d 1412 (9th Cir.1992); United States ex rel. Butler v. Hughes Helicopters, Inc., 71 F.3d 321 (9th Cir.1995); United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013 (7th Cir.1999).

. The majority emphasizes the uncompromising nature of its rule by adding in a footnote, "The materiality of the certified statement is not dependent upon how large a role the truth or falsity of the certification plays in the government’s ultimate decision whether to remit payment.” Majority Opinion at 679 n. 17. Suppose a government contractor mis-certified his payment address for reasons having nothing to do with the contract. He could be subjected to FCA liability under the majority’s theory. The majority’s reasoning has done away with materiality, at least in certification cases, while purporting to apply it!

. As a matter of pure logic, the government’s knowledge affects not only the question whether the defendant "knowingly” presented a false claim, but also the question whether the claim was false. The Seventh Circuit may have captured the relationship when it observed that one cannot meaningfully discuss falsity without implicating the knowledge requirement. Lamers, 168 F.3d at 1018. The court went on to hold that government knowledge precluded an actionable false claim.

. Indeed, the U.S. Attorney threatened in March 1996 to sue the owners for FCA penalties based on their false certifications, but HUD subsidies continued until the property was foreclosed in July 1998. And after that, HUD had the owners manage the apartments for another three months.

. In a dubious rhetorical flourish, the majority also mischaracterizes the appellees’ position as suggesting that the government’s awareness that a claimant’s submission was false might affect the truth or falsity of the claim. The majority tartly add: “A lie does not become the truth simply because the person hearing it knows that it is a lie." The majority confuse the vernacular "truth” or "falsity” of a claim with an actionable FCA false claim, whose components also include materiality and "knowing” falsehood. While the owners do not concede the vernacular falsity of their vouchers, they have disputed the existence of actionable civil FCA claims.

. See Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 426, 110 S.Ct. 2465, 2472, 110 L.Ed.2d 387 (1990) (denying recovery of disability benefit funds by retiree who received erroneous information from federal agency that led him to lose six months of benefits) ("judicial use of the equitable doctrine of es-toppel cannot grant respondent a money remedy that Congress has not authorized”); Fed. Crop. Ins. Corp. v. Merrill, 332 U.S. 380, 382, 386, 68 S.Ct. 1, 92 L.Ed. 10 (1947) (denying recovery by farmers of funds from federal crop insurance program where farmers bought insurance after Government falsely assured them that their entire crop was insurable); Linkous v. United States, 142 F.3d 271, 277 (5th Cir.1998) (rejecting plaintiff’s argument, in Federal Tort Claims Act action, that United States should be equitably estopped from denying doctor’s status as United States employee where doctor was in fact an independent contractor; dismissing FTCA action for lack of subject matter jurisdiction on ground that FTCA's waiver of sovereign immunity extends only to suits for acts committed by Government employees within scope of their employment).

. Cf. John T. Boese, Civil False Claims and Qui Tam Actions, § 2.03[F][3] ("Government Knowledge of False Claims Act Allegations”), at 2-108-2-109 (2nd ed. 2001 Supp.) ("[T]he strongest case for government knowledge precluding liability is one where an agency insists on continued performance while independent investigators believe this continued performance involves continued false claims, so that the contractor seems forced to choose between further False Claims Act liability [and] breach of contract.... [P]rosecution should not be permitted where a contractor is not free to terminate a contract or otherwise cease making false claims.”).

. There is no applicable regulatory definition of decent, safe and sanitary housing. The government has cited a regulation pertaining to a different HUD program, see Southland Mgmt. Corp., 95 F.Supp.2d at 635 n. 7 (citing, inter alia, 24 C.F.R. § 886.113), cited in Majority Opinion.at 688, but the majority opinion correctly recognizes its inutility.