There is an important pleading standard question being posed to the US Supreme Court in the petition for writ of certiorari by Intermountain Healthcare (IHC) in a False Claims Act (FCA) case filed by a whistleblower in 2012. The issue involves the pleading requirements under Federal Rule of Civil Procedure 9(b), which requires a plaintiff to plead fraud with particularity.
For FCA cases, the courts typically require that a plaintiff plead details of the alleged fraud, including the who, what, where, when, and how. Defendants often try to avoid this heightened pleading requirement by asserting that the defendant possesses the information necessary to prove the fraud so the plaintiff should be excused from pleading with specificity.
That was the situation for IHC, where the US Court of Appeals for the Tenth Circuit reversed the district court’s decision and held that the whistleblower did not need to allege certain facts with particularity because those facts were in IHC’s exclusive control. IHC has now asked the Supreme Court to rule whether a plaintiff can avoid the Rule 9(b) pleading requirement by asserting that the defendant possesses the information necessary to meet the pleading requirement. However, this issue is not new and the Supreme Court has declined to grant its review in the past.
In its petition to the Supreme Court, IHC also asserts that the whistleblower provision of the FCA violates the appointments clause of the US Constitution, which generally authorizes the president, or in certain instances, the courts and government department heads, to appoint “officers.” IHC argues that the whistleblower was not properly appointed under the Constitution because whistleblowers are “officers,” or, alternatively, “the FCA impermissibly vests a core function of officers—civil law enforcement—in nonofficer [whistleblowers].” This argument also isn’t new. Noted in a footnote in a 2000 Supreme Court case, Vermont Agency of Natural Resources v. U.S. ex rel. Stevens, Justice Antonin Scalia commented that the Court “express[es] no view on the question whether [whistleblower] suits violate Article II, in particular, the Appointments Clause of § 2.” IHC has asked the Supreme Court to review the appointments clause issue, arguing that it remains an open question in Vermont Agency.
It an amicus brief urging the Supreme Court to grant IHC’s petition for certiorari, the American Hospital Association (AHA) argues that whistleblower lawsuits have disproportionately targeted healthcare entities, noting that two-thirds of FCA cases filed within the last two years involved healthcare defendants. The question here, according to the AHA, is “whether private plaintiffs pursuing FCA claims should have to follow the same basic rules of civil litigation that apply to every other plaintiff pursuing a fraud claim, or whether they should be treated as a special class of plaintiff entitled to a court-made exception from those rules.”
Perhaps signaling interest in reviewing either or both issues, the Supreme Court has asked for a response to the petition for certiorari from the whistleblower and the government by March 25. This will be an interesting case if the Supreme Court accepts it for review, and one that will be watched carefully.