Fourth Circuit Highlights Tougher Path to Dismissal of FCA Cases Post-SuperValu
A divided panel of the Fourth Circuit reversed the dismissal of a qui tam FCA suit alleging that the defendant pharmaceutical company underpaid Medicaid rebates by misreporting “best price” under the Medicaid Drug Rebate Statute. The decision marks the Fourth Circuit’s first application of the subjective scienter standard articulated by the Supreme Court in United States ex rel. Schutte v. SuperValu Inc., and underscores the difficulty defendants may face in securing dismissal at the pleading stage on the scienter element.
Court Grants Motion to Dismiss FCA Claim for Failure Adequately to Plead Scienter
Recently a court took the rare step of granting a motion to dismiss a qui tam suit because the relator’s vague and conclusory scienter allegations failed to satisfy Rules 8 and 9(b). U.S. ex rel. Dietz v. Philips Respironics, No. 2:21-CV-00272 (W.D. Pa. Feb. 23, 2026).
First Circuit Clarifies Application of Medicare’s “Reasonable and Necessary” Standard in FCA Cases Against Clinical Labs
Earlier this week, the First Circuit in OMNI Healthcare held that “in FCA cases alleging Medicare fraud based on laboratory testing, generally a laboratory can rely on a doctor’s order to show that the test is ‘reasonable and necessary’” under the Medicare statute. U.S. ex rel. OMNI Healthcare Inc. v. MD Spine Solutions LLC, No. 25-1110 (1st Cir. Dec. 1, 2025).