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April 20, 2016

SCOTUS Considers What Constitutes Fraud Under the False Claims Act

The Supreme Court debated what constitutes fraud between government contractors and the government under the False Claims Act this week, hearing arguments in Universal Health Services v. U.S. ex rel Escobar, writes Daniel Fisher in Forbes.

“The justices seemed inclined to work toward a materiality standard, similar to the ones used every day in contract disputes and securities litigation,” writes Fisher, who asks, “where will judges draw the line?”

“The answer seems to be … where a neglected fact is so important that the government wouldn’t pay for what it received had it known,” writes Fisher. “Unfortunately, that standard is malleable enough for enterprising plaintiff lawyers to create cases with threatening enough levels of damages to force their targets to settle.”

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