A Rule 9(b) motion to dismiss is often the first big hurdle that a False Claims Act lawsuit faces. Under Rule 9(b) of the Rules of Civil Procedure, a relator in a False Claims Act lawsuit must allege the “circumstances constituting fraud ... with particularity.” Accordingly, defendants often use Rule 9(b) to challenge a complaint and argue that the case should be dismissed due to lack of “particularity.”
There is much debate among the courts about what constitutes “particularity.” The Fourth, Sixth, Eighth, and Eleventh Circuits have held that a plaintiff must show “representative samples” of the alleged fraudulent conduct, specifying the time, place, and content of the acts and the identity of the actors. Conversely, the First, Fifth, Seventh and Ninth Circuits take a “more nuanced reading of the heightened pleading requirements of Rule 9(b).”
The Third Circuit recently joined the latter group in Foglia v. Renal Ventures Management, LLC, holding “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.’”
In reaching its decision, the Third Circuit reiterated that it had never “held that a plaintiff must identify a specific claim for payment at the pleading stage of the case to state a claim for relief.” (Emphasis in the original…) Rather, it rationalized – as the Fifth Circuit did – that requiring this level 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.”
Although the Third Circuit adopted the “less rigid” 9(b) standard, relators still must meet a minimum level of specificity with respect to the False Claims Act allegations. The Third Circuit in Foglia went on to state that in order for the relator to such less rigid 9(b) standards, he would have to provide “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” In other words, the relator must allege sufficient facts to “establish a plausible ground for relief” and do more than describe “a mere opportunity for fraud.”
Ultimately, the Court found that, although it was a “close case,” at this early stage in the proceedings, it needed to “accept as true all allegations in the complaint,” which satisfied the particularity requirement of Rule (b).
Not only is the Foglia decision a victory for the relator in this particular case, but it also marks a victory for relators in the Third Circuit, and in other Circuits as well, since the Third Circuit refused to adopt the rigid 9(b) particularity standards of other Circuits and acknowledged that even the Circuits that purport to apply the rigid standard do not consistently do so.
The whistleblower attorneys at Goldberg Kohn are committed to fighting fraud against the government and protecting the rights of whistleblowers. If you would like more information the Foglia decision, Rule 9(b) standards, or have information about possible False Claims Act violations, please contact us at 312-827-2623 to schedule a free, confidential appointment with one of our nationally recognized whistleblower attorneys.