Eleventh Circuit Rules On FCA Materiality And Litigation Funding Agreements

The U.S. Court of Appeals for the Eleventh Circuit has issued an opinion in Ruckh v. Salus Rehabilitation, LLC, one of the largest False Claims Act ("FCA") cases in recent years—at least in terms of recovery—reinstating the majority of a massive $350 million jury verdict.¹ The decision weighs in on a number of key and emerging FCA issues, including materiality under Escobar² and relator standing.

While the decision is great news for relators and the government, the Eleventh Circuit's reasoning, especially with regard to Escobar, is less than clear and leaves much open to interpretation.

THE FACTS

To recap the facts briefly, a registered nurse and former employee of a skilled nursing facility in Florida brought a qui tam action alleging FCA violations based on fraudulent Medicare and Medicaid billing.³ The relator claimed that several nursing facilities and other affiliated companies: (1) artificially inflated Medicare patients' Resource Utilization Group (RUG)