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False Claims Act “Materiality” After Escobar

July 11, 2016

By: Barbara Rowland

Along with my Post & Schell colleagues, Matt Newcomer and Carolyn Kendall, I recently co-authored an article for Law360 that examined the U.S. Supreme Court’s decision in Universal Health Services Inc. v. Escobar. We focused on the Court’s rejection of a bright-line rule on the False Claims Act's (FCA) materiality standard and adoption of a fact-specific standard that will need to be litigated on a case-by-case basis.

This is significant for companies and organizations that contract with the federal government because while Escobar endorses the implied false certification theory, it is far from a “victory” for the government and qui tam relators. The net impact of Escobar may well be to narrow the availability of the theory given the Court’s newly defined “rigorous” materiality standard.

The article goes into detailed analysis, but a couple of key points of note:

  • The apparent need for a case-by-case determination of materiality was demonstrated by the Court’s discussion of what is, is not, or might be material.
  • The Court’s decision reintroduces the concept of government knowledge of a false claim as a defense to an FCA case.

We will keep an eye on the cases decided post-Escobar to see how the court-sanctioned parameters and evidence of materiality develop, including the four circuit court decisions from the First, Fourth, Seventh, and Eighth circuits that the Escobar decision vacated and remanded.  

The full article is available here >

Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.

About the Authors:

Barbara Rowland is a Principal in Post & Schell's Internal Investigations & White Collar Defense Practice Group resident in its Washington, D.C. Office. Her practice focuses on representing corporations and individuals from a variety of industries, including pharmaceutical and medical device manufacturers and distributors, retail pharmacies, pharmacy benefit managers, health care providers, and other government contractors. She conducts internal investigations, counsels clients subject to government investigation, represents executives, managers, and employees in such investigations, and defends clients in related litigation and at trial. Learn More >>

Matt Newcomer

Matthew T. Newcomer is a Principal in Post & Schell's Internal Investigations & White Collar Defense Group. He conducts internal investigations and counsels and defends corporations, officers and other individuals facing civil and criminal investigation, including matters involving multinational pharmaceutical and medical device companies and exposures concerning off-label sales and marketing practices, the Anti-Kickback Statute (AKS), the “Responsible Corporate Officer” or “Park” doctrine, the federal False Claims Act (FCA) and federal and state RICO statutes. Learn More >>

Carolyn Kendall

Carolyn H. Kendall is an Associate in Post & Schell's Internal Investigations &
White Collar Defense Practice Group. She conducts internal investigations and defends corporations, officers and other individuals facing criminal and civil investigation. Ms. Kendall's work includes matters involving pharmaceutical, manufacturing, and financial companies, relating to potential criminal tax and money laundering violations, as well as allegations involving securities violations, mortgage and financial institution fraud, the Federal Anti-Kickback Statute, and other fraud and regulatory statutes. Learn More >>