Sidley – Chastising DOJ for asking eighteen times to extend the seal period, the Fifth Circuit recently held that due to its “dilatory conduct,” the agency could not avail itself of the FCA’s tolling provision.
In the same opinion, the court held that continued reimbursement does not defeat materiality where there are “valid reasons why an agency may continue to pay claims despite allegations of fraud.” It averred that while “Escobar articulated that continued payment despite knowledge of fraud often indicates lack of materiality, ‘often’ does not mean ‘always.’” The court explained that without continued reimbursement, the critical access hospital in the case “would have probably closed,” and that “stopping reimbursement upon the first allegations of fraud would thus have undermined CMS’s goal of sustaining healthcare access for underserved rural patients.”
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