The United States Court of Appeals for the Third Circuit recently rejected the strict approach taken by many federal circuit courts to Federal Rule of Civil Procedure 9(b) that requires a qui tam relator bringing a False Claims Act (FCA) case to plead details of false claims that were actually submitted to the government in order to survive dismissal. See Foglia v. Renal Ventures Mgmt., LLC, Case No. 12-4050, 2014 WL 2535339 (3d Cir. June 6, 2014). In doing so, the Third Circuit joined other federal appeals courts that have taken what the court described as a “more nuanced” approach to Rule 9(b). The Third Circuit ruled that, to avoid dismissal for failure to satisfy Rule 9(b), “it is sufficient for a plaintiff to 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.”
In Foglia, the relator sued Renal Ventures, a dialysis provider, under the qui tam provision of the FCA. The relator, a registered nurse who had worked for Renal Ventures, alleged that the dialysis provider submitted false claims to the government when it impermissibly reused single use vials of Zemplar, a vitamin D drug frequently prescribed to dialysis patients. The United States did not intervene in the litigation.
The United States District Court for the District of New Jersey dismissed the relator’s complaint, ruling that the relator failed to satisfy Rule 9(b), which requires allegations of fraud to be stated “with particularity.” The district court reasoned that the relator’s failure to provide a “representative sample” or to “identify representative examples of specific false claims made to the Government” was fatal under Rule 9(b).
The Third Circuit reversed, rejecting the strict approach to Rule 9(b) that the district court had taken. Although the Third Circuit stated that the relator’s complaint presented “a close case as to meeting the requirements of Rule 9(b),” the court ultimately concluded that the complaint satisfied this pleading rule. As the Third Circuit explained, the district court erred in dismissing the complaint under Rule 9(b) because the complaint gave the dialysis provider “notice of the charges against it, as is required by Rule 9(b)” and only the dialysis provider had “access to the documents that could easily prove the claim one way or another.” That said, the Third Circuit included an important caveat in its opinion when it emphasized that a relator’s FCA complaint must raise “a ‘strong inference’ that false claims were submitted.”
The Third Circuit’s decision in Foglia deepens a circuit split regarding the correct construction of Rule 9(b) in the context of FCA cases. In October 2013, the United States Supreme Court indicated its potential interest in hearing argument in an FCAcase that would address the split. Indeed, the Supreme Court invited the Solicitor General to file a brief expressing the views of the United States regarding United States ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc., No. 12-1349, an FCA qui tam case in which the Fourth Circuit affirmed the dismissal of the complaint after ruling that the relator failed to specifically state which false claims Takeda Pharmaceuticals allegedly submitted to the government for payment. The question presented in the petition for writ of certiorari was whether Rule 9(b) requires that an FCA complaint “allege with particularity that specific false claims actually were presented to the government for payment,” or whether it is instead sufficient to allege the “particular details of” the “scheme to submit false claims” together with sufficient indicia that false claims were submitted.
When the Solicitor General filed his brief, he recommended that the Supreme Court deny the petition for certiorari, though the Solicitor General noted “a rigid rule” that FCA complaints that do not identify specific claims for payment that “are inadequate would hinder the ability of qui tam relators to perform the role that Congress intended them to play in the detection and remediation of fraud against the United States.” On March 31, 2014, the Supreme Court denied the petition for certiorari in Nathan, leaving open the question of the correct application of Rule 9(b) in FCA cases.
The Third Circuit’s Foglia decision is available by clicking here.