19 February 2019

8th Circuit Reaffirms FRCP 9(b)’s Demanding Pleading Standard

The U.S. Court of Appeals for the Eighth Circuit joined a growing trend among courts in tightening False Claims Act (“FCA”) pleading requirements, affirming the dismissal of a qui tam action brought against a nonprofit hospital because the relators failed to meet the “particularity” standard set forth under Rule 9(b) of the Federal Rules of Civil Procedure. In doing so, the court reminded FCA litigants that Rule 9(b) requires either “representative samples” of false claims plead with adequate specificity, or particular details of a scheme to submit false claims paired with reliable indicia that they were submitted. United States ex rel. Strubbe v. Crawford Cnty. Mem’l Hosp., No 18-1022, 2019 WL 512190 (8th Cir. Feb. 11, 2019). 

In Strubbe, relators Stephanie Strubbe, Carmen Trader, and Richard Christie sued the Crawford County Memorial Hospital (“CCMH”) and its CEO in the District Court for the Northern District of Iowa – Sioux City in April 2015, alleging that CCMH violated the FCA by, among other things, “submit[ting] false claims through a wide-ranging fraudulent scheme” involving claims for breathing treatments and laboratory services done by paramedics.

The district court dismissed the FCA claims for failure to plead with particularity, because the relators did not plead facts showing any false claims were submitted, or how they acquired this information. 2019 WL 512190 at *2. The Eighth Circuit affirmed the dismissal of the FCA claims, finding that the relators’ FCA claims failed to survive Rule 9(b)’s heightened pleading standard. Id. at *2-4.

In its ruling, the Eighth Circuit held that a relator can satisfy Rule 9(b) by pleading (1) representative examples of false claims, or (2) particular details of a scheme to submit false claims, paired with reliable indicia creating a strong inference that claims were submitted. Id. at *2. The court relied on the Eighth Circuit’s opinion in Joshi as an example of an FCA action that failed to provide “representative examples.” Id. at *3 (citing Joshi, 441 F.3d 552, 554 (2006)). In Joshi, a hospital anesthesiologist brought a qui tam claim alleging that a defendant-hospital sought inflated Medicare reimbursements, and submitted claims for services and supplies not provided. Id. Despite the relator alleging that every claim over a sixteen-year period was fraudulent, the Eighth Circuit found the complaint inadequate for its lack of representative examples. Id.

The Eighth Circuit acknowledged that the relators in Strubbe “pleaded more than the relator in Joshi.” Id. Nonetheless, it found that because the relators failed to provide representative examples containing adequate specificity, they could not meet Rule 9(b)’s particularity burden. Id. Notably, the Eighth Circuit reached this decision despite the relators providing one example of a patient who received unnecessary breathing treatments, finding deficiency in the fact that the relators did not provide “the date, the provider performing the treatment, any specific information about the patient, what money was obtained, and most importantly, whether a claim was actually submitted for that particular patient.” Id.

Further, the Eighth Circuit found that while the relators provided some details about the allegedly fraudulent scheme, they did not provide sufficient indicia showing that false claims were actually submitted. Id. The court noted that the relators did not have access to the company’s billing department, nor personal knowledge of the billing system as EMTs and paramedics. Id. at *4.

The Eighth Circuit’s decision is the latest in a trend of FCA cases where courts of appeals are raising the bar for plaintiffs on the Rule 9(b) particularity standard. See. e.g., United States ex rel. Hirt v. Walgreen Co., 2017 WL 359661 (6th Cir. Jan. 25, 2017); United States ex rel. Jallali v. Sun Healthcare Group, et al., 2016 WL 3564248, (11th Cir. July 1, 2016). Strubbe confirms that relators face a demanding pleading standard under Rule 9(b). Concrete examples and specific details are paramount, and anything less is likely to fail.

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