The False Claims Act requires that the alleged fraud was material to the government’s payment decision. This “materiality requirement” asks whether the government’s decision to pay was actually affected by the fraud. The whistleblower lawyers at Miller Law Group can help you navigate this important requirement.
The Act defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4). While this definition offers little clarity, the U.S. Supreme Court recently rendered a decision that dealt extensively with materiality: Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).
In Escobar, the Court warns that materiality does not exist where noncompliance is minor. Id. at 2003 (citing United States ex rel. Marcus v. Hess, 317 U. S. 537, 543 (1943)). Therefore, potential whistleblowers should be wary if the fraud is based on a mere technicality. (Our lawyers help people evaluate this issue often.)
Materiality can be shown with evidence that the government often refuses to pay claims involving similar non-compliance. Id. However, if the government often pays similar claims with full knowledge that a requirement is lacking, those claims likely are not material. Id. at 2003–04.
The Court ends its discussion in Escobar with a final warning: “The standard for materiality that we have outlined is a familiar and rigorous one.” Id. at 2004 n.6. Courts will not hesitate to dismiss a whistleblower lawsuit for lack of materiality. Thus, this requirement is one of the most important criteria for any potential suit under the False Claims Act.
If you have discovered fraud against the government, contact Miller Law Group today for a free consultation or call us at (919) 348-4361. Our whistleblower attorneys can help you combat waste and abuse of taxpayer money. We can also help you determine what ay or may not be “material” under the Act BEFORE you take action.