Analyzing FCA Materiality Defense Outcomes Under Escobar

Since the Supreme Court in Escobar stated that continued payment by the government is “very strong evidence” that the alleged violations are not “material” under the False Claims Act (“FCA”), courts have grappled with how much weight the government’s continued payment should be accorded when assessing “materiality.” Courts have adopted varying approaches, with no obvious majority position. To better understand the overall picture of how courts have treated the government’s continued payment as part of the materiality inquiry, Sidley Lawyers Brenna Jenny, Matthew Bergs, and Paul Kalb, analyzed two years’ worth of cases that substantively assessed the continued payment defense. The results of their analysis are published in an article out today in Law360 entitled Analyzing FCA Materiality Defense Outcomes Under Escobar. The authors conclude that “Escobar’s continued payment defense is often a winning argument for defendants, although the success rate can vary significantly based on factors such as the stage of litigation, the defendant’s industry and the political affiliation of the administration that appointed each judge.” They caution, however, that an amendment to the FCA proposed by Senator Grassley addressing how plaintiffs prove materiality, available here, has the potential to reduce the success rate of the continued payment defense.

A copy of the article is available here.

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