As we have reported in the past, the U.S. Circuit Courts are split on several issues involving the federal False Claims Act. One of the most divisive issues facing the courts today involves the application of Federal Rule of Civil Procedure 9(b). Rule 9(b) requires heightened pleading requirements for plaintiffs submitting complaints alleging fraud. About half of the federal Circuits hold that Rule 9(b) applies to filings under the FCA and routinely dismiss cases that do not explicitly allege fraud and specific actions demonstrating fraud. The other half of the Circuits interpret the FCA to have a lower pleadings threshold for fraud claims arising under the FCA and allow cases to continue despite the plaintiff pleading general allegations of fraud. As with any legal issue on which the Circuit Courts are sharply split, the Supreme Court granted a writ of certiorari in the case of Nathan v. Takeda Pharmaceuticals, which involves this pleadings issue.
Current Procedural Status of Nathan v. Takeda
In many high-profile Supreme Court cases, government agencies and private organizations submit briefs highlighting their opinion on the matter. These briefs are known as amicus curiae briefs – a Latin phrase meaning “friend of the court.” Sometimes, the Supreme Court will make a request to a government agency for further enlightenment on a particular issue for which it needs additional legal background or a more thorough explanation of the administrative processes involved in a particular issue.
In October of last year, the Supreme Court requested the U.S. Solicitor General to give its opinion on the specific question: “Whether a relator in a qui tam action under the False Claims Act, 31 U.S.C. 3729 et seq., must identify specific false claims submitted for payment in order to plead fraud with sufficient particularity to satisfy Federal Rule of Civil Procedure 9(b).” The Solicitor submitted a 22-page amicus brief outlining its position on the issue, complete with citations to several Supreme Court cases and relevant statutes.
Introduction to the Solicitor General’s Opinion of the Applicability of Rule (b) to FCA Pleadings
The Solicitor’s brief begins with a clarification of the issue as practically applied to a case submitted under the FCA. The brief frames the question as to whether a relator must submit documentation of each and every instance of fraudulent activity or whether a general statement of the nature of the fraud is sufficient. The latter interpretation is known as the per se rule and, according to the Solicitor, is an incorrect application of Rule 9(b) to an FCA case. The Solicitor’s brief takes the position that an FCA complaint comports with federal filing rules if it “contains detailed allegations supporting a plausible inference that false claims were submitted to the government.” In other words, a petition citing each and every instance of fraud is not required.
In tomorrow’s post, we will examine the Solicitor’s opinion in further detail and learn how the office believes FCA cases should proceed in the future. Stay tuned for more specifics about FCA filing requirements, as well as the specificity of evidence you may need to gather in order to commence your own whistleblower lawsuit.
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