Category: Materiality

Escobar in Action: Physician-owners’ fraud claims against hospital defeated in Fifth Circuit appeal for lack of materiality

Siena Caruso

Following the passage of the Affordable Care Act (“ACA”), which placed new limits on physician-owned hospitals, St. Luke’s Health System (“System”) took action to change one of its hospital’s ownership structures through a buy-out of the physicians’ partnership interests pursuant to the Texas Securities Act (“TSA”). The TSA allows rescission for the original price paid for a security, plus interest, in exchange for a release...

Two Recent Justice Department Memoranda May Have Significant Consequences for Pending and Future False Claims Act Enforcement

Alex Hontos

In recent weeks, the United States Department of Justice (“DOJ”) issued two memoranda that might change the calculus of False Claims Act (“FCA”) cases.  The memoranda at a minimum provide organizations with new—or at least invigorated—defenses to qui tam actions and civil enforcement matters. First, on January 10, Michael Granston, Director of DOJ’s Civil Frauds section, issued a memorandum encouraging DOJ trial attorneys to consider dismissing...

Applying Escobar’s Materiality Standard, Florida Federal Court Reverses $350 Million False Claims Act Verdict against a Nursing Home Operator

Alissa Smith

If the government does not take action and continues to pay for Medicare/Medicaid claims after it learns of non-compliance related to the claims, is the non-compliance material to the government’s decision to pay?  This is a question being answered in the negative by courts across the country, who have concluded that the government (or a qui tam relator) is not able to proceed under a...