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

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.

Source: 

• Dorsey & Whitney: 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