Defendants confronting a relator who chooses to proceed on their own in a declined qui tam frequently take advantage of this information deficit and seek dismissal for failure to plead in a manner consistent with Rule 9(b). The result over the years has been variability in the application of Rule 9(b) between circuits, and among panels within the same circuits. But in 2022, the Supreme Court again denied several petitions seeking clarity as to exactly what that specificity must include. Although every federal court of appeals has held that Rule 9(b) applies to claims under the FCA, the circuit courts have articulated different standards for applying the rule to the sine qua non of an FCA claim: the submission of a false claim to the government for payment.1 The Supreme Court’s denial of certiorari in Jolie Johnson, et al. v. Bethany Hospice and Palliative Care LLC, 20-11624;2 United States, et al., ex rel. Cathy Owsley v. Fazzi Associates, Inc., et al., 19-4240;3 and Molina Healthcare of Illinois, Inc., et al. v. Thomas Prose, 20-2243,4 preserves the current fractured landscape, which leaves a moving defendant subject to the standard set by whichever circuit in which the relator chooses to file their complaint.
In Johnson, the petitioners-relators conceded that “their complaint did not include any details about specific claims submitted to the government,” but argued that the complaint contained “sufficient indicia of reliability” that a claim for payment was submitted.5 The court disagreed and declined to “make inferences about the submission of fraudulent claims because such an assumption would strip all meaning from Rule 9(b)’s requirements of specificity.”6
In Owsley, the relator alleged that during her employment as a nurse with co-defendant Care Connection, employees in related defendants’ entities committed fraud by altering diagnostic codes on federally-required forms without the proper supporting documentation.7 The complaint included allegations purported to be examples of documents containing fraudulent coding, but did not include key details regarding whether these supposed examples were actually submitted as claims.8 Noting its “clear and unequivocal requirement that a relator allege specific false claims when pleading a violation of” the FCA,9 the Sixth Circuit found that the alleged “examples” were insufficiently detailed for the respondents to identify the particular “claim” to which the examples referred.10
It was defendants who petitioned for review in Molina. There, the respondent-relator, a physician, alleged that a managed care organization was not providing Skilled Nursing Facility (SNF) services to patients, in spite of a contract with the state that included, among other things, provisions regarding SNF services.11 The district court had dismissed the complaint on the basis that it did not sufficiently allege that the defendants had knowledge of the SNF provision’s “materiality” to the agreement with the state, which dominated the Seventh Circuit’s opinion reversing the dismissal.12 The Seventh Circuit also held that the relator “provided information that plausibly supports the inference that Molina included false information about the pertinent services for new enrollees.”13
The High Court declines to intervene
The petitions for certiorari in all three cases presented similar questions for review: whether a relator’s complaint alleging violation of the FCA pleaded the defendant’s submission to the government of false claims for payment with sufficient particularity to satisfy Rule 9(b).14 Petitioners in each case characterized the courts of appeal as being split on this question. Petitioners in Molina and Johnson described the split as involving three classes: (1) circuits that require specific details of a false claim and do not infer false claims from the circumstances;15 (2) circuits that require specific details but provide exceptions when an alleged systematic scheme would necessarily establish the existence of false claims; 16 and (3) circuits that hold specific details of false claims are not required and the existence of false claims can be inferred from circumstances.17 The petitioner in Owsley presented the split as a dichotomy between those circuits requiring specific examples of false claims submitted,18 and those that do not require specific examples of false claims, provided that submission can be inferred from the circumstances.19 Each petition argued that these distinctions constitute a meaningful circuit split.
The Solicitor General disagreed. After the Supreme Court sought input from the Solicitor General, the government filed amicus briefs in Johnson and Owsley, recommending denial of certiorari. The Solicitor General reiterated the government’s position that Rule 9(b) does not impose a per se rule “that a relator must plead the details of particular false claims – that is, the dates and contents of bills or other demands for payment – to overcome a motion to dismiss.”20 The Solicitor General contends that the so-called per se rule has been rejected by every circuit, and, as a result, there is no need for the Supreme Court to consider the issue.21 From the Solicitor General’s perspective, the courts of appeals had “converged” on a consistent approach that – despite using different articulations – nonetheless permits a relator to proceed without identifying a specific false claim in some circumstances.22 The Solicitor General interprets case law from every circuit to allow for submission of a false claim to be inferred so long as the plaintiff pleads the alleged scheme to submit such claims with particularity.23 The Solicitor General also acknowledged that the circuits “have expressed different degrees of willingness to infer the submission of false claims from probability,” but viewed this as reflective of the judges’ “subjective assessments” of the allegations in the individual cases rather than a meaningful circuit split.24
Notwithstanding the Solicitor General’s somewhat slanted view that Rule 9(b) standards across the circuits had “converged” without Supreme Court intervention, the high court’s denial of certiorari of all three petitions leaves the current legal landscape untouched. As a result, the same complaint filed in one circuit could still be more susceptible to a successful 9(b) challenge than if it had been filed in another circuit. The question for 2023 and beyond will be whether trial and appellate courts in those circuits, and in state courts, find the Solicitor General’s view to be persuasive authority and converge on a shared approach, or if instead, more meaningful distinctions emerge as they continue to review on a case-by-case basis the sufficiency of uninformed, inferential allegations as relators struggle to plead fraud with particularity.
