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.
Qui Tam Alleges Hospital Fraud Relating to Provider Relief Fund “High Impact” Payment
Earlier this month, a federal court unsealed a qui tam complaint against several New Jersey hospitals, management services organizations, and the hospitals’ Chief Executive Officer and Chief Financial Officer for allegedly refusing to return CARES Act Provider Relief Fund (“PRF”) money for which the hospitals knew they were not eligible, and for allegedly using PRF money for impermissible purposes. See United States ex rel. Singh v. Hudson Hospital OPCO, LLC, No 21-cv-19788 (D.N.J. Nov. 5, 2021). This case is noteworthy because it is one of the first unsealed qui tam complaints raising allegations about ineligibility for, and misuse of, PRF payments.
