A business may now not know whether it committed fraud until the government chimes in. There are thousands of regulations with which businesses need to comply. If you recklessly (or perhaps worse, intentionally) miss one—regardless of which one—and it proves to be material to the government’s decision to pay you, you might be on the hook for fraud. The analysis used to turn on whether the government had labeled that regulation a “condition of payment.” However, with today’s Supreme Court’s decision in Escobar, the analysis has shifted to whether there was an intent to mislead and whether it was material to the government’s decision to pay. In its unanimous decision, the Supreme Court concluded that what matters is not what label the government attaches to a particular requirement, but whether a party knowingly violated a requirement they know to be material to the government’s decision to pay.
To read the full text of this Duane Morris Alert, please visit www.duanemorris.com.