There has been growing variation among courts of appeal over the appropriate pleading standard to apply under Rule 9(b) to the element of presentment, i.e., the requirement that plaintiffs plead with particularity the submission of a false claim to the government for payment. This topic has been the subject of repeated Supreme Court cert petitions (as discussed further here), and the topic has been raised yet again in a cert petition filed late last year in Johnson v. Bethany Hospice and Palliative Care, LLC (No. 21-462) (lower court opinion discussed here). The relator in Bethany Hospice, whose case was dismissed by the Eleventh Circuit for “rely[ing] on mathematical probability to conclude that a defendant surely must have submitted a false claim at some point”, seeks Supreme Court review of this “longstanding circuit split.” The Supreme Court invited a response from the Solicitor General. As discussed below, the Solictor General’s brief attempts to blur the distinctions between the various approaches of the courts of appeal, in an effort to convince the Supreme Court not to hear the case.
The relator argues that the circuits currently fall into one of three camps: (1) one circuit (Eleventh) requires “relators who have pled a fraudulent scheme with particularity also to plead specific details of false claims”; (2) six circuits (Third, Fifth, Seventh, Ninth, Tenth, D.C.) “allow the submission of claims to be inferred from circumstances (including from a fraudulent scheme)”; and (3) five circuits (First, Second, Fourth, Sixth, Eighth) “have adopted rules that typically require relators to plead details of false claims, but recognize certain exceptions.” The relator also argues that the circuits continued to disagree over “what counts as ‘reliable indicia.’” In contrast, the defendant argues that “[n]early all circuits apply similar standards in appropriate cases, and any disparity in outcomes is driven by differences in the pleaded facts, not by a difference in legal rules.”
Siding with the defendant, DOJ argues that, while some differences in the circuits’ application of Rule 9(b) still exist, the courts have “largely converged on an approach that allows relators either to identify specific false claims or to plead other sufficiently reliable indicia supporting a strong inference that false claims were submitted to the government.” DOJ further argues that, though the standard for what constitutes “reliable indicia” varies by circuit, the variation is simply a reflection of “different judges’ subjective assessments of the reliability of the particular allegations at issue, as opposed to a choice among competing legal standards” and, therefore, the standard is not appropriate for review by the Supreme Court.
In arguing that the circuits have coalesced around a standard requiring “specific false claims or reliable indicia,” DOJ acknowledges that differences still exist but attempts to minimize the import of those differences. For example, DOJ asserts that the Third, Fifth, Eighth, Seventh, Ninth, and D.C. Circuits have all adopted the “either/or” standard but simultaneously acknowledges that the “First, Fourth, and Sixth Circuits have placed greater emphasis than other courts of appeals on FCA relators pleading details regarding specific false claims for payment.” Indeed, these circuits appear to only allow relators to plead “reliable indicia” that false claims were presented, as opposed to actual examples of false claims being presented, under very limited circumstances:
- First Circuit: Relators must “allege the essential particulars of at least some actual false claims that were submitted to the government” except “where the defendant allegedly ‘induced third parties to file false claims with the government’” in which case relators need only allege “the details of the scheme with ‘reliable indicia that lead to a strong inference that claims were actually submitted.’” United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 39 (1st Cir. 2017) (citations omitted) (emphasis added).
- Second Circuit: “Rule 9(b) does not require that every qui tam complaint provide details of actual bills or invoices submitted to the government, so long as the relator makes plausible allegations . . . that lead to a strong inference that specific claims were indeed submitted and that information about the details of the claims submitted are peculiarly within the opposing party’s knowledge.” United States ex rel. Chorches v. Am. Med. Response, Inc., 865 F.3d 71, 93 (2d Cir. 2017) (emphasis added).
- Sixth Circuit: “Adoption of doctrine that (1) requires the pleading of representative false claims in the majority of cases, while (2) recognizing that a relator may nonetheless survive a motion to dismiss by pleading specific facts based on her personal billing-related knowledge that support a strong inference that specific false claims were submitted for payment.” United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750, 773 (6th Cir. 2016) (emphasis added).
DOJ suggests that these differences are inconsequential because the First, Second, and Sixth Circuits still do not “invariably require” specific false claims to be pled. But this argument is unconvincing—DOJ’s broader contention is that all circuits allow relators to plead “reliable indicia” in all cases, not that all circuits allow relators to plead “reliable indicia” in at least some cases.
With respect to the standard for “reliable indicia”, DOJ argues that the question is not suitable for resolution by the Supreme Court because it is a factual, not legal, inquiry that would require a “case-by-case” review. Yet even accepting this as true, it is apparent that the circuits disagree as a legal matter about the types of evidence that can be considered. For example, in the Eleventh Circuit decision underlying the relator’s cert petition, the court held “numerical probability is not an indicum of reliability,” Est. of Helmly v. Bethany Hospice & Palliative Care, LLC, 853 F. App’x 496, 502 (11th Cir. 2021), whereas the Fifth Circuit has essentially held the opposite, see United States ex rel. Colquitt v. Abbott Laboratories, 858 F.3d 365, 372 (5th Cir. 2017) (finding a “strong inference the [defendants] submitted claims to Medicare [because] . . . [n]early every hospital in America participates in Medicare”).
Though the Supreme Court has declined to grant cert in numerous cases over the past decade requesting clarity over the application of Rule 9(b) to the presentment requirement, the Court’s request for DOJ’s input on this issue—the first since 2014 (as discussed here)—suggests that it is at least seriously considering again whether to finally weigh in. DOJ’s attempt to avoid review may reflect concern that the Supreme Court would require a more rigorous application of Rule 9(b) than some circuits have adopted. We will continue to monitor the Court’s consideration of this cert petition.
DOJ’s brief can be viewed here.