Laboratory Corporation of America Holdings D/B/A Laboratory Corporation of America v. the State of Texas and Npt Associates, 25-0127

The State alleged LabCorp violated Texas Medicaid billing regulations by failing to give Medicaid the same discounts and pricing it gave other payors. 1
The Act imposes civil penalties for unlawful acts and covers false statements, misrepresentations, and concealment or nondisclosure of information permitting unauthorized payment. 2
Texas Medicaid providers are also governed by Chapter 371, a Provider Agreement, and a Medicaid Provider and Procedures Manual addressing usual-and-customary charges and discounts. 3
After a 2013 qui tam suit and CID, LabCorp produced extensive billing records, met with OAG decisionmakers in 2014, and submitted a 2015 white paper explaining its billing practices and its view that the discount rules applied only to advertised public discounts. 4
The State paid LabCorp’s claims without objection from 2014 through 2021, then intervened and alleged LabCorp’s certifications and nondisclosure violated the Act. 5
The trial court granted LabCorp summary judgment, but the court of appeals held Section 36.002(2) required no materiality showing for omissions and found fact issues on materiality. 6

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Section 36.002(2) require materiality for omissions? 7	LabCorp said the State had to prove any omission was material to payment.	The State said omissions are actionable even if immaterial.	Yes; materiality is required. 8
Did LabCorp conclusively negate materiality? 9	LabCorp argued the State knew its practices and kept paying for seven years.	The State argued LabCorp’s disclosures were incomplete and violations were material conditions of payment.	Yes; undisputed facts showed immateriality as a matter of law. 10
Did the State raise a fact issue on materiality? 11	LabCorp said the State’s evidence showed violations, not materiality.	The State said the violations, conditions of payment, and LabCorp’s disclosures created fact issues.	No; the State’s evidence was insufficient. 12

In re Xerox Corp., 555 S.W.3d 518 (Tex. 2018) (Texas Medicaid fraud statute targets fraud against the Medicaid program 13)
Medina v. Planned Parenthood S. Atl., 606 U.S. 357 (U.S. 2025) (Medicaid subsidizes state efforts to provide healthcare to low-income persons 14)
United States ex rel. Escobar v. Universal Health Services, Inc., 579 U.S. 176 (U.S. 2016) (government payment despite actual knowledge is strong evidence of immateriality under FCA 15)
Neder v. United States, 527 U.S. 1 (U.S. 1999) (common-law fraud includes a materiality requirement 16)
Morissette v. United States, 342 U.S. 246 (U.S. 1952) (common-law terms carry their established meanings into statutes 17)
Taylor v. Tolbert, 644 S.W.3d 637 (Tex. 2022) (clear legislative repudiation is required to depart from common-law origins 18)
Barrow-Shaver Resources Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471 (Tex. 2019) (materiality asks whether the representation would influence a reasonable decisionmaker 19)