The Dentons Government Contracts and Appellate Litigation practices filed on October 21, 2015 an amicus curiae brief on behalf of two national government contractor industry associations urging the US Supreme Court to review a case involving the threshold standards for filing a False Claims Act qui tam relator suit. The amicus brief, which Dentons submitted to the Supreme Court on behalf of the Coalition for Government Procurement and the Professional Services Council–The Voice of the Government Services Industry, supports the certiorari petition filed on September 21, 2015 in AT&T, Inc. v. United States ex rel. Heath, No. 15-363. The appeal raises the question of how Federal Rule of Civil Procedure 9(b)—which requires a party “alleging fraud [to] state with particularity the circumstances constituting fraud” (emphasis added)—should be applied to qui tam relator suits. The federal courts of appeals are divided on whether Rule 9(b) requires dismissal of a qui tam complaint that fails to identify with specificity even one alleged representative false or fraudulent claim.
Under the False Claims Act’s qui tam provisions, 31 U.S.C. § 3730, a private-party plaintiff (known as a “relator”) can pocket a 15–30 percent share of the proceeds even if a qui tam suit is settled prior to trial. During the past decade, opportunistic relators increasingly have been targeting government contractors with vague or generalized allegations of fraud, hoping to force them to accede to multi-million dollar settlements. The industry amicus brief explains that “[b]ecause so much is at stake for government contractors and other qui tam defendants—the threat of heavy civil penalties, multi-million dollar treble damages judgments, and reputational harm that can affect a company’s ability to compete for contracts —there is immense pressure to settle even a baseless qui tam suit that survives a motion to dismiss.” The industry brief argues that for this reason, “[s]trict, nationally uniform enforcement of Rule 9(b) is essential in qui tam litigation.” The alternative, a lax interpretation of Rule 9(b)’s particularity requirement, “would impair the operation of the federal procurement system” by reducing competition and eroding the mutual trust and working relationship between the federal government and the contractors on which it so heavily depends.