Another opportunity to revisit Escobar has come and gone. On Monday, March 18, 2019, the Supreme Court denied certiorari in Brookdale Senior Living et al. v. United States ex rel. Prather, No. 18-699.
The district court in Prather had dismissed the relator’s claim for failure to adequately allege materiality under Escobar, despite concluding that compliance with a home-healthcare-timing regulation (obtaining physician certification at the time of care “or as soon thereafter as possible”) was an express condition of payment. United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., 892 F.3d 822 (6th Cir. 2018). The district court faulted the relator’s “inability to point to a single instance where Medicare denied payment based on violation of § 424.22(a)(2), or to a single other case considering this precise issue.” Id. at 834.
The Sixth Circuit reversed, declining to draw the same “negative inference from the absence of any allegations about past government action.” Id. The court of appeals held that an FCA plaintiff is “not required to make allegations regarding past government action.” Id. Absent allegations that the government had actual knowledge of the fraud alleged, its past payment practices were irrelevant to materiality. Id. According to the Sixth Circuit, the relator in Prather had adequately pled materiality—based in no small part on the fact that the timing requirement was an express condition of payment. Id. at 836.
Defendants filed a petition for certiorari at the Supreme Court, asking it to answer two questions: (1) whether the failure to plead facts relating to past government practices can weigh against a finding of materiality; and (2) whether an FCA allegation fails when the pleadings make no reference to the defendant’s knowledge that the alleged violation was material to the government’s payment decision.
The first question is particularly important in the wake of Escobar, as we explained in a recent Law360 Expert Analysis on two other FCA cases that the Supreme Court declined to hear. Yet they will go unanswered a while longer, as the Supreme Court seems in no hurry to revisit Escobar.
