Opinion ID: 2722147
Heading Depth: 2
Heading Rank: 1

Heading: Pleading Standard Under the FCA

Text: “Because the FCA is an anti-fraud statute, complaints alleging violations of the FCA must comply with Rule 9(b).” Joshi, 441 F.3d at 556. Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud[.]” “This particularity requirement demands a higher degree of notice than that required for other claims.” United States ex rel. Costner v. United States, 317 F.3d 883, 888 (8th Cir. 2003). We explained in Joshi that to satisfy Rule 9(b)’s particularity requirement, “the complaint must plead such facts as the time, place, and content of the defendant’s false representations, as well as the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result.” 441 F.3d at 556. In other words, “the complaint must identify the ‘who, what, where, when, and how’ of the alleged fraud.” Id. (quoting Costner, 317 F.3d at 888). Moreover, we stated that although an FCA complaint need not include the “specific details of every alleged fraudulent claim” when a relator alleges that a defendant engaged in a systematic practice or scheme of submitting fraudulent claims, the complaint “must provide some representative examples of [the defendant’s] alleged fraudulent conduct, specifying the time, place, and content of [the defendant’s] acts and the identity of the actors.” Id. at 557. Thayer concedes that she did not provide any representative examples of the false claims in the complaint. She argues, however, that neither Rule 9(b) itself nor Joshi requires that representative examples be pleaded in every FCA complaint that -4- alleges a systematic practice or scheme of submitting false claims. We agree, and conclude that Joshi’s representative-examples requirement need not be satisfied with respect to some portions of the complaint. Dr. Joshi was an anesthesiologist who had practiced at St. Luke’s Hospital from 1989 to 1996. Id. at 554. His April 2004 qui tam action against the hospital and the hospital’s chief of anesthesiology alleged, among other things, that the hospital had systematically violated the FCA over a sixteen-year period by seeking Medicare reimbursements at higher rates than those to which it was entitled and by submitting claims for services that were not performed and supplies that were not provided. Id. at 554, 557. He did not identify the details of any of the false claims in his complaint but instead alleged that every claim submitted was fraudulent. Id. at 554-56. In concluding that the complaint failed to satisfy Rule 9(b), we explained that “Dr. Joshi’s allegation that ‘every’ claim submitted by St. Luke’s was fraudulent lack[ed] sufficient ‘indicia of reliability[,]’” id. at 557, because, as an anesthesiologist rather than a member of the hospital’s billing department, he failed to provide the factual basis for his “knowledge concerning the alleged submission of fraudulent claims,” id. at 558. We held that to satisfy Rule 9(b), he was required to plead at least some representative examples of the false claims. Id. at 557. Unlike Dr. Joshi, who had no direct connection to the hospital’s billing or claims department and could only speculate that false claims were submitted, Thayer was the center manager for two of Planned Parenthood’s clinics, oversaw Planned Parenthood’s billing and claims systems, and was able to plead personal, first-hand knowledge of Planned Parenthood’s submission of false claims. In these circumstances, we find persuasive the approach of those circuits that have concluded that a relator can satisfy Rule 9(b) by “alleging particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that -5- claims were actually submitted.”2 United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009); see also Chesbrough v. VPA, P.C., 655 F.3d 461, 471 (6th Cir. 2011); Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998-99 (9th Cir. 2010); United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1172 (10th Cir. 2010); cf. United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 457 (4th Cir. 2013) (indicating that a relator need not identify individual false claims in order to satisfy Rule 9(b) if the “specific allegations of the defendant’s fraudulent conduct necessarily led to the plausible inference that false claims were presented to the government[,]” but that representative examples are required if a defendant’s actions “could have led, but need not necessarily have led, to the submission of false claims”), cert. denied, 134 S. Ct. 1759 (2014); United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 29 (1st Cir. 2009) (explaining that in qui tam actions in which the defendant allegedly caused third parties to file false claims, “a relator could satisfy Rule 9(b) by providing ‘factual or statistical evidence to strengthen the inference of fraud beyond possibility’ without necessarily providing details as to each false claim”); United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 854 (7th Cir. 2009) (“We don’t think it essential for a relator to produce the invoices (and accompanying representations) at the outset of the suit.”); Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005) (per curiam) (stating that to satisfy Rule 9(b), an FCA “complaint must contain ‘some 2 Planned Parenthood argues that because we have continued to require relators to plead representative examples of the false claims in order to satisfy Rule 9(b) in cases following Joshi, we should not excuse Thayer’s failure to plead representative examples. See United States ex rel. Dunn v. N. Mem’l Health Care, 739 F.3d 417, 420 (8th Cir. 2014); Baycol Prods. Litig., 732 F.3d at 878-80; United States ex rel. Ketroser v. Mayo Found., 729 F.3d 825, 829 (8th Cir. 2013); United States ex rel. Vigil v. Nelnet, Inc., 639 F.3d 791, 797-98 (8th Cir. 2011); United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 822-25 (8th Cir. 2009). Like Joshi, however, these cases are distinguishable because the relators did not have access to the defendants’ billing systems and were not able to plead personal knowledge of the defendants’ submission of false claims. -6- indicia of reliability’” to support the allegation that a false claim was submitted to the government). As Judge Higginbotham explicated in Grubbs, Rule 9(b) “is context specific and flexible and must remain so to achieve the remedial purpose of the False Claim Act.” See 565 F.3d at 190. Allowing a relator to satisfy Rule 9(b) by pleading the “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted” fulfills the objectives of Rule 9(b) “without stymieing legitimate efforts to expose fraud.” Id. These objectives include both providing the defendant with adequate notice of the relator’s claims and protecting the defendant from baseless claims. Id. at 190-91. We agree that “[s]tating ‘with particularity the circumstances constituting fraud’ does not necessarily and always mean stating the contents of a bill.” Id. at 190. Given Rule 9(b)’s objective of protecting defendants from baseless claims, relators whose allegations lack sufficient indicia of reliability should be required to plead representative examples of the false claims because their allegations are more likely to be unfounded. In contrast, a relator who provides sufficient indicia of reliability to support her allegations that false claims were submitted, such as by pleading details about the defendant’s billing practices and pleading personal knowledge of the defendant’s submission of false claims, fulfills Rule 9(b)’s objective of protecting the defendant from baseless claims. Accordingly, we conclude that a relator can satisfy Rule 9(b) without pleading representative examples of false claims if the relator can otherwise plead the “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Id. To satisfy the “particular details” requirement of our holding, however, the relator must provide sufficient details “to enable the defendant to respond specifically and quickly to the potentially damaging allegations.” United States ex rel. Costner v. United States, 317 F.3d 883, 888 (8th Cir. 2003). -7-