1 U.S. ex rel. Clausen v. Lab'y Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002) (“The submission of a claim is thus not…a “ministerial act,” but the sine qua non of a False Claims Act violation.”).
2 Est. of Helmly v. Bethany Hospice & Palliative Care of Coastal Ga., LLC, 853 F.App’x 496 (11th Cir. 2021), cert. denied sub nom. Johnson v. Bethany Hospice & Palliative Care LLC, 143 S. Ct. 351 (2022).
3 United States ex rel. Owsley v. Fazzi Assocs., Inc., 16 F.4th 192 (6th Cir. 2021), cert. denied sub nom. United States v. Fazzi Assocs., Inc., 143 S. Ct. 362 (2022).
4 United States v. Molina Healthcare of Illinois, Inc., 17 F.4th 732 (7th Cir. 2021), cert. denied sub nom. Molina Healthcare of Illinois, Inc. v. Prose, 143 S. Ct. 352 (2022).
5 See Est. of Helmly, 853 F. App'x at 501–02.
6 Id. at 502–03 (quotation and brackets omitted).
7 Owsley, 16 F.4th at 195.
8 Id. at 197.
9 Id. at 196 (quotation omitted).
10 Id. at 197.
11 Molina Healthcare of Illinois, Inc., 17 F.4th at 736.
12 Id. at 737, 742–75.
13 Id. at 741.
14 See, e.g., Petition for Writ of Certiorari, Johnson v. Bethany Hospice & Palliative Care LLC, 2021 WL 4441324 (2021) (No. 21-462).
15 Petitioner in Johnson only included the Eleventh Circuit into this category, while Petitioner in Molina included the First, Sixth, Eighth, and Eleventh Circuits. See Johnson Petition for Writ of Certiorari at 16-18 and Petition for Writ of Certiorari, United States v. Molina Healthcare of Illinois, Inc., 2022 WL 519218 (2022) (No. 21-1145).
16 Petitioner in Johnson included the First, Second, Fourth, Sixth, and Eighth Circuits into this category, while Petitioner in Molina included the Second and Fourth Circuits. See Johnson Petition for Writ of Certiorari at 24-28 and Molina Petition for Writ of Certiorari at 16.
17 Petitioner in Johnson included the Third, Fifth, Seventh, Ninth, Tenth and D.C. Circuits into this category, and Petitioner in Molina included the same. See Johnson Petition for Writ of Certiorari at 18-24 and Molina Petition for Writ of Certiorari at 16-18.
18 The Owsley petition included the First, Fourth, Sixth, Eighth, Eleventh Circuits in this category. Petition for Writ of Certiorari, United States ex rel. Owsley v. Fazzi Assocs., Inc., 2021 WL 6118289 (2021) (No. 21-936).
19 The Owlsey petition included, in this category, the Second, Third, Fifth, Seventh, Ninth, Tenth, and D.C. Circuits. Id. at 11-20.
20 See, e.g., Brief for the United States as Amicus Curiae at 11, Johnson v. Bethany Hospice & Palliative Care LLC, 143 S. Ct. 351 (2022) (21-462) (describing its amicus brief in United States ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc., 572 U.S. 1033 (2014)); Brief for the United States as Amicus Curiae at 30-31, United States ex rel. Owsley v. Fazzi Assocs., Inc., 2021 WL 6118289 (2021) (21-936).
21 United States Amicus Brief, Johnson at 14 (citing, inter alia, United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., 838 F.3d 772 (6th Cir. 2016); United States Amicus Brief, Owsley at 15 (citing the same); see also id. at 8 (“If the courts of appeals were applying a per se rule that every relator must plead the details of specific false claims, this Court’s intervention might be warranted”).
22 See United States Amicus Brief, Johnson at 14-17 and United States Amicus Brief, Owsley at 14-19.
23 United States Amicus Brief, Johnson at 9-10 and United States Amicus Brief, Owsley at 19.
24 United States Amicus Brief, Johnson at 17-18 and United States Amicus Brief, Owsley at 20.