The False Claims Act (FCA) allows private citizens to bring lawsuits against companies for defrauding the federal government. In such an action, one of the requirements of the law and one which is frequently litigated is that of materiality.
Courts and counsel continue to grapple with the U.S. Supreme Court’s unanimous opinion in Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which altered the FCA landscape by reframing the nature of the FCA’s materiality standard. As a result of Escobar, some courts have embraced this heightened materiality standard and affirmed dismissal where it is not satisfied.
Since Escobar, courts have wrestled with analyzing and applying the materiality requirement discussed in the Supreme Court’s opinion, resulting in a number of petitions for writ of certiorari filed with the Supreme Court seeking clarification of the Escobar mandates.
Explore the growing body of case law regarding the materiality requirements of the FCA at the Federal Bar Association’s Qui Tam Conference in Washington, D.C. on February 28 and March 1, 2019. We invite you to register today at www.fedbar.org/quitam19.
Moderator Katherine J. Seikaly (Partner, Reed Smith LLP) will lead a panel on “Materiality Issues” with celebrated speakers Paul S. Chan (Principal, Bird Marella), David Finkelstein (Trial Attorney, Fraud Section, Civil Division, U.S. Department of Justice), Lesley C. Reynolds (Partner, Reed Smith LLP), and Tejinder Singh (Partner, Goldstein & Russell, P.C.).
“We’ve got representatives of the defense bar, the relator’s bar, and [the U.S. Department of Justice]. We’re going to start with pleading materiality and what relator’s counsel can do to build up their complaint on that point. And then [we’ll] talk a little bit about motions to dismiss and arguments that can be made by the defense bar early,” explains Katherine Seikaly.
In order to be considered as illegal under the FCA, a misrepresentation about compliance with a statutory, regulatory or contractual requirement must be material to the Government’s payment decision in order to be actionable. Under the express language of the FCA, material means having a “natural tendency to influence, or be capable of influencing” the government’s decision to pay a claim. 31 U.S.C. § 3729(a)(4).
The U.S. Supreme Court recently declined to review United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017), leaving in place a plaintiff-friendly decision by the Ninth Circuit regarding the FCA’s materiality requirement.
In Gilead, the ruling by the 9th U.S. Circuit Court of Appeals allowed a whistleblower lawsuit against Gilead Pharmaceuticals that accused the drugmaker of lying about its HIV drugs. The Gilead decision is noteworthy because it created a split among the circuit courts regarding the application of Escobar’s materiality standard and the scope of the “government knowledge” defense to materiality.
Speakers at the Qui Tam Conference will share their thoughts on the guidance provided in the Escobar and Gilead cases. Register at www.fedbar.org/quitam19. Click here to hear from R. Scott Oswald (chair of the Qui Tam Section of the FBA) and moderator Katherine Seikaly on what to expect from this panel.
Stacy Slotnick, Esq. holds a J.D., cum laude, from Touro Law Center and a B.A., summa cum laude, from the University of Massachusetts Amherst. She performs a broad range of duties as an entertainment lawyer, including drafting and negotiating contracts; addressing and litigating trademark, copyright, patent, and other IP issues; and directing the strategy and implementation of public relations, blogging, and social media campaigns.