Rule 9(b)
Subscribe to Rule 9(b)'s Posts

District Court Discards FCA Claim with Prejudice for Inability to Identify Specific False 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...

Continue Reading

District Court Tosses Complaint After Finding of Misconduct

On April 28, 2017, the United States District Court for the District of Massachusetts dismissed a relator’s qui tam complaint in United States ex rel. Leysock v. Forest Laboratories, Inc. after concluding that the complaint relied on information obtained resulting from deceptive conduct by the relator’s counsel. In Leysock, the relator alleged that the defendant caused the submission of false claims to Medicare by promoting Forest’s dementia drug, Namenda, for off-label label use. After the United States declined to intervene, Forest filed a motion to dismiss, which the Court denied, largely based upon detailed allegations about eight prescribing physicians who prescribed Namenda for off-label use by Medicare beneficiaries. These allegations, the Court reasoned, were sufficient to satisfy Federal Rule of Civil Procedure 9(b), which in False Claims Act cases typically requires plaintiffs to plead specific allegations regarding the alleged fraud, tying alleged...

Continue Reading

The FCA and Medical Necessity: An Increasingly Tenuous Relationship

On January 19, 2017, another district court ruled that a mere difference of opinion between physicians is not enough to establish falsity under the False Claims Act.  In US ex rel. Polukoff v. St. Mark’s et al., No. 16-cv-00304 (Jan. 17, 2017 D. Utah), the district court dismissed relator’s non-intervened qui tam complaint with prejudice based on a combination of Rule 9(b) and 12(b)(6) deficiencies.  In so doing, the Polukoff court joined US v. AseraCare, Inc., 176 F. Supp. 3d 1282, 1283 (N.D. Ala. 2016) and a variety of other courts in rejecting False Claims Act claims premised on lack of medical necessity or other matters of scientific judgment.  This decision came just days before statements by Tom Price, President Trump’s pick for Secretary of Health and Human Services (HHS), before the Senate Finance Committee in which he suggested that CMS should focus less on reviewing questions medical necessity and more on ferreting out true fraud.  Price’s...

Continue Reading

Nurse-Relator’s Personal Opinion About Medical Necessity Insufficient To Support FCA Complaint, Holds Seventh Circuit

On September 1, 2016, the US Court of Appeals for the Seventh Circuit largely affirmed dismissal of a relator’s amended complaint pursuant to the particularity requirement of Fed. R. Civ. P. 9(b). In US ex rel. Presser v. Acacia Mental Health Clinic, LLC, the relator, a nurse, alleged that a number of practices at a clinic where she worked were not medically necessary. These were: requiring patients to see multiple practitioners before receiving medication; requiring patients to undergo mandatory drug screenings at each visit; and requiring patients to come to the clinic in-person in order to receive a prescription or speak to a doctor. (The relator also alleged that clinic misused a billing code. This was the only claim the Seventh Circuit permitted to go forward.) In dismissing the majority of the relator’s complaint, the Seventh Circuit began with a robust discussion of the importance of Rule 9(b) in screening out baseless False Claims Act (FCA) claims:...

Continue Reading

District Court Dismisses FCA Claims Based on Fraudulent Off-Label Promotion for Lack of Particularity

On May 23, 2016, the US District Court for the District of Massachusetts dismissed several of the claims in a False Claims Act (FCA) whistleblower suit against Medtronic, Inc. and its wholly-owned subsidiary Medtronic MiniMed, Inc. (Medtronic) related to its insulin pumps and integrated diabetes management systems. In United States ex rel. Witkin v. Medtronic, Inc., the relator, Witkin (a former employee of Medtronic) alleged that certain of Medtronic’s promotional activities related to its insulin pumps and the pediatric use of its integrated diabetes management systems designed for adult use were false or misleading, resulting in false claims for reimbursement.  The district court held that Witkin failed to plead his claims with sufficient particularity pursuant to Fed. R. Civ. P. 9(b).  The district court emphasized the particularity requirement in this case, observing that “the alleged fraudulent promotional activity permits only a weak inference of...

