Understanding the Third Circuit’s Foglia Pleading Standard in False Claims Act Cases

When it comes to False Claims Act litigation, one of the most hotly-contested issues surrounds the standards for pleading a claim with specificity. As we have reported in the past, the federal circuit courts are decidedly split on the issue, with several requiring an extremely intensive, fact-specific pleading standard alleging dates, times, dollar amounts, and details of every alleged act of fraud. Other circuit courts take a more relaxed approach to the pleading requirements, holding that a case can withstand a motion to dismiss as long as the relator has set forth enough information from which a reasonable person could draw an inference that fraud has occurred.

In our ongoing False Claims Act case against Omnicare, Inc., et al., one defendant, PharMerica, was recently defeated in its motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), in which it alleged that the relator had not met the heightened pleading requirements of Rule 9(b) and therefore had not properly advanced his claims of fraud. In so doing, the court reviewed its pleading standard as set forth in the case Foglia v. Renal Ventures Management, LLC, which provides the standard by which all 9(b) challenges to False Claims Act cases filed in the Third Circuit are to be decided.

Details of Foglia Case

The Foglia case was decided by the Third Circuit Court of Appeals in June, 2014, and sets forth the more liberal pleading standards for cases alleging fraud under the False Claims Act. In joining with the First, Fifth, and Ninth Circuits, the Third Circuit held that the relator could withstand a motion to dismiss – and therefore advance to the discovery phase – by providing “reliable indicia that lead to a strong inference that claims were actually submitted.”

The Foglia case involved a nurse-relator advancing the claim that Renal Ventures was not in compliance with state and federal standards with regard to quality of care and disbursement of certain drugs. As such, subsequent invoices to federal programs like Medicare or Medicaid worked to trigger possible False Claims Act liability. The defendant asserted – and the federal district court agreed — that the relator’s claim should have been dismissed for failing to specifically state each claim of fraud. On appeal, the Third Circuit applied the less-stringent standard, reasoning that the purpose of Rule 9(b) is to place a defendant on notice of pending claims – which is accomplished by setting forth reasonably specific allegations of fraud.

Application to Silver v. Omnicare et. al.

The Foglia standard was applied to our case against Omnicare, Inc. and several other pharmacy services organizations just months after the order was entered. In our case, PharMerica tried a similar maneuver by seeking to dismiss our claims under Rule 12(b)(6) vis a vis Rule 9(b), asserting that our relator had not set forth the requisite information to support a False Claims Act allegation. In applying Foglia, the court concluded that our relator had indeed set forth enough facts at the pleading stage to withstand dismissal, holding that “Silver is not required at the pleading stage to specify dates of the claims, the content of the forms or bills submitted, identification numbers, the amount of money charged to the government, the particular goods or services for which the government was billed, the individuals involved in the billing, or the length of time between the alleged fraudulent practices and the submission of claims based on those practices.”

The crux of the Foglia pleading standard, which appears to be taking hold in the Third Circuit, is that a relator’s complaint need not be a perfectly itemized and detailed description of every instance of fraud. In fact, the Court pointed out that the relator’s claim was not presented with the utmost clarity; however, the court was able to deduce the relator’s argument and make sense out of the relator’s basic assertions. The Court further explained that, in keeping with the purpose behind complaints, the defendant was undoubtedly on notice of the plaintiff’s assertions. Moreover, the plaintiff would have been unable to include greater detail seeing as how “only the defendant has access to the documents that could prove relator’s claims either way.”

Contact Berger Montague Today

If you are aware of healthcare fraud or would like to speak with a reputable False Claims Act attorney about your information, please contact Berger Montague right away.