Injecting additional uncertainty into the already-muddled case law regarding what precisely must be pleaded with particularity under Rule 9(b), the Second Circuit in U.S. ex rel. Chorches v. American Medical Response, Inc., No. 15-3930, 2017 WL 3180616 (July 27, 2017), held that a relator need not identify a specific invoice in order to adequately plead that a false claim was presented to the government. While Chorches would seem to deepen a circuit split on Rule 9(b) — one the Supreme Court has repeatedly declined to take up — the Second Circuit goes to great lengths to downplay its existence. According to the Second Circuit, “the reports of a circuit split are, like those prematurely reporting Mark Twain’s death, greatly exaggerated.”
The relator in Chorches worked as an EMT for an ambulance company and alleged a scheme to defraud Medicare by falsely certifying ambulance transports as medically necessary. While the relator was able to allege precisely the contents of reports prepared relating to ambulance patients, he was unable to identify a specific resulting invoice billing ambulance services to Medicare. The district court granted a motion to dismiss, holding that the complaint failed to satisfy Rule 9(b) because it did not adequately allege the submission of any specific false claims to the government.
The Second Circuit reversed, holding that “Rule 9(b) does not require that every qui tam complaint provide details of actual bills or invoices submitted to the government.” Rather, a complaint satisfies Rule 9(b) where it plausibly alleges (1) “that the information that would permit further identification of [the purportedly false] claims is peculiarly within the [defendant’s] knowledge” and (2) specific facts “creating a strong inference that specific false claims were submitted.” The court’s decision seemed to be motivated by the fact that EMTs and paramedics, while aware generally of the existence of a fraudulent scheme, were not involved in billing and therefore it would be “virtually impossible” for them to have access to billing records. The court instead permitted an inference that there was false billing since the relator alleged he was explicitly informed that he must falsify transport reports in order for the trips to qualify for Medicare reimbursement. The fact that between 40 and 70 percent of the ambulance company’s business involved Medicare or Medicaid patients further strengthened the inference that “any systematic scheme for documenting fabricated medical necessity for ambulance services will indeed reach government insurers.”
Chorches is perhaps most notable for its discussion of the state of Rule 9(b) jurisprudence. As we have previously discussed, the circuits appear split regarding whether it is appropriate to “relax” Rule 9(b) for certain qui tam cases, and numerous cert. petitions have (thus far unsuccessfully) asked the Supreme Court to resolve the split. Six circuits have adopted what they termed a “more lenient” pleading standard under Rule 9(b) that does not require the details of an actually-submitted false claim. Four circuits, on the other hand, have professed to adopt a “stricter” standard that, at least as a general matter, requires the relator to plead facts regarding specific claims for payment. Just last year, the Second Circuit itself acknowledged a circuit split on this issue, although it declined at the time to choose a side; but, potentially rewriting history, Chorches concludes that no significant split exists. According to the court, while these decisions may “at first glance” appear to be in tension, their differing conclusions stem not from different views of the proper Rule 9(b) standard, but instead simply from application of the same standard to different facts and differently-situated relators.