Difference between revisions of "False Claims Act"

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='''Materiality and the False Claims Act'''=
='''Materiality and the False Claims Act'''=
The False Claims Act (FCA) defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4).  In United States ex rel. Escobar v. Universal Health Servs., Inc., the Supreme Court held that FCA liability can attach for violating statutory or regulatory requirements, whether or not those requirements were designated in the statute or regulation as conditions of payment.
The False Claims Act (FCA) defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4).  In [https://www.supremecourt.gov/opinions/15pdf/15-7_a074.pdf ''United States ex rel. Escobar v. Universal Health Servs., Inc.'',] the Supreme Court held that FCA liability can attach for violating statutory or regulatory requirements, whether or not those requirements were designated in the statute or regulation as conditions of payment.


In particular, the Escobar Court held that “liability can attach when the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory or contractual requirement. In these circumstances, liability may attach if the omission renders those representations misleading.” 136 S. Ct. 1989, 1995 (2016).  The Court articulated the following factors governing the materiality analysis, with no one factor being necessarily dispositive:
In particular, the Escobar Court held that “liability can attach when the defendant submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory or contractual requirement. In these circumstances, liability may attach if the omission renders those representations misleading.” 136 S. Ct. 1989, 1995 (2016).  The Court articulated the following factors governing the materiality analysis, with no one factor being necessarily dispositive:
*whether compliance with a statute is a condition of payment;
*whether the violation goes to “the essence of the bargain” or is “minor or insubstantial”;
*whether the government consistently pays or refuses to pay claims when it has knowledge of similar violations; and
*whether the government would likely refuse payment had it known of the regulatory violations.


whether compliance with a statute is a condition of payment;
As ''Escobar'' addresses only an implied certification theory, ''Escobar’s'' materiality requirement should not extend to all types of [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ FCA claims].  For example, an express ''misrepresentation'', e.g., a health insurer expressly agreeing to comply with Medicare rules and regulations when it does not, would violate the FCA.  ''See, e.g., U.S. ex rel. McCarthy v. Marathon Techs., Inc.'', No. 11 C 7071, 2014 WL 4924445 (N.D. Ill. Sept. 30, 2014).
whether the violation goes to “the essence of the bargain” or is “minor or insubstantial”;
whether the government consistently pays or refuses to pay claims when it has knowledge of similar violations; and
whether the government would likely refuse payment had it known of the regulatory violations.
As Escobar addresses only an implied certification theory, Escobar’s materiality requirement should not extend to all types of FCA claims.  For example, an express misrepresentation, e.g., a health insurer expressly agreeing to comply with Medicare rules and regulations when it does not, would violate the FCA.  See, e.g., U.S. ex rel. McCarthy v. Marathon Techs., Inc., No. 11 C 7071, 2014 WL 4924445 (N.D. Ill. Sept. 30, 2014).


=='''Examples of Material False Claims'''==
=='''Examples of Material False Claims'''==