Does the Government Implicitly Decide Materiality by Inaction?

Relator alleged a false claim when the defendants purportedly administered medical procedures in facilities that were not in compliance with Pennsylvania health regulations. Defendants moved to dismiss for failure to plead fraud with particularity and failure to state a claim. The court granted the dismissal as to failure to state a claim.

United States, ex rel., Stebbins v. Vascular Access Centers, LLC, et al., W.D. Pa., Civil No. 19-1524

Falsity: The court ruled the relator failed to allege falsity because the alleged violation related to state Department of Health regulations, not Medicare or Medicaid.

Materiality: The court also ruled that relator failed to sufficiently plead materiality after looking at the totality of the circumstances. The factors the court considered weighing in favor of no materiality included: no expressed condition for payment, whether the government would have reimbursed claims for arteriograms if it were aware it violated state regulation, and the government’s decision to not intervene in the case.

– Case summary by Joshua Lim, Assistant Editor

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