Eleventh Circuit Rejects Argument That Mathematical Probability Suffices To Allege The Existence of False Claims, Affirming Dismissal For Failure To Satisfy Rule 9(b)
On April 26, 2021, the Eleventh Circuit affirmed the dismissal with prejudice of a qui tam action brought by two former employees of a Georgia hospice provider and associated medical providers. The Court held that the relators did not plead with sufficient particularity under Rule 9(b) that the defendant had submitted a false claim to the government. Estate of Debbie Helmly, et al. v. Bethany Hospice and Palliative Care of Coastal Georgia, LLC, et al., No. 20-11624 (11th Cir. Apr. 26, 2021).
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). (more…)
Court Affirms Government’s Unfettered Right to Dismiss a Qui Tam Action
When the government moves to dismiss a qui tam action, it must satisfy two procedural requirements: it must first notify the relator that the government has filed a motion to dismiss, and second, it must provide the relator an opportunity for a hearing on the motion. 31 U.S.C. § 3730(c)(2)(A). In the year since the issuance of the Granston Memo, which we have written about, here, here, here, and here, both relators and courts have grappled with the breadth of the government’s discretion to dismiss qui tam actions.
Flexing Its Granston Muscle, DOJ Seeks Dismissal of Patient Support Services FCA Litigation
For the second time in three weeks, the Department of Justice has stepped in to seek the dismissal of high-profile FCA litigation being pursued by relators after the government initially declined to intervene. DOJ’s recent action pertains to approximately a dozen lawsuits filed primarily in 2016 and 2017, which were unsealed over the last year as DOJ declined to intervene. Each of the cases was filed by an LLC relator formed for the purpose of pursuing the litigation and alleging that pharmaceutical manufacturers, and third-party service providers who contracted with them, violated the Anti-Kickback Statute (and thus the FCA) by providing various support services for the manufacturers’ drugs. The cases focused on three types of activity. First, defendants deployed nurse educators who allegedly promoted the manufacturers’ drugs to physicians and patients through a “white coat marketing” scheme. Second, the nurse educators allegedly instructed patients on proper use of medication. Third, the defendants allegedly communicated with insurance companies to determine whether the plans would reimburse the manufacturers’ drugs for specific patients and what process was required to ensure such reimbursement. The relators allege that the second and third categories of conduct violated the AKS because they provided physician practices with expense relief. (more…)
Granston Memo Calls for DOJ to Dismiss More Declined Qui Tams; Courts Diverge on The Extent of DOJ’s Right to Do So
In the recently released Granston Memo, DOJ outlined its policy in favor of dismissing non-intervened qui tam suits when dismissal will advance other important government interests. [Reported on here]. While the FCA bar has been debating how much – if at all – the world of FCA enforcement will change in light of the Granston Memo, DOJ has been litigating over its right to act on the policy and dismiss declined qui tam suits. In that regard, the statute appears straightforward: “The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” 31 USC § 3730(c)(2)(a). However, in the last week DOJ lost and won this issue in sharply contrasting decisions regarding the government’s right not to pursue claims. (more…)
Acting Associate Attorney General Discusses Trump Administration FCA Enforcement Policy
On June 14, 2018, at the ABA’s National Institute on the Civil False Claims Act and Qui Tam Enforcement, Acting Associate General, Jesse Panuccio, delivered wide-ranging remarks on the False Claims Act. Of particular interest, AAG Panuccio discussed several recent high profile enforcement priorities of the Trump Administration. (more…)
Ninth Circuit Dismisses Qui Tam Appeal as Untimely
On July 25, 2017, the Ninth Circuit dealt a harsh blow to two relators in their appeal of a False Claims Act judgment, dismissing it for lack of jurisdiction as untimely.
In the underlying case, U.S. ex rel. Hoggett v. University of Phoenix, the relators alleged that the University of Phoenix had continued to falsely certify compliance with the Higher Education Act’s “incentive compensation ban” following a prior False Claims Act settlement on the same issue. The district court dismissed their case with prejudice pursuant to the public disclosure bar. Following dismissal of the case, the relators moved under Rule 59(e) to alter or amend the judgment, requesting a stay pending the decision in a similar case before the Ninth Circuit. (more…)
Unethical Investigative Work By Relator’s Counsel Leads to Dismissal of FCA Claims
On April 28, 2017, the District Court for the District of Massachusetts dismissed a qui tam complaint alleging off-label promotion against a pharmaceutical manufacturer. Dismissal was a sanction for relator’s counsel having devised and implemented what the Court called “an elaborate scheme of deceptive conduct in order to obtain information from physicians about their prescribing practices, and in some instances about their patients.”
Relator filed his initial complaint in 2012, alleging that the manufacturer was promoting off-label use of two drugs and paying physicians kickbacks for prescribing those drugs. While the case was under seal, the relator filed an amended complaint adding detail to his allegations and including a reference to a third drug. After the United States declined to intervene and the case was unsealed in April 2014, relator filed a second amended complaint that focused only on alleged off-label promotion of the third drug.
Supreme Court Rules That Violation of the FCA’s Seal Provision Does Not Mandate Dismissal
On December 6, 2016 the Supreme Court ruled that violation of the FCA’s seal provisions does not mandate dismissal of a relators’ complaint. Rather, while Section 3730(b)(2) requires relators to file under seal, the text of the statute is silent as to the remedy for violating this requirement. The Court left to the District Court’s discretion to determine the appropriate remedy for violations of the seal provision. Slip Op. at 10.