Healthcare Fraud & Abuse Review 2021

focus on the government’s likely or actual response to the defendant’s alleged misconduct, include the following: (1) whether the government has expressly identified compliance with the relevant statutory, regulatory or contractual requirement as a condition of payment; (2) whether the government consistently refuses to pay claims in other cases based on noncompliance with the requirement; (3) whether the government has continued to pay the defendant’s claims

with knowledge of the defendant’s noncompliance or alleged misrepresentations; and (4) whether compliance with the requirement goes to the essence of the government’s bargain, or instead is minor or insubstantial. As in years past, the application of these factors continues to play a prominent role in the resolution of FCA cases at both the pleading and summary judgment stages, yet courts have not always analyzed these factors consistently. In particular, recent cases reflect a growing disagreement about the extent to which the FCA’s materiality element requires a “holistic” review, or, on the other hand, whether one or more of the individual factors identified in Escobar – particularly the government’s continued payment of claims after learning of the alleged noncompliance – may be dispositive of the materiality inquiry on their own. Largely at the invitation of qui tam relators and the government, several courts hewed toward a more “holistic” approach to materiality, conducting detailed analyses of all (or at least most) of the Escobar factors, and weighing them against each other, to determine whether the materiality element has been satisfied. These cases have tended to reflect a hesitancy to dismiss FCA lawsuits on materiality grounds, especially because such a far-reaching analysis of multiple factors often ends in the conclusion that the allegations or evidence on materiality is mixed, and therefore the question of materiality should be determined by the factfinder. In U.S. ex rel. Bibby v. Mortgage Investors Corp. , for instance, the Eleventh Circuit cited the supposedly “holistic” nature of the materiality analysis as a reason for reversing the district court’s grant of summary judgment for the defendant mortgage lender. 69 That dismissal had been based on the immateriality of regulations that prohibited lenders from charging certain closing costs to veterans on government-insured loans. Although the Tenth Circuit acknowledged that the government had continued to guarantee loans even after learning about impermissible closing costs, it cited other Escobar factors that purportedly

FALSE CLAIMS ACT UPDATE

The FCA continues to be the federal government’s primary civil enforcement tool for pursuing liability with respect to healthcare providers that have allegedly defrauded federal healthcare programs. As in previous years, there continues to be a number of legal developments involving the FCA that will greatly impact the government’s enforcement efforts and the manner in which relators pursue FCA claims.

ESCOBAR’S “RIGOROUS” MATERIALITY REQUIREMENT

Five years after the Supreme Court’s watershed 2016 decision in Universal Health Services v. U.S. ex rel. Escobar , this decision continues to have a profound impact on how the FCA’s materiality element is pleaded, litigated and analyzed by courts. 68 In Escobar , the Supreme Court described the materiality element as “rigorous” and “demanding,” and set forth several nonexclusive factors to guide the inquiry. These factors, which mainly

579 U.S. 176 (2016).

987 F.3d 1340 (11th Cir. 2021).

HEALTHCARE FRAUD & ABUSE REVIEW 2021 BASS, BERRY & SIMS | 11