Government’s Case Dismissed Due to Inability to Allege False Claims With Particularity

By on January 26, 2016

The United States District Court for the Middle District of Florida recently dismissed the government’s False Claims Act case against Liberty Ambulance Service, Inc. for failure to plead its claims with sufficient particularity.  The court in United States ex rel. Pelletier, No. 3:11-cv-00587 (M.D. Fla. Jan. 7, 2016), held that while the government’s allegations plausibly gave rise to relief on its claim that the defendant defrauded the government by falsifying reports of ambulance services provided, the government nonetheless failed to meet the particularity requirement of Rule 9(b).

The crux of the court’s decision was that the government failed to sufficiently allege that Liberty had actually submitted a false claim to the government.  The court reiterated the often-invoked standard that liability under the FCA attached “not to the underlying fraudulent activity or to the government’s wrongful payment but to the “claim for payment.’”  Thus, the court stated, “a False Claims Act plaintiff may not describe an improper scheme in detail and assume that a claim for payment must have been or likely was submitted based on the scheme.”

The court observed that the government had alleged in detail the fraudulent scheme to falsify records:  “the government’s complaint and supporting materials go into great detail regarding a scheme whose purpose may well have been to secure payment from the government based on false claims.”  Yet the government’s allegations failed to allege with sufficient particularity that Liberty has actually submitted false claims. Despite presumably having access to the submitted claims, the government could not identify a single false claim submitted by the defendant.  Nor were any of the government’s witnesses “involved with the actual submission of claims to the government or the receipt of payment from the government.”  Unable to cite specific false claims and without “first-hand knowledge of Liberty’s internal billing practices,” the government could not meet Rule 9(b)’s particularity requirement.

The court distinguished the U.S. Court of Appeals for the Eleventh Circuit’s decision in United States ex rel. Walker v. R&F Prop. of Lake County, Inc., 433 F.3d 1349 (11th Cir. 2005), where that court had affirmed the denial of a motion to dismiss an FCA claim despite the plaintiff’s failure to specifically identify any false claim.  In Walker, the plaintiff had some knowledge of the defendants’ billing practices and had spoken to an office administrator who confirmed how the government was billed.  Here, by contrast, the court held, the statements of the defendant’s employees that the government offered did “not demonstrate the same degree of familiarity with the billing process as would provide the indicia of reliability necessary to meet the Rule 9(b) standard.”

The court’s decision confirms the importance of holding an FCA plaintiff—whether a relator or the government—to its burden of pleading its claims with particularity.  Even where the plaintiff can allege a plausible scheme to defraud the government, without a particularized accusation that false claims were submitted, the FCA case cannot proceed.