Day Pitney's October 2017
White Collar Roundup included the following item:
False Claims Act's Materiality Standard Strikes
Again
The "rigorous" materiality requirement in False Claims
Act cases post-Universal Health Servs., Inc. v. United States
ex rel. Escobar just cost a relator millions of
dollars. The U.S. Court of Appeals for the Fifth Circuit recently
vacated a $663 million False Claims Act verdict in United States of America ex. rel. Harman v.
Trinity Industries Inc. The court found the fraud
allegations could not stand because materiality was lacking. In
Harman, the government did not intervene in the
relator's case and even gave a pretrial statement supporting
the defendant, Trinity. Nevertheless, the jury found the government
had been defrauded and awarded Joshua Harman $663 million. The
Fifth Circuit noted the case should never have made it to the jury
because the materiality standard for the falsity to the government
was not met.
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