DC District Court dismisses False Claims Act retaliation claim for failure to comply with heightened particularity under Rule 9(b)

by Ben Vernia | February 18th, 2010

In a False Claims Act retaliation case brought by four former employees of an SBA grantee, on February 15, District Judge Ricardo Urbina ruled that the heightened pleading requirement of Fed. R. Civ. P. 9(b) applied to the underlying fraud claims, and dismissed the plaintiffs’ complaint without prejudice. Relying on Shekoyan v. Sibley Int’l Corp., 217 F.Supp.2d 59, 64 (D.D.C. 2002), and several non-retaliation cases under the False Claims Act, Judge Urbina reasoned that the heightened standard of pleading under Rule 9(b) applied to FCA retaliation claims.

Under this standard, the Court found, the complaint failed to allege the specifically false content in the defendant’s Small Business Administration grant applications, and that failed to allege a nexus between the false representations and the Government’s payment of a claim, as required under the Supreme Court’s decision in the Allison Engine Co. case. Judge Urbina nevertheless declined to dismiss the complaint with prejudice, because he could not conclude that no set of allegations consistent with the proposed claims could satisfy the pleading requirements.

Comment: Judge Urbina’s decision to apply Rule 9(b) to retaliation claims under the FCA, 31 USC 3720(h), conflicts with the majority trend at the Court of Appeals level. See, for example, U.S. ex rel. Elms v. Accenture LLP, 341 Fed. Appx. 869 (4th Cir. 2009); U.S. ex rel. Marlar v. MWXT Y-12 LLC, 525 F.3d 439 (6th Cir. 2008); Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097 (9th Cir. 2008); U.S. ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 238 n.23 (1st Cir. 2004). Although the D.C. Court of Appeals affirmed the case on which Judge Urbina relied, Shekoyan, it did so on the grounds that the plaintiff had not demonstrated that he had engaged in protected activity, and did not address the pleading question raised in the District Court. See Shekoyan v. Sibley Int’l Corp., 409 F.3d 414, 422-23 (D.C.Cir. 2005).

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