This is the first post of a two-part discussion of FCA pleading standards and discusses the requirements for pleading the details of a fraudulent scheme. Read our post on the pleading requirements for connecting a fraudulent scheme to the submission of false claims.
The False Claims Act (FCA) continues to be the federal government’s primary civil enforcement tool for imposing liability on healthcare providers who defraud federal healthcare programs. A significant portion of FCA litigation is initiated through the filing of sealed qui tam complaints by relators on behalf of the United States. When these complaints are unsealed, whether the government intervenes or not, their first hurdle is often surviving a motion to dismiss. Because actions under the FCA allege fraud against the government, courts require allegations sufficient to satisfy Rule 9(b) of the Federal Rules of Civil Procedure.
Determining whether an FCA complaint satisfies Rule 9(b) turns on two related questions: Does it contain an adequate description of the alleged fraud scheme? If so, does it connect that scheme to false claims submitted to the government?
This post discusses the requirements for adequately pleading a fraudulent scheme. We have also written a follow-up post discussing the requirements for connecting that scheme to the submission of actual false claims. To follow our discussion of recent developments in FCA pleading standards, subscribe to this blog.
Pleading Details of a Fraudulent Scheme
Generally speaking, courts agree that in order to pass muster, FCA complaints must include all of the details one would expect to find in the first paragraph of a newspaper article—that is, the “who, what, when, where and how” of the alleged fraud. While meeting this standard may seem simple enough, courts continue to grapple with the nuances and difficulties associated with pleading fraud with the requisite specificity.