Second Circuit Closes Down Government’s “Materiality Manufacturing”

As 2020 drew to a close, the Second Circuit issued one of the most consequential materiality decisions of the year. In United States v. Strock, the court held that the relevant “payment decision” under Escobar, at least in fraudulent inducement cases, includes both the government’s decision to award a contract in the first instance and the subsequent decisions to pay claims under the contract. The court also emphasized that post-payment enforcement efforts are of little probative value in determining materiality as they allow the government to engage in consequence-free “materiality manufacturing.”

Source:

• Arnold & Porter: Second Circuit Closes Down Government’s “Materiality Manufacturing”