Category

Materiality

12 April 2021

DOJ Tries to Take Materiality Off the Table for Drug Company Motions to Dismiss

In a recent Statement of Interest, DOJ articulated a problematic, and incorrect, theory of materiality in an apparent effort to make it virtually impossible for defendants to defeat bare allegations of materiality at the motion to dismiss stage in cases that involve allegedly false claims for prescription drugs.

(more…)

SHARE
EmailShare
09 March 2021

Grassley Letter to AG Nominee Garland Previews Legislation To Curtail DOJ Dismissal Authority and Materiality Requirement

Senator Charles Grassley, who supported the nomination of Merrick Garland for Attorney General, sent the then-nominee a letter on February 24 to ask the Department of Justice to work to “further clarify and strengthen the False Claims Act.”  As we reported in previous posts (here, here, and here), Senator Grassley has publicly criticized DOJ’s position that its authority to dismiss FCA suits over relators’ objections is virtually unfettered, and has criticized the materiality standard established by the Supreme Court in Escobar as lending undue weight to role of government conduct (or lack thereof) in response to allegations of fraud.  The letter discloses that Senator Grassley is working with “a cadre of bipartisan Senate colleagues” to “strengthen” and “improve” the False Claims Act by narrowing the materiality requirement, and by requiring a court to assess the merits of a qui tam in deciding whether to grant a motion to dismiss filed by DOJ.  We will continue to monitor and report on any such legislation that may ultimately be proposed.

SHARE
EmailShare
18 February 2021

“Come Down with a Sledgehammer”: Sen. Grassley and Acting Civil Division Head Boynton Discuss FCA Priorities

Yesterday, Senator Grassley, the architect of the 1986 False Claims Act amendments, and Brian Boynton, the Acting Assistant Attorney General of DOJ’s Civil Division, delivered the opening remarks at the Federal Bar Association’s 2021 Qui Tam Conference, previewing Senator Grassley’s priority legislative changes to the FCA and DOJ’s enforcement priorities under the Biden administration.

(more…)

SHARE
EmailShare
16 February 2021

Courts Continue to Diverge on How Post-Complaint Government Conduct Affects Materiality Analysis Under Escobar

Two recent decisions by district courts in the Third Circuit illustrate the continued divide among courts regarding the extent to which the government’s declination decision bears on the materiality analysis set forth in Escobar and also underscore the challenges defendants can face in defeating materiality at the motion to dismiss stage.

(more…)

SHARE
EmailShare
13 July 2020

Eleventh Circuit Reinstates Bulk of $350 Million FCA Jury Verdict, Adds Further Gloss to the FCA’s Materiality and Causation Standards and Role of Litigation Funding

On June 25, 2020, the Eleventh Circuit affirmed in part and reversed in part a district court’s decision to set aside a jury’s $350 million verdict in favor of the relator.  In Ruckh v. Salus Rehabilitation, LLC, Angela Ruckh, a registered nurse, alleged that two skilled nursing facilities (“SNFs”) and two related management services companies violated various Medicare and Florida Medicaid SNF regulations.  The Eleventh Circuit’s decision adds further gloss to the FCA’s materiality and causation standards.

(more…)

SHARE
EmailShare
16 May 2019

Recent Decisions Provide Further Guidance on Application of Escobar’s Materiality Standard

Two recent court decisions ruled in favor of relators on the issue of materiality under the standard set forth in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 2001 (2016). On May 7, 2019, the Fifth Circuit reversed a decision by the Southern District of Texas, which had held that relators had failed to sufficiently plead materiality. And on May 8, 2019, the Eastern District of California denied a motion to dismiss premised on failure to adequately plead materiality.

(more…)

SHARE
EmailShare
25 September 2018

Ninth Circuit Addresses Impact of Escobar’s Falsity and Materiality Requirements On Existing Circuit Precedent

In Escobar, the Supreme Court held that the implied false certification theory of liability is viable under the False Claims Act when “at least two conditions” are satisfied: “[F]irst, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.” As we have previously discussed here, courts are split as to whether Escobar’s two-part test is a mandatory baseline to demonstrate an implied false certification or merely one way to plead such a claim, leaving open the door for other variants of implied certification claims not explicitly identified by the Supreme Court.  Recently, in United States ex rel. Scott Rose, et al. v. Stephens Institute, No. 17-15111 (9th Cir. Aug. 24, 2018), the Ninth Circuit held that Escobar’s two-part test was mandatory—effectively overruling its pre-Escobar test for establishing implied certification claims outlined in Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993 (9th Cir. 2010). (more…)

SHARE
EmailShare
20 June 2018

Sixth Circuit’s Split Decision In Prather Highlights Persistent Questions About the Pleading Standard for Materiality After Escobar

Last week, the Sixth Circuit again resurrected the relator’s case in United States ex rel. Marjorie Prather v. Brookdale Senior Living Communities, Inc. (a discussion of the Sixth Circuit’s previous opinion is available here.  In a 2-1 decision, the majority held that the relator’s materiality and scienter allegations sufficed under Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  The majority issued the decision over a vigorous dissent by Judge McKeague.  The gulf between the majority and the dissent reflects persistent questions about how Escobar applies at the pleading stage (see discussion here). (more…)

SHARE
EmailShare
14 June 2018

Sen. Grassley Fires Warning Shot Over Evolving Interpretations of FCA Materiality Requirement

In a recent floor statement, Senator Chuck Grassley, considered by many to be the chief defender of the FCA in Congress, voiced concerns about how some lower courts are interpreting the FCA’s materiality requirement following the Supreme Court’s Escobar decision.   Senator Grassley’s speech is worth noting because he has led successful efforts to legislatively overrule FCA decisions with which he has disagreed in the past. (more…)

SHARE
EmailShare
06 July 2017

Applying Escobar, Court Rejects Comparative Effectiveness and “Fraud on the Formulary” Claims

The heightened materiality standard imposed by the Supreme Court last year in Escobar continues to pose a formidable bar to relators pursuing expansive theories of FCA liability.  As we explain below, one court recently rejected a claim against pharmaceutical manufacturers alleging that the defendants had fraudulently induced state formulary committees to cover the defendants’ drug, refusing to take a “step toward bringing all misrepresentations to government bodies within the purview of the FCA.”  See United States ex rel. Dickson v. Bristol-Myers Squibb Co., No. 13-cv-01039 (D.N.J. June 27, 2017).  (more…)

SHARE
EmailShare
XSLT Plugin by BMI Calculator