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January 2, 2018

02 January 2018

Second Circuit Finds That The Government’s Continued Payment In The Face of Fraud Allegations Undercuts Materiality

The Supreme Court emphasized in Escobar that questions of materiality are not “too fact intensive for courts” to decide through a motion to dismiss.  Nonetheless, what facts a plaintiff must allege adequately to plead materiality consistent with Escobar’s “demanding” standard remains a hotly contested question.  In a recent decision, the Second Circuit held that the relator’s failure to allege that CMS, the agency allegedly defrauded, changed its reimbursement practices after becoming aware of information supposedly withheld by the defendant, doomed the complaint on materiality grounds.  See United States ex rel. Coyne v. Amgen, Inc., No. 17-1522 (2d Cir. Dec. 18, 2017).  The decision underscores the significance of the materiality requirement at the motion to dismiss stage. (more…)

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