In the First FCA Appellate Case of 2021, the Fourth Circuit Affirms the Dismissal of Relators’ Claims for Lack of Scienter and Failing to Engage in Protected Activity

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On January 8, 2021, in the first appellate decision of the year addressing a False Claims Act case, the Fourth Circuit affirmed the summary judgment dismissal of relators’ claims that a manufacturer of allergenic extracts violated the FCA. In addition to emphasizing that regulatory violations alone are not FCA violations, the case is an important first-of-the-year reminder of the importance of a defendant’s mental state when evaluating FCA claims.  Since the landmark decision in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), a lot of attention has focused on the FCA’s materiality requirement. It must be remembered, however, that Escobar recognized that both of “[t]hose requirements [the FCA’s materiality and scienter requirements] are rigorous.”  136 S. Ct. at 2002.  Rigorous enough, in fact, that cases lacking sufficient evidence of scienter will be dismissed on summary judgment, as in Skibo.

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