Court Confirms That Materiality Is a Required Element Under the “Avoids” Prong of Reverse False Claims Theories
Last week, a Special Master, tasked with making a report and recommendation on summary judgment in the Government’s FCA case against United HealthGroup, Inc. (“United”) in the Central District of California, confirmed that the “avoids” prong of the FCA’s reverse false claims provision has a materiality requirement. U.S. ex rel. Poehling v. UnitedHealth Group, Inc., No. CV 16-08697-FMO-PVCx (C.D. Cal. Mar. 3, 2025). That prong imposes liability on a person who knowingly and improperly avoids an obligation to pay the Government. 31 U.S.C. § 3729(a)(1)(G). Although the “avoids” prong does not explicitly refer to materiality, the Special Master held that it incorporates the elements of common law fraud—including materiality. The holding is consistent with broader guidance in recent years from the Supreme Court that the FCA should be interpreted consistent with common law principles—which can result in courts imposing constraints on novel theories of liability.
Ninth Circuit Reboots FCA Suit Based on Radiologist Use of Certain Computer Monitors
A panel of the Ninth Circuit recently issued a 2-1 opinion reversing, in part, a district court’s dismissal of a False Claims Act case premised on a radiology facility’s use of non-medical grade computer monitors for diagnostic readings. In reviving the case, the majority concluded that the relator sufficiently pled a false certification theory of fraud from which the court drew a “strong inference” that the radiology facility’s use of the computer monitors did not meet Medicare’s “reasonable and necessary” requirement because the allegedly technologically inferior monitors the radiologists used undermined the efficacy of their diagnostic readings. The decision is notable because the majority relied on tenuous inferences to establish falsity, as detailed by the dissent, and a watered-down materiality analysis to establish materiality.
Chiding DOJ for “Inexcusable” Delay in Deciding to Intervene, Fifth Circuit Makes Notable Determinations on Materiality and Statute of Limitations
Chastising DOJ for asking eighteen times to extend the seal period, the Fifth Circuit recently held that due to its “dilatory conduct,” DOJ could not avail itself of the FCA’s tolling provision. In the same opinion, the court held that continued reimbursement does not defeat materiality where there are “valid reasons why an agency may continue to pay claims despite allegations of fraud.”