Federal circuit and district court opinions are rapidly bringing into focus what Escobar really means for False Claims Act (FCA) litigation. Two courts recently upended monstrous jury awards, concluding that liability was not sufficiently supported by evidence of materiality, based on the Supreme Court's guidance in Escobar. Decisions like these not only illustrate how significantly Escobar narrows the scope of FCA liability, but also create an opportunity for companies susceptible to potential whistleblower lawsuits to become aware of touchstones inthe new materiality analysis that could end an FCA claim. In "Lack of Materiality Evidence 'Zaps' Mammoth FCA Jury Awards: 5 Lessons" for Bloomberg BNA's Health Law Reporter, a Hogan Lovells team of Ginny Gibson, Karla Aghedo, Heaven Chee, and Becky Umhofer offers five practical post-Escobar lessons for companies and FCA litigators to consider:
- When the government continues paying claims despiteknowledge of the claimant's noncompliance with astatutory, regulatory or contractual requirementrelated to the claim, the continued payments could bestrong evidence against materiality (and evenscienter).
- If the defendant remains eligible for government programs while the suit is pending, the government's view of their reliability as a business partner couldaffect the materiality evaluation.
- Relators must overcome an appearance of immateriality if the government has not intervened insupport of their complaint.
- A defect in goods or services that does not impact thevalue, or “primary purpose,” of that good or service is unlikely to be material to the government's decision to pay a claim.
- If a good or service is in limited supply, of uniquevalue, or difficult to find, courts may consider the impact of imposing FCA liability on the government'sability to find alternative suppliers.
False Claims Act: A review of 2017 Understanding how recent court decisions could affect your business is critical. That’s why we have published – False Claims Act: A review of 2017. This report reviews the key developments of the past year, and discusses some discernible trends in government enforcement of the FCA.