- Materiality is now a required element for omission claims under Texas’ Medicaid fraud statute. The court imported a common-law fraud materiality requirement into Section 36.002(2), rejecting the view that liability attaches to any omission tied to a condition of payment.
- Government inaction after meaningful disclosure can be powerful — even conclusive — evidence of immateriality. The court emphasized continued payment despite actual or imputed knowledge as a strong indicator an omission did not matter to the government’s payment decision, echoing Escobar’s materiality approach.
- The decision changes litigation strategy for all sides. Providers should document and elevate preaudit disclosures and compliance support; agencies may need faster, documented enforcement responses to preserve omission-based claims; relators will need more specific materiality allegations and evidence beyond “condition of payment” theories.
Article
A New Defense For Medicaid Fraud Cases in Texas
Law360
July 8, 2026Estimated Read Time: 1 min
Key Takeaways
A recent Texas Supreme Court decision in Laboratory Corporation of America Holdings v. State of Texas and NPT Associates held that Texas’ Health Care Program Fraud Prevention Act requires proof that an alleged fraudulent omission was material, even though the statute does not expressly say so. The court also found LabCorp’s alleged omissions immaterial as a matter of law because Texas continued paying claims for years after LabCorp disclosed its billing practices during the state’s under-seal investigation. The ruling is expected to reshape how Texas Medicaid fraud-by-omission cases are pleaded, proven and defended, with potential ripple effects for False Claims Act matters more broadly.
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