asserted that statistical analysis could not satisfy Rule 9(b) since the complaint revolved around allegations of medically unnecessary treatment, which is subjective in nature. The district court disagreed and found that the relator’s complaint included specific allegations carrying “empirical reliability and probative value of its statistical study.” Citing the Supreme Court’s decision in Tyson Foods, Inc. v. Bouaphakeo , 94 the district court reasoned that the use of statistical evidence in pleading turns on how reliable it is in establishing the elements of the relevant cause of action. The district court noted that the transparency in the relator’s formula sufficiently put Mariner on notice of its misconduct and that the relator had alleged enough specific details about the fraudulent scheme, in addition to statistical analysis, to satisfy Rule 9(b). District courts often allow relators the opportunity to cure deficient allegations through amended pleadings. In U.S. ex rel. SW Challenger, LLC v. eviCore Healthcare MSI, LLC , the relators alleged in a second amended complaint that a utilization management vendor for managed care organizations improperly engaged in a scheme to automate the decision-making process for determining whether a service is medically necessary for Medicare and Medicaid beneficiaries. 95 The district court granted defendant’s motion to dismiss, pointing out the deficiencies in the relators’ complaint. The district court noted the absence of allegations regarding records or billings submissions to managed care companies, and the fact that, even though the complaint described several individuals involved in the scheme, the complaint failed to identify who submitted the unnecessary authorization forms and how the scheme took place. After detailing the relators’ pleading failures, the district court allowed the relators to remedy the deficiencies in a third amended complaint. 96 Courts differ, however, in the latitude afforded to relators in amending their qui tam complaint. In U.S. ex rel. Gutman v. Chicago Vein Institute , the district court dismissed the relator’s second amended complaint with prejudice. The relator alleged that, while working at a vein care clinic, the clinic performed unnecessary procedures, improperly upcoded certain procedures to more expensive procedures, and improperly offered employees a bonus plan for patient referrals, all in violation of the FCA. 97 The district court dismissed the amended pleading, finding that the relator provided no “transactional-level details” as to the scheme, such as specific unnecessary procedures or specific instances where As in years past, certain relators attempted to use statistical analysis to meet Rule 9(b)’s pleading requirements.
defendants paid a referral or bonus. Given that the case had been pending for four years, the relator had the opportunity to conduct discovery, and the relator had already amended her complaint, the district court ruled that any further amendments would be futile. Pleading the Submission of False Claims Courts continued to take divergent approaches to whether relators can satisfy Rule 9(b)’s particularity requirement without identifying specific representative false claims filed due to a fraudulent scheme. Some circuits have continued to take a rigid approach, requiring relators to plead specific details of false claims submitted. Others have taken a more flexible approach that would allow the submission of false claims to be inferred from the circumstances. It is possible that the Supreme Court could address this issue as a result of a petition for writ of certiorari filed late last year. In recent years, the Sixth and Eleventh Circuits have applied the presentment requirement strictly, and two rulings this year were no exception. In U.S. ex rel. Owsley v. Fazzi Associates, Inc. , the Sixth Circuit affirmed the dismissal of a relator’s claim that the defendant exaggerated home health patients’ conditions to inflate claims for payment. 98 The Sixth Circuit acknowledged that the relator described in detail a fraudulent upcoding scheme, but held the relator failed to plead the submission of false claims with particularity. Specifically, the Sixth Circuit held that, although the relator did allege personal knowledge of billing practices used in the alleged fraudulent scheme, she failed to allege facts identifying any specific false claims in a way that would give the defendants notice of a claim she alleged was fraudulent. In Estate of Helmly v. Bethany Hospice and Palliative Care, LLC , the Eleventh Circuit affirmed the dismissal of two relators’ claims for failure to plead with particularity the submission of an actual false claim. 99 The relators alleged that the defendant hospice Courts continued to take divergent approaches to whether relators can satisfy Rule 9(b)’s particularity requirement without identifying specific representative false claims filed due to a fraudulent scheme. Some circuits have continued to take a rigid approach, requiring relators to plead specific details of false claims submitted. Others have taken a more flexible approach that would allow the submission of false claims to be inferred from the circumstances. It is possible that the Supreme Court could address this issue as a result of a petition for writ of certiorari filed late last year.
94 95
577 U.S. 442 (2016).
2021 WL 3620427 (S.D.N.Y. Aug. 13, 2021).
96 See also U.S. ex rel. Raffington v. Bon Secours Health System, Inc. , 2021 WL 4762054 (S.D.N.Y. Oct. 13, 2021) (granting in part, denying in part, relator’s motion to amend the complaint for the seventh time after finding certain new allegations were futile because they did not relate back to the original complaint and finding other allegations were referenced in prior versions of the complaint). 97 2021 WL 170674 (N.D. Ill. Jan. 19, 2021).
98 99
16 F.4th 192 (6th Cir. 2021).
853 F. App’x 496 (11th Cir. 2021).
FALSE CLAIMS ACT UPDATE BASS, BERRY & SIMS | 16
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