Courts Are Taking Materiality Seriously Post-Escobar

FCAIn the three months since the U.S. Supreme Court issued its decision in Universal Health Services v. United States ex rel. Escobar, lower court decisions suggest a trend of strict interpretation of the high court’s materiality requirement for False Claims Act allegations. Pleadings generally must allege facts demonstrating materiality to avoid dismissal. As a result, contractors have more tools to avoid liability by arguing that the materiality or scienter requirements have not been met. Thus, although the Escobar decision opened contractors to liability in jurisdictions that previously did not recognize implied certification theory — such as the Seventh Circuit — the high materiality bar may afford them additional protections.

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