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Sean Hennessy focuses his practice on white-collar and securities defense matters, including the defense of criminal and civil investigations brought by the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and State Attorneys General. Sean defends individuals and public and private companies against governmental investigations involving allegations of antitrust violations, securities and investment adviser fraud, insider trading, financial market manipulation, tax crimes and violations of the False Claim Act. Read Sean Hennessy's full bio.

On October 1, 2018, the District Court for the Northern District of California dismissed with prejudice a relator’s qui tam suit against Carelink Hospice Services, Inc. (Carelink) for failure to meet the heightened pleading standards mandated by Federal Rule of Civil Procedure 9(b). The court’s decision largely rested on the relator’s inability to specifically plead the existence of identifiable false claims—a strong affirmation that, in the Ninth Circuit, courts continue to hold relators to their pleading burdens.

The relator worked for Carelink, a hospice provider, for a three-month period in 2015. As a hospice provider, Carelink needed to provide certifications of terminal illness to justify admissions to the facility and, in turn, receive reimbursements from Medicare for services rendered. The relator, without identifying particular claims for reimbursement or patients, alleged that Carelink violated the FCA by seeking reimbursement for patients who Carelink knew were not terminally ill. The court seized upon the relator’s inability to point to specific claims in rendering its dismissal of the case.

Relying on Rule 9(b)’s particularity requirement, the court dismissed the relator’s complaint due to her failure to identify, with the required specificity, actual false claims. The court noted that the relator “relies on general allegations that Carelink presented false claims” but failed to “identify any reimbursements from Medicare[.]” The court came to this conclusion despite the relator’s citation to four patients about whom she alleged to have raised eligibility concerns. The court reasoned that these allegations, without “describ[ing] the nature of [her] concerns or her basis for believing the four individuals” were not eligible for Medicare reimbursements, were not enough to satisfy Rule 9(b).

The court concluded that the relator “fail[ed] to identify with particularity what ‘claims’ Caremark submitted” that were false because the allegations “do not provide a reasonable basis for [the court] to infer that claims had been submitted on behalf of any particular patient.” The court specifically dispelled the relator’s argument that, based on her extremely limited tenure with Carelink, the Rule 9(b) requirement should be relaxed in her case.

This decision confirms that, in the Ninth Circuit, a relator must allege the existence of specific, particularized, identifiable false claims submitted to the government. This confirmation serves as a strong defense against relators who do not sufficiently allege the “who, what, when, where, and how” of their FCA claims.

On April 24, 2018, the District Court of Maryland dismissed with prejudice a relator’s qui tam suit against Johns Hopkins Health System Corporation (Johns Hopkins) for failure to state a claim. The court’s decision rested on two rationales, the second of which is generally applicable to FCA claims in the Fourth Circuit and serves as strong deterrent against relator “fishing expeditions.”

The facts of the case revolve around an agreement that Johns Hopkins entered into with Maryland’s Health Services Cost Review Commission (HSCRC), the agency tasked with setting hospital rates for services throughout Maryland. This agreement set a reimbursement “budget cap” that relied on Johns Hopkins’ history of patient volumes, costs and patterns of services in its setting.

The agreement between Johns Hopkins and the HSCRC focused on care provided to Maryland residents. Importantly, the “budget cap” assigned to Johns Hopkins under the agreement applied only to services provided to Maryland residents. Revenue for services provided to out-of-state residents was not counted towards the cap, thereby creating, according to the relator, an incentive for Johns Hopkins to inappropriately recruit and prioritize out-of-state patients in contravention to the focus of the agreement. The relator claimed that senior management sought to increase revenue by treating out-of-state patients at the expense of Maryland patients, leading to false claims each time Johns Hopkins submitted claims and impliedly represented that it was compliant with the agreement’s focus on Maryland patients. Both the United States and the State of Maryland declined to intervene in the relator’s case.

Relying heavily on Rule 9(b)’s particularity requirement, the court dismissed the relator’s complaint due to his failure to identify, with the requisite specificity, claims for payment from Johns Hopkins to the government. The court noted that one of Rule 9(b)’s purposes is “to eliminate fraud actions in which all the facts are learned after discovery,” an especially important purpose in qui tam actions in which a relator has suffered no injury and “may be particularly likely to file suit as a pretext to uncover unknown wrongs.”

The court concluded that the relator alleged a scheme that “need not necessarily have led to the submission of false claims” and failed to identify any particular false claims for payment actually submitted to the government. The court strongly confirmed that Rule 9(b) requires substantial evidence of fraudulent activity before discovery and that courts in the Fourth Circuit will not allow relators to attempt “fishing expeditions” into a defendant’s conduct.

This decision affirms that, in the Fourth Circuit, a relator must provide specific, particularized allegations that point to identifiable claims actually presented to the government for payment.  This affirmation serves as a strong defense against relators who have not conducted sufficient diligence and expect the discovery process to offer the evidence required to satisfy Rule 9(b) after the filing of a complaint.