November 01, 2017

Post-Escobar Circuit Challenges

Bruce Frederick, Howell Schwabe Williamson & Wyatt and Emily S. Baker, Lewis & Clark, Portland, OR

The Supreme Court’s 2016 decision in Escobar validated the implied false certification theory of liability under the False Claims Act (FCA). But while this theory adds an arrow to the quiver of a plaintiff in such a suit, the court also set new requirements to establish scienter and a heightened standard to show materiality. Unfortunately, the circuits do not agree on what exactly the decision requires for claims going forward, in particular whether the tests outlined in Escobar are in fact requirements or rather mere suggestion. While the battle rages on, the Ninth Circuit seems to have taken a side on both issues, finding the scienter requirement’s two-part “falsity” test is mandatory, and allowing a heightened materiality standard to stop many qui tam claims in their tracks. 

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