Materiality Rules: Escobar Changes the Game

On May 1, 2017, the Third Circuit affirmed the district court’s dismissal of a relator’s claims in United States ex rel. Petratos, et al. v. Genentech Inc. in a False Claims Act (FCA) case in which the relator alleged that pharmaceutical manufacturer Genentech had suppressed data about a cancer drug’s side effects. Applying the materiality analysis from the Supreme Court’s decision in Universal Health Servs., Inc. v. United States ex rel. Escobar, the Third Circuit “join[ed] the many other federal courts that have recognized the heightened materiality standard after [Escobar]” and found that the relator failed to allege that Genentech made misrepresentations that were material to government’s decision to pay claims. The Third Circuit’s decision in Petratos is just one of the nearly 100 court opinions that have cited Escobar in the eleven months since the Court’s landmark ruling on the on the implied-certification theory of liability. In a “Feature Comment” published in The Government Contractor, C&M attorneys analyze some of the key cases and explore the developing trends in the wake of Escobar.