The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we are taking a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions requiring relators to plead actual claims to satisfy the requirements of Rule 9(b) in order to avoid dismissal.
Federal courts have continued to examine the particularity of the pleading required by Rule 9(b) in the context of FCA claims. Although courts generally agree that a relator must plead the “who, what, when, where, and how” of the alleged fraud, the manner in which courts have applied this standard and the types of allegations considered sufficient to satisfy Rule 9(b) continues to vary significantly.
A number of courts have continued to impose a strict requirement that relators identify and plead the specific details of a false claim, though many courts have identified limited circumstances in which application of a more flexible pleading standard may be appropriate. For example, this year, courts in the Sixth Circuit repeatedly dismissed complaints for failure to plead actual false claims; the Sixth Circuit, however, for the first time, relaxed the pleading standard when a relator alleged personal knowledge of billing practices without pleading a particular false claim. The First Circuit continued to apply a more flexible standard when a complaint alleges that the defendant caused the submission of false claims. Though these cases indicate that some courts recognize a more permissive standard for satisfying Rule 9(b) in certain circumstances, they also demonstrate that even these relaxed standards can be quite demanding.
A number of courts continued to dismiss complaints based on relators’ failure to identify an actual false claim, while leaving open the possibility that certain circumstances may warrant application of a more permissive approach. For example, in U.S. ex rel. Eberhard v. Physicians Choice Laboratory Services, LLC., the Sixth Circuit applied the Circuit’s “strict” standard to dismiss the complaint when the relator failed to identify the “time, place, and content of [the defendant’s] alleged misrepresentation.” 642 Fed. Appx. 547, 550-51, 553 (6th Cir. 2016) (citing U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493 (6th Cir. 2007) and Chesborough v. VPA, P.C., 655 F.3d 461 (6th Cir. 2011)). District courts within the Sixth Circuit reached the same result. See U.S. ex rel. Crockett v. Complete Fitness Rehab., Inc., 2016 WL 5476277, at *9 (E.D. Mich. Sept. 29, 2016) (failure “to identify a fraudulent claim” was “fatal to [the] complaint”); U.S. ex rel. Armes v. Garman, 2016 WL 3562062, at *9 (E.D. Tenn. June 24, 2016) (dismissing complaint because relator failed to allege false claims and did not allege any “personal knowledge of any claims or billing information” to justify the application of a relaxed standard). Consistent with prior decisions, the Sixth Circuit in Eberhard left open the possibility that certain circumstances may warrant the application of a more flexible standard, though declined to do so in this case.
In U.S. ex rel. Chase v. LifePath Hospice, Inc., the U.S. District Court for the...
