A New Application of Escobar: Gilead or When Half-Truths Can Become Actionable Under the FCA

On July 7, 2017, the Ninth Circuit in a very closely watched opinion determined that the whistleblowers in this case had demonstrated viable claims under the False Claims Act (“FCA”), alleging that their employer, Gilead Sciences, Inc. (“Gilead”) had made false statements to the U.S. Food and Drug Administration (“FDA”) regarding its HIV drug, resulting in billions of dollars of illicit payments from the government to Gilead. Such judicial decision is highly significant in that it is the first substantive Circuit Court decision since the U.S. Supreme Court decision in Universal Health Care v. Escobar, which effectively raised the legal burden by whistleblowers to demonstrate claims under the FCA.

In previous issues, we have discussed at great length the legal significance of the U.S. Supreme Court’s recent case in Universal Health Services, Inc. v. United States ex rel. Escobar (“Escobar”). Also in, those articles, we noted that full impact of the Escobar case had not yet been felt, but was likely to be substantial.