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Eighth Circuit Clarifies Position on Pleading Fraud Under the False Claims Act

Posted  September 4, 2014

By Jason Enzler

The Eighth Circuit has become the latest appellate court to join the fray over what is required of False Claims Act complaints.  Last Friday, in U.S. ex rel. Thayer v. Planned Parenthood of the Heartland, the Court held that a qui tam relator need not plead a representative sample of a false claim in order to survive a motion to dismiss the complaint.  In doing so, the Eighth Circuit sided with what appears to be the majority of circuit courts in taking a less restrictive view of what a relator must allege in order to meet Rule 9(b)’s pleading requirements and stay in court.

The qui tam relator in the case, Susan Thayer, was the center manager for a Planned Parenthood clinic in Storm Lake, Iowa, for almost two decades.  In 2011, she filed a lawsuit alleging Planned Parenthood violated the federal False Claims Act and the Iowa False Claims Act by, among other things, submitting false claims for reimbursement for (i) birth control pills prescribed without examination, (ii) birth control pills that were never received by patients, (iii) services that had already been paid for by donations, and (iv) services that were more expensive than those actually performed (a.k.a. “upcoding”).  The district court dismissed her complaint, holding that under Eighth Circuit precedent, she was required to allege a representative sample of a false claim actually submitted to the government in order to meet the requirements of Rule 9(b).

On appeal, the Eighth Circuit acknowledged that precedent had required such a pleading.  But the Court went on to reverse the lower court, holding that in the case at hand, it found “persuasive the approach of those [other] circuits that have concluded that a relator can satisfy Rule 9(b) by ‘alleging particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.’”

While the Court stopped short of overturning its prior holding, its use of the “reliable indicia” test appears to be a softening of what many had viewed as a rigid standard.  It also appears to mark the contours of a trend, following on the heels of the Third Circuit’s decision earlier this year to adopt the same less restrictive standard.

Tagged in: FCA Materiality,