The U.S. Supreme Court’s Universal Health Services Inc. v. United States ex rel. Escobar decision two years ago led to a sharp increase in litigation over materiality in civil False Claims Act cases, but hasn’t had the same effect in criminal fraud prosecutions. Since then, the Fourth and Ninth Circuits have declined to apply Escobar in rulings involving three separate criminal cases.
Tony and Mark discussed the Escobar decision and appellate court rulings in U.S. v. Raza, U.S. v. Lindsey and U.S. v. Palin. They explained that the lower courts’ failure to apply Escobar’s standards to criminal cases overlooks “the real-world significance (or lack thereof) of a defendant’s alleged representations.”
“Put simply, Escobar stands for the proposition that evidence of how an alleged victim acts when it knows information is false is powerful evidence of whether the misrepresentation or omission matters, i.e., whether it is material,” they wrote.