Third Circuit adopts "nuanced," relaxed standard for satisfying Rule 9(b)

by Ben Vernia | June 12th, 2014

On June 6, the Court of Appeals for the Third Circuit, in US ex rel Foglia v Renal Ventures Mgmt, sided with the First, Fifth, and Ninth Circuits (and against the Fourth, Sixth, Eighth, and Eleventh Circuits), and held that the whistleblower in the declined qui tam before it need only allege the particular details of a scheme to submit false claims, along with reliable indicia that lead to a strong inference that claims were actually submitted.

The whistleblower in the case was a nurse employed for 18 months at the defendant dialysis care services company. He alleged that the defendant had falsely certified that it was in compliance with state regulations governing quality of care, and in two ways had submitted false claims for the drug Zemplar. The relator had failed to identify even representative samples of false claims, leading the district court to dismiss the case on the grounds that his complaint lacked particularity under Fed. R. Civ. P. 9(b). The court rejected the requirement of pleading even representative claims, reasoning:

[I]t is hard to reconcile the text of the FCA, which does not require that the exact content of the false claims in question be shown, with the “representative samples” standard favored by the Fourth, Sixth, Eighth, and Eleventh Circuits. As the Fifth Circuit has stated, requiring this sort of detail at the pleading stage would be “one small step shy of requiring production of actual documentation with the complaint, a level of proof not demanded to win at trial and significantly more than any federal pleading rule contemplates.”

The Court also found persuasive the government’s brief filed in relation to the petition for a writ of certiorari in US ex rel Nathan v Takeda Pharm N Am which had argued that the claim requirement was both “unsupported by Rule 9(b) and undermines the FCA’s effectiveness as a tool to combat fraud against the United States.” In addition, the Circuits which had adopted the higher standard had not even consistently adhered to it, the Third Circuit reasoned.

Applying the lower standard to the relator’s case, the Court concluded that, while a “close case as to meeting the requirements of Rule 9(b),” it sufficed to allege a scheme to submit false claims.

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