Jason C. LynchAndy Liu

The government has reiterated in no uncertain terms its proposed standard for particularity under the FCA: “a qui tam complaint satisfie[s] Rule 9(b) if it contains detailed allegations supporting a plausible inference that false claims were submitted to the government, even if the complaint does not identify specific requests for payment.”  Brief for United States as Amicus Curiae, United States ex rel. Nathan v. Takeda Pharmaceuticals, Petition for Certiorari No. 12-1349 (U.S. 2013).  While opining at some length about the state of case law in the lower courts, the Solicitor General ultimately asked the Supreme Court not to hear the case.

Many of us thought that Nathan was a good opportunity for the Supreme Court to resolve an apparent split among the circuits (an issue we discussed in posts from February and March of last year).  The point of contention is the particularity required in an FCA complaint under Rule 9(b): is it enough to allege a fraudulent scheme, or must a plaintiff also furnish details about the claims themselves?  The government finds concerns about this circuit split to be somewhat overstated.  See Br. at 10 (“[T]hose circuits that initially endorsed the per se rule [requiring identification of specific claims] have issued subsequent decisions that appear to adopt a more nuanced approach.”).  The government thus finds the extent of inter-circuit disagreement to be “uncertain,” suggesting that it “may be capable of resolution without the Court’s intervention.”  Id. at 10, 14.

In any event, the government argues, the Nathan case is “not a suitable vehicle for resolving” the particularity question (id. at 11)because the Fourth Circuit’s opinion “rested chiefly on the complaint’s lack of plausibility, not its lack of particularity.”  Id. at 18.  The government’s suggestion is that Nathan was actually dismissed on Rule 12(b)(6) grounds, and so a favorable resolution of the Rule 9(b) question on appeal would not change the ultimate outcome of the case.

Whether the Supreme Court’s review of Nathan is warranted or not, we find the Solicitor General’s discussion of Rule 9(b) noteworthy.  Acknowledging that several courts of appeal have adopted a “per se rule that a relator must plead the details of particular false claims,” the government opposes this interpretation.  Br. at 10, 12-14.  The government’s primary critique is that the per se rule “attaches dispositive significance to the relator’s awareness of details that in most instances are already known to the government.”  Br. at 16.  This misconstrues somewhat the nature of the protections afforded by Rule 9(b), which is not intended to put the government on notice of the fraud.  Rather, the “multiple purposes of Rule 9(b) [are] of providing notice to a defendant of its alleged misconduct, of preventing frivolous suits, or eliminating fraud actions in which all the facts are learned after discovery, and of protecting defendants from harm to their goodwill and reputation.”  Nathan, 707 F.3d at 456 (citing United States ex rel. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999)) (emphasis added; internal alterations omitted).  Neither is Rule 9(b) meant to “assist the government’s enforcement efforts,” Br. at 16, and thus it matters not that a “rigid view” thereof “would hinder the ability of qui tam relators to perform the[ir] role.”  Id. at 15, 16.  The Nathan court considered and tacitly rejected that very argument: “we acknowledge the practical challenges that a relator may face in cases such as the present one, in which a relator may not have independent access to records such as prescription invoices.”  Id. at 458. 

The government’s singular focus on practical effect also ignores that “liability under the [False Claims] Act attaches only to a claim actually presented to the government for payment, not to the underlying fraudulent scheme.”  Id. at 456.  Evidence of an actual false claim has been called “the sine qua non of a False Claims Act violation.” United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 225 (1st Cir. 2004) (quoting United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1311 (11th Cir.2002)).  The government’s preoccupation with its fear that requiring identification of claims “would take a big bite out of qui tam litigation,” Br. at 15, renders the government’s Rule 9(b) argument  incomplete.

In the end, the government admits “at least some continuing uncertainty” on the Rule 9(b) question but asks the Supreme Court not to take the case even though it believes that Nathan   “undermines the FCA’s effectiveness as a tool to combat fraud against the United States.”  Br. at 10.  The most likely explanation for the government’s position is that it awaits a case with better facts.  Bad facts, after all, make bad law.

Post-script: for those in the health care field, the most notable element of the Solicitor General’s brief may be where he agrees with the Fourth Circuit that Nathan’s statistics-based allegations of fraud based on off-label marketing were implausible.  Several pages are devoted to bolstering the Nathan court’s conclusion on this point.  Br. at 19-21.