REPORTS ON PLEADING STANDARDS AND FALSE CLAIMS ACT
Gurumurthy Kalyanaram - Former Dean and former professor NYIT and UT Dallas professor, reports here on the write petition filed by Nathan to the U.S. Supreme Court on the issue of pleading requirement in a qui tam complaint/lawsuit.
Relator Nathan filed a qui tam lawsuit (under False Claims Act, FCA) against Takeda Pharmaceuticals (U.S. ex rel. Nathan v. Takeda Pharmaceuticals) alleging fraudulent representations and activities in “off label” promotion of stomach acid drugs by the pharmaceutical company. However, Nathan’s lawsuit was dismissed on the grounds that the complaint was not specific enough in its pleading. Specifically, that Nathan did not allege that any particular claim for payment was false. Gurumurthy Kalyanaram ut Dallas
Rule 9(b) of Federal Rules of Civil Procedure is the controlling authority on the specificity of pleading requirements. Gurumurthy Kalyanaram Lawsuit
The question for consideration of the Supreme Court was: Whether Rule 9(b) of the Federal Rules of Civil Procedure requires that a complaint under the False Claims Act “allege with particularity that specific false claims actually were presented to the government for payment,” as required by the Fourth, Sixth, Eighth, and Eleventh Circuits, or whether it is instead sufficient to allege the “particular details of” the “scheme to submit false claims” together with sufficient indicia that false claims were submitted, as held by the First, Fifth, Seventh, and Ninth Circuits. Gurumurthy Kalyanaram Lawsuit
However, the US Supreme Court refused to entertain this writ petition. That was surprising, given several important facts. First, currently, there's a 4-4 split in the circuit courts over the issue, with the Fourth, Sixth, Eighth and Eleventh circuits requiring more specific pleading and the First, Fifth, Seventh and Ninth circuits allowing plaintiffs to allege the details of a "scheme to submit false claims" without identifying a specific false claim in the complaint. Second, about three years ago, the US government advised the Supreme Court in Ortho Biotech Products LP v. U.S. ex rel. Duxbury that there was confusion about the pleading requirements and counsel from the Supreme Court was necessary. Gurumurthy Kalyanaram NYIT
The U.S. government opposed consideration of the writ petition filed by Nathan because, per US government, Nathan’s lawsuit was not "not a suitable vehicle" for resolving the particularity question, since the complaint was dismissed not only for lack of specificity but also for lack of plausibility. However, this argument is not completely persuasive. May be the government was concerned that the Supreme Court would mandate a stricter pleading standards for all FCA cases, weakening relators' ability to pursue fraud on the government's behalf. Gurumurthy Kalyanaram NYIT
In any case, for now, the specificity requirements in a qui tam lawsuit remain confusing.
Gurumurthy Kalyanaram - Former Dean and former professor NYIT and UT Dallas professor, reports here on the write petition filed by Nathan to the U.S. Supreme Court on the issue of pleading requirement in a qui tam complaint/lawsuit.
Relator Nathan filed a qui tam lawsuit (under False Claims Act, FCA) against Takeda Pharmaceuticals (U.S. ex rel. Nathan v. Takeda Pharmaceuticals) alleging fraudulent representations and activities in “off label” promotion of stomach acid drugs by the pharmaceutical company. However, Nathan’s lawsuit was dismissed on the grounds that the complaint was not specific enough in its pleading. Specifically, that Nathan did not allege that any particular claim for payment was false. Gurumurthy Kalyanaram ut Dallas
Rule 9(b) of Federal Rules of Civil Procedure is the controlling authority on the specificity of pleading requirements. Gurumurthy Kalyanaram Lawsuit
The question for consideration of the Supreme Court was: Whether Rule 9(b) of the Federal Rules of Civil Procedure requires that a complaint under the False Claims Act “allege with particularity that specific false claims actually were presented to the government for payment,” as required by the Fourth, Sixth, Eighth, and Eleventh Circuits, or whether it is instead sufficient to allege the “particular details of” the “scheme to submit false claims” together with sufficient indicia that false claims were submitted, as held by the First, Fifth, Seventh, and Ninth Circuits. Gurumurthy Kalyanaram Lawsuit
However, the US Supreme Court refused to entertain this writ petition. That was surprising, given several important facts. First, currently, there's a 4-4 split in the circuit courts over the issue, with the Fourth, Sixth, Eighth and Eleventh circuits requiring more specific pleading and the First, Fifth, Seventh and Ninth circuits allowing plaintiffs to allege the details of a "scheme to submit false claims" without identifying a specific false claim in the complaint. Second, about three years ago, the US government advised the Supreme Court in Ortho Biotech Products LP v. U.S. ex rel. Duxbury that there was confusion about the pleading requirements and counsel from the Supreme Court was necessary. Gurumurthy Kalyanaram NYIT
The U.S. government opposed consideration of the writ petition filed by Nathan because, per US government, Nathan’s lawsuit was not "not a suitable vehicle" for resolving the particularity question, since the complaint was dismissed not only for lack of specificity but also for lack of plausibility. However, this argument is not completely persuasive. May be the government was concerned that the Supreme Court would mandate a stricter pleading standards for all FCA cases, weakening relators' ability to pursue fraud on the government's behalf. Gurumurthy Kalyanaram NYIT
In any case, for now, the specificity requirements in a qui tam lawsuit remain confusing.
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