11. Whistleblower/False Claims Act Requires Materiality

Not every lie is important enough to count as a lie. Likewise, not every false statement made to the government rises to the level of a “false claim.”

So, does everything a government contractor says to the government to get money have to be one-hundred percent correct? For example, if the government orders red traffic cones and the cones arrive with a slight orange tint, it this a false claim? On the other hand, what if a shipment of United States flags arrive with orange stripes, then, did the contractor lie when it promised to furnish “United States flags”? The law uses the term “materiality” to sort out these kinds of problems. The False Claims Act defines materiality as, “having a natural tendency to influence, or be capable of influencing, the payment of receipt of money or property.” In plain language, this means, would the government have paid for the flags had it known that the stripes were orange. Easy answer: of course not. On the other hand, unless there was specific discussion and specifications about the color of the traffic cones, a slight difference in the color of the otherwise well-made and perfectly proportioned cones probably would not cause a reasonable government employee to believe that payment should be withheld.