Continue Reading

District of Massachusetts Rejects Relators’ Attempt to Convert Products Liability Theory into FCA Claim

On February 2, 2016, U.S. District Court for the District of Massachusetts dismissed a complaint alleging sweeping allegations of purported fraud under the False Claims Act (FCA) relating to hip replacement devices, and in doing so reaffirmed the principle that where an FCA complaint fails to plead the specifics of actual false claims, it cannot survive. The case is United States ex rel. Nargol v. DePuy Orthapaedics, Inc., in which, at the end of a 57-page opinion, U.S. District Judge Dennis Saylor denied the relators’ request for leave to amend, observing that “[d]espite full awareness of Rule 9(b)’s pleading standards, the relators—who are expert witnesses in related products-liability lawsuits against DePuy—have failed to plead with requisite particularity even a single false claim for the Pinnacle [metal-on-metal] [] device in their 168-page second amended complaint.” The relators alleged a variety of conduct, but most of it boiled down to variations on...

Continue Reading

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

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...

Continue Reading

Seventh Circuit Strictly Construes Original Source Requirement Against ‘Bounty-Hunting’ Relator

In a decision released yesterday in U.S. ex rel. Bogina v. Medline Industries, Inc., the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s dismissal of a relator’s False Claims Act (FCA) complaint, holding that the complaint’s allegations had been publicly disclosed in a prior, settled lawsuit and the relator was not an original source. The opinion, authored by Judge Richard Posner, described FCA relators as “bounty hunters” and observed that the FCA imposes obstacles on parasitic bounty-hunting relators who seek to “be handsomely compensated if the[ir] suit succeeds.” Among those obstacles is the FCA’s public disclosure bar, which Judge Posner’s opinion ensures has sharp teeth in the Seventh Circuit. First, the court held that the 2010 amendments to the original source exception the public disclosure bar, requiring a relator to “materially add” to publicly disclosed allegations in order to surmount the bar, could be applied...

Continue Reading

Can Satisfying A Regulatory Requirement Now Equate To Providing Illegal Remuneration?

Defending False Claims Act litigation is often a costly budget item. The disposal of weak cases by the government through the intervention decision making process has always been a critical safety valve for non-culpable defendants. Two of the more concerning trends in False Claims Act litigation, however, are (1) the increasing likelihood of relators pursuing factually and legally weak allegations after the government declines to intervene, and (2) courts allowing such cases to survive a Rule 9(b) motion to dismiss. A recent case in the Middle District of Florida involving the unintended consequences of a health system’s adherence to a local zoning obligation serves as a prime example of these troubling trends. On August 14, 2015, in U.S. ex rel. Bingham v. BayCare Health System, the court denied the defendants’ motion to dismiss relator’s claim that BayCare Health System (BayCare) and an independent third party real estate developer, St. Pete MOB, LLC (St....

Continue Reading

Fifth Circuit Enforces High Rule 9(b) Bar in Affirming Dismissal of Implied Certification Case

In U.S. ex rel Gage v. Davis S.R. Aviation, LLC, the U.S. Court of Appeals for the Fifth Circuit confirmed the high degree of specificity needed to successfully plead a claim under the False Claims Act (FCA). Affirming the lower court’s dismissal on Rule 9(b) grounds, the court held that a plaintiff who alleged that certain government contractors defrauded the government by improperly reselling salvaged aircraft parts failed to plead the “who, what, when, where and how” of the alleged scheme. Specifically, the court held that plaintiffs who assert a false claim based on a failure to meet a contractual provision must allege the exact contractual provision that was breached and set forth the exact nature of that breach. The plaintiff claimed that the defendants had salvaged certain aircraft parts from a crashed civilian aircraft and resold the allegedly defective parts to the U.S. government for use in military aircraft. As the plaintiff had not alleged that...

Continue Reading

BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES