The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions that have required a relator only to plead a reliable indicia of the submission of false claims to satisfy Rule 9(b).
Relators in a pair of cases from the Middle District of Florida succeeded in satisfying Rule 9(b) under a relaxed pleading standard. In U.S. ex rel. Space Coast Medical Associates, LLP, 94 F. Supp. 3d 1250 (M.D. Fla. Feb. 6, 2015), the district court held relators had pleaded “sufficient indicia of reliability that claims were submitted” by alleging “particularized knowledge of the Defendants’ billing process and of alleged fraudulent bills,” as well as “individual Medicare patients who received treatment.”
In U.S. ex rel. Bingham v. Baycare Health System, 2015 WL 4878456 (M.D. Fla. Aug. 14, 2015), the district court applied even more lenience. In a case based on alleged Stark Law and AKS violations, the district court held that Rule 9(b) was satisfied when the relator alleged only the fraudulent scheme and, relying on CMS data, the defendant’s revenue from Medicare claims and the names of the physicians at issue. The district court explained the lenient standard was appropriate because the nature of the alleged fraud did not rely on the contents of particular bills due to the fact that the improper relationships tainted every claim submitted as a result of referrals at issue.
Other courts applied the relaxed standard, but nonetheless rejected the relators’ complaints as insufficiently pleaded. In U.S. ex rel. Judd v. Quest Diagnostics Inc., 2015 WL 5025447 (3d Cir. Aug. 26, 2015), the Third Circuit announced its “adoption” of the “more nuanced reading of the heightened pleading requirements of Rule 9(b)” and held that the relator’s allegations failed because the relator provided “no reason to believe” that the defendant “submitted claims for Medicare reimbursement in connection with its kickbacks.”
Similarly, in U.S. ex rel. Britton v. Lincare Inc., 2015 WL 8526356 (11th Cir. Dec. 10, 2015), the Eleventh Circuit issued a per curiam opinion affirming the district court’s dismissal of the relator’s complaint for failure to plead fraud with particularity under Rule 9(b). The Eleventh Circuit explained the relator was “unable to muster any facts tending to show that Lincare asked the Government to pay amounts it does not owe” because he “disclaimed any knowledge of [the defendant’s] billing practices” and did not allege the “who,” “what,” “where,” “when,” and “how” of any fraudulent submissions.