United States: The Eighth Circuit’s Decision In Planned Parenthood And The Extent Of The Circuit Split Regarding The Rule 9(B) Heightened Pleading Requirement In FCA Cases

Last Updated: September 15 2014
Article by Luke Levasseur

Keywords: Rule 9(b)--Particularity Requirement.

The FCA relators' and defense bars have been battling for some time about the extent of a relator's obligation under Rule 9(b) to plead the details of her/his claim with particularity. The Eighth Circuit's recent decision in US ex rel. Thayer v. Planned Parenthood appears to change the balance in what has been described as a circuit split regarding whether allegations concerning "representative examples" of specific false claims are necessary to satisfy Rule 9(b)'s heightened pleading standard. On closer inspection, however, the court's opinion raises questions regarding the extent of the circuit split.

Under Planned Parenthood, a relator may be able to evade the representative-example-requiring interpretation of Rule 9(b) if she/he can plead the "particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that the claims were actually submitted." For such "reliable indicia" to exist, the relator would presumably have held a position that would have resulted in first-hand knowledge of the defendant's billing processes and procedures such that she/he could make credible allegations related to the submission of specific claims to the Government. Many FCA relators will not be in a position to satisfy both of these requirements, and Rule 9(b) should continue to preclude such claims.

Federal Rule of Civil Procedure 9(b) requires that when "alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." FCA relators often make allegations describing purported improprieties regarding products or services being sold by a Government contractor—but they have little or nothing to say about the specifics regarding the submission of a request for payment to a Government official (or seeking Government funds). The submission of claims, of course, is the central issue in a false claims case. With respect to FCA allegations that are light on details of the purported claims for payment, several circuit courts have issued opinions making clear that FCA claims should be dismissed under Rule 9(b) if they fail to identify specific requests for payment—or, as characterized by an earlier Eighth Circuit opinion, "representative examples of false claims."

Back in June, Cameron Hamrick wrote a post about the Third Circuit's decision in US ex rel. Foglia v. Renal Ventures, in which that court came down on the side it characterized as the "more nuanced reading of the heightened pleading requirement"—and rejected the notion that "representative samples" of false claims should be required. The Renal Ventures opinion states that the Fourth, Sixth, Eighth, and Eleventh Circuits imposed the "representative samples" requirement—while the First, Fifth, and Ninth Circuits (which the Third Circuit was joining) held that it is "sufficient for a plaintiff to allege 'particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted."

Before Planned Parenthood, the leading Eighth Circuit case applying Rule 9(b) particularity requirement in the FCA context was US ex rel. Joshi v. St. Luke's Hospital  (2006). The relator in that case, Dr. Joshi, had practiced medicine at the defendant hospital, and he alleged a 16-year practice of inflating Medicare reimbursement requests. But Dr. Joshi did not provide details of any specific claims and, instead, alleged that all of the hospital's claims had been inflated. In Joshi, the Eighth Circuit held that although Rule 9(b) does not "require [the relator] to allege specific details of every alleged fraudulent claim," the "particularity requirement" mandates allegations concerning "some representative examples of their alleged fraudulent conduct, specifying the time, place, and content of their acts and the identity of the actors." Because the relator's complaint was "void of a single, specific instance of fraud, much less any representative examples," it was properly dismissed. Joshi was repeatedly cited for the proposition that the Eighth Circuit required "representative examples" of false claims to satisfy Rule 9(b)

Like Dr. Joshi, the relator in Planned Parenthood "conceded that she did not provide any representative examples" of specific false claims purportedly made by the defendant. However, unlike Dr. Joshi, who was a service provider and didn't allege first-hand knowledge of the hospital's claim submission process, the Planned Parenthood relator had worked as the "manager for two of Planned Parenthood's clinics." In that capacity she oversaw the "billing and claims systems" and was thus able "to plead personal, first-hand knowledge of Planned Parenthood's submission of false claims" that the Eighth Circuit held was sufficient under Rule 9(b).

The Eighth Circuit panel in Planned Parenthood couldn't (and didn't purport to) overrule Joshi; it distinguished the case factually and announced the applicable legal rule. The crucial difference is that the Planned Parenthood relator "was able to plead personal, first-hand knowledge" of claim submission—and could thus "alleg[e] particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted." The court held that such allegations were sufficiently detailed to survive a motion to dismiss under Rule 9(b).

The court supported its decision, which appears to retreat from the "representative examples are required" rule, with a long string-cite to other circuit court decisions (at pp.5-7)—including the Fourth, Sixth, and Eleventh Circuits, which had issued opinions requiring "representative examples"—that applied the same "particular details paired with reliable indicia" standard being applied in Planned Parenthood. The Eight Circuit's decision in Planned Parenthood can either be seen as retreating on the court's earlier imposition of a higher standard—or as consistent with the assertion by the Solicitor General's office in its amicus brief in the Takeda case from the last Supreme Court term (in which the SG discouraged granting a writ of certiorari) that appeals courts such as the Eighth Circuit "have not consistently adhered to th[e] rigid understanding of Rule 9(b)" as requiring representative samples of claims.

Government contractors will be unhappy with a decision such as Planned Parenthood that recognizes a reduced pleading obligation for relators under Rule 9(b)—and thus potentially opens the door for more discovery based on flimsier allegations, e.g., relators who cannot specify even one false claim purportedly submitted to the Government. That said, to the extent courts are not consistently applying the "representative examples" requirement announced in earlier cases, the opinion helpfully explains how legal rules are actually being applied. In sum, the Planned Parenthood decision may open the courthouse door to a few additional relators, but contractors should continue to prevail when the relators' past/current employment position (or other background) does not give her/him any basis to understand facts (and make allegations with an indicia of reliability) regarding the defendant's billing practices or procedures concerning submissions of claims for payment to the Government.

Originally published September 11th, 2014

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