Global life sciences company wins Texas Supreme Court decision holding that state false claims statute requires proof of materiality and reinstating grant of summary judgment
Client(s) Life sciences company
Jones Day successfully represented a global life sciences company in the Supreme Court of Texas, which resulted in a landmark decision holding by a 7-2 vote that the Texas Medicaid Fraud Prevention Act ("Act") (Texas's version of the False Claims Act) requires proof of materiality with an omissions theory, and that Jones Day's client was entitled to summary judgment on materiality in light of the state’s history of paying claims with knowledge of the alleged misconduct.
After intervening in 2021 in a qui tam suit that had been filed in 2013, the state alleged that Jones Day's client had been fraudulently overcharging Texas Medicaid for nearly two decades. The Jones Day team won summary judgment on materiality grounds, showing that its client had disclosed its billing practices to the state in 2014 but the state, nevertheless, continued to pay the client's claims without complaint for roughly seven years before bringing suit. In December 2024, however, the Court of Appeals reversed. The appellate court held that the Act's statutory text did not require materiality for the state's omission theory, and that materiality presented a question of fact for the state's misstatement theory.
The Supreme Court of Texas granted Jones Day's petition for review in January 2026 and heard oral argument in February 2026. The court reversed the appellate court on both points and reinstated summary judgment. Based on the Act's common-law backdrop and statutory text, the majority held (over two dissents) that the omissions must be material to be actionable. The majority further held that Jones Day's client was entitled to summary judgment on materiality, finding the state’s conduct "incompatible with materiality" and rejecting the state's attempts to show a factual dispute. The decision brought an end to a matter that had been pending for approximately 13 years.
