Cases Highlight Ongoing Uncertainty, Complexities Of Rule 9(b) In FCA Context

• Published date: 04 July 2022
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Criminal Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Dinsmore & Shohl
• Author: Mr Patrick M. Hagan and Pablo Davis

One of the most basic questions under the False Claims Act'what facts a relator must plead to state a claim'is also one of the most difficult to answer. The Supreme Court is considering multiple certiorari petitions seeking to resolve a circuit split in the application of Rule 9(b)'s heightened pleading standard to the FCA. Even within those two broad approaches, courts continue to encounter new issues and to adopt a fact-specific stance on how much 'particularity' the rule requires. Defendants need to pay continued close attention to circuit differences, and use the rule to the maximum extent possible to hold relators to the heightened standard.

For a False Claim Act (FCA)¹ complaint to survive a motion to dismiss it must not only meet the ordinary 12(b)(6) plausibility standard,² but also clear Rule 9(b)'s higher hurdle by 'stat[ing] with particularity the circumstances constituting fraud.'³ This requirement accords defendants a measure of protection from baseless FCA qui tam (whistleblower) actions.⁴ The rule is silent, though, on how much detail is needed to plead fraud 'with particularity,' and federal courts have not interpreted the requirement uniformly.

Circuit Split' or Convergence?

Generally, the circuits fall into two broad camps, with one group requiring plaintiffs to 'show 'representative samples' of the alleged claims for payment, specifying the time, place, and content of the acts and the identity of the actors,'⁵ and the other holding a plaintiff need only 'allege 'particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.'⁶

Despite having denied cert on this question before,⁷ there are signs the Court recognizes the growing pressure on the issue: twice already this year'in January in the Eleventh Circuit case of Bethany Hospice,⁸ and last month in Owsley from the Sixth Circuit⁹'the Court asked the Solicitor General to submit amicus briefs.¹⁰ The first of those briefs to be filed revealed there is even disagreement about the extent to which the circuits diverge.

In her Bethany Hospice amicus brief, the Solicitor General argued against cert and contended 'the courts of appeals have largely converged on a . . . flexible standard.'¹¹ Even those circuits that 'have placed greater emphasis than other courts of appeals on FCA relators pleading details regarding specific false claims for payment,' the brief contended, have 'recognized that such details are not invariably required.'¹² Incredibly, this position managed to unite relators and defendants in opposition. The relator in Bethany Hospice characterized the Solicitor General's position as 'pure ipse dixit' and 'devoid' of supporting authority.¹³ In another case, the defendant filed a supplemental brief arguing that the Solicitor General 'is the only one who thinks' the circuits have converged.¹⁴

The dispute turns on which cases the Solicitor General chose to cite and which ones she ignored. In arguing the circuits are largely harmonious, the Solicitor General cited the Sixth Circuit's decision in Prather.¹⁵ There, while recognizing 'most other circuits have applied either an across-the-board heightened standard or an across-the-board permissive one,'¹⁶ the court termed the split 'not nearly as deep as it first appears' because '[e]very circuit that has applied a heightened standard, save ours, has retreated from such a requirement in cases in which other detailed factual allegations support a strong inference that claims were submitted.'¹⁷Prather allowed a limited exception to the representative-claim requirement, holding 9(b) satisfied where relators allege 'specific personal knowledge that relates directly to billing practices' supporting a...