The Supreme Court’s 2016 decision in Universal Health Services, Inc. v. United States ex rel. Escobar resolved a Circuit split regarding the implied certification theory as a basis for False Claims Act (FCA) liability. While the Court held that the implied certification theory can form the basis for liability, it defined the FCA’s materiality requirement as a “rigorous” and “demanding” one, opening the door to a range of new issues for litigation intended to distinguish mere non-compliance from fraud or reckless submission of false claims.1
Courts have since grappled with Escobar’s emphasis that a misrepresentation about compliance with statutory, regulatory, or contractual requirements must be material to the government’s payment decision in order for an implied certification theory of liability to lie. While the Court in Escobar suggested that district courts could apply the “rigorous” standard at the pleading stage on motions to dismiss, and several district courts have attempted to do so, few appellant panels have agreed.2 A few recent cases, discussed below, show how most courts view materiality to be a fact-intensive, case-by-case inquiry not well suited to resolution on motion to dismiss.
Ninth and Tenth Circuits apply rigorous Escobar materiality standard
Ninth Circuit affirms dismissal, enforcing materiality pleading requirements
Relators in McElligott v. McKesson Corp. alleged that McKesson made false certifications in violation of the FCA, claiming that...
Foley partner Lisa Noller, Chair of the Firm’s Litigation Department, will be speaking at the American Bar Association’s Qui Tam & Civil False Claims and Healthcare Fraud Institute in Washingt...