Appellate courts are deeply split on how to apply Rule 9(b) of the Federal Rules of Civil Procedure, which requires “particularity” in allegations of fraud, to whistleblower suits brought under the False Claims Act. Some circuits have allowed the defense bar to use Rule 9(b) strike down worthy FCA claims, foreclosing opportunities for taxpayers to recover millions, or even billions, of dollars lost to fraud. The Supreme Court seems eager resolve this debate — if only the Solicitor General will back a suitable test case.
This expert analysis by
TELG managing principal R. Scott Oswald was published by Law360 on September 3, 2014. The full article is available at Law360. (Site requires paid subscription.)
The Glass Slipper: Searching For The FCA Case That Fits
Imagine an employee of a government contracting firm sees her company engaged in all manner of potentially fraudulent conduct. She believes that management routinely inflates employee labor hours or that the company has knowingly failed to meet the requisite safety standards for its products. Perhaps the employee works in health care and is aware of an off-label marketing scheme or that physicians in a practice routinely engage in upcoding.
The employee knows that a false claim exists but lacks access to the underlying contracts, invoices, purchase orders or other documentation to specifically identify the proverbial “who, what, when, where and how” associated with the fraud. While I am sensitive to the heightened pleading requirements of Rule 9(b) and certainly believe that frivolous allegations of fraud should be dismissed, the requirements that some courts are imposing upon would-be relators are jeopardizing the government’s anti-fraud enforcement efforts. Specifically, by demanding that a relator meet such a strict "particularity" pleading standard, fraudulent invoices from unscrupulous contractors will continue to fall through the cracks.
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