Tenth Circuit Affirms Demanding False Claims Act Materiality Standard

On February 7, 2020, the Tenth Circuit affirmed summary judgment for the defendant in United States ex rel Janssen v Lawrence Memorial Hospital, __ F.3d __ (2020). In holding that the relator had not shown that she could prove defendant's material noncompliance with the legal requirements at issue, the Court affirmed important limits on the use of the False Claims Act ("FCA") established by the Supreme Court in its 2016 Escobar decision.

Background

In Janssen, the relator alleged that Lawrence Memorial Hospital (LMH) engaged in two schemes that violated the FCA. First, she alleged that LMH falsified patient arrival times in medical records to increase reimbursement. Under CMS's Inpatient Quality Reporting program (IQR), Outpatient Quality Reporting program (OQR) and Hospital Value Based Purchasing program (HVBP), the hospital was required to report data, including arrival time data, to CMS. Hospitals that failed to submit accurate data under the IQR or OQR