The False Claims Act is one of the federal government’s most useful tools in rooting out and remedying fraud against the United States by government contractors and healthcare providers.  The statutory scheme allows for treble damages and civil penalties against those who have committed fraud.  Additionally, the statute allows individuals with knowledge of a violation of the False Claims Act to bring suit on behalf of the United States against the entity that has allegedly committed fraud.  These individuals are known as “relators,” and they receive a portion of any funds recovered by the government as a result of the complaint that they filed.  The potential monetary benefit to the relator is a significant incentive to individuals and their attorneys to file complaints on behalf of the government.

However, that incentive sometimes makes relators and their counsel overzealous, leading them to overlook the fact that the False Claims Act is, at its core, an anti-fraud statute, and the relator’s complaint alleges fraud on the part of the defendant.  Under Federal Rule of Civil Procedure 9(b), a plaintiff is required to plead fraud with particularity.  The rule increases the information required in a pleading from the notice pleading standard of many states and even the higher plausibility standard applicable to other civil actions in federal courts.  Essentially, a plaintiff cannot simply allege that “Defendant has committed fraud” and survive a motion to dismiss.  A more detailed recitation of the facts surrounding the alleged fraud is required.  However, what level of detail is required depends on the circumstances and the fraud alleged.

In the Eleventh Circuit, a relator must allege in their complaint specific examples of false claims submitted by the defendant.  The Relator must say, “This is an example of a false claim submitted by Defendant.”  That is enough to survive a motion to dismiss.  However, the pleading of a specific example of a submitted false claim is crucial because the Eleventh Circuit has held that a relator may not rely on a mathematical probability to support her allegations of false claims.  The relator cannot simply say, “Defendant bills nearly all of its treatments to Medicare or Medicaid.  Therefore, Defendant must have submitted a false claim.”  It is not enough to allege that fraud must have occurred.  The relator must allege that a specific instance of fraud actually occurred.

Now, the Supreme Court will weigh in on the Eleventh Circuit’s pleading standard.  In Johnson v. Bethany Hospice and Palliative Care, U.S. Supreme Court, No. 21-462, the Supreme Court will review a ruling of the Eleventh Circuit to determine whether the Eleventh Circuit’s standard, which is also followed by the First Circuit and is considered the strictest pleading standard for the False Claims Act, is the proper pleading standard and should be extended to every other Circuit in the country. 

While it may seem harsh to require a relator to include details of specific claims submitted to the government, it is important to understand the statutory scheme of the False Claims Act.  By the time a False Claims Act case reaches the motion to dismiss stage, a relator already has access to evidence obtained from the defendant that plaintiffs in other civil cases do not receive until the discovery period.  That is because, after filing a complaint on behalf of the government, the complaint is sealed, and the government begins to investigate and request evidence using civil investigative demands similar to subpoenas.  Among the evidence requested by the government should be any claims submitted to the federal government.  With that information, the relator – or the government if it decides to intervene in the case – has the ability to plead specific instances of false claims submitted to the government.  If a relator does not include that information in an amended complaint, it may be an indication that specific instances of fraud do not exist.