On January 14, 2019, Intermountain Healthcare, Inc. and Intermountain Medical Center (Intermountain) filed a petition for writ of certiorari with the U.S. Supreme Court. Intermountain’s petition comes after the U.S. Court of Appeals for the Tenth Circuit reversed a district court’s grant of Intermountain’s motion to dismiss. In relevant part, the district court concluded that the relator failed to identify any company employees with knowledge of the alleged fraud or when any employees knew about the fraud. The Tenth Circuit reversed, holding that the relator need not allege those facts because they were in the defendant’s exclusive control and that allegations of knowledge need only be pleaded generally.
Intermountain’s petition raises two questions:
- Can a plaintiff avoid Federal Rule of Civil Procedure 9(b)’s pleading requirements by asserting that only the defendant possesses the information needed to meet those requirements?
- Do the False Claims Act’s (FCA) qui tam provisions violate the Appointments Clause of Article II of the U.S. Constitution?
Both questions have previously appeared in petitions for writ of certiorari, but neither question has been addressed by the Supreme Court. See, e.g., Petition for Writ of Certiorari, U.S. ex rel. Joshi v. St. Luke’s Hospital, Inc. (denied Oct. 2, 2006); Petition for Writ of Certiorari, GPM Gas Corp. et al. v. U.S. ex rel. Grynberg (denied Apr. 22, 2002).
Rule 9(b) and the FCA
Intermountain first contends that the Tenth Circuit erred by excusing the complaint’s deficiencies based on the relator’s “inability to obtain information within the defendant’s exclusive control.” Intermountain argues that, by “excusing” the relator from having to plead the alleged fraud with particularity, the Tenth Circuit violated the plain terms of Federal Rule of Civil Procedure 9(b). Intermountain argues that review is warranted because only two circuits, the Eighth and Eleventh, “apply the plain text of Rule 9(b) – no exceptions,” while eight other circuits, including the Tenth, “ignore Rule 9(b)’s particularity requirement” if the relator asserts that only the defendant possesses specific information. A clear circuit split is the most common grounds on which the Supreme Court grants review, and there appears to be a clear split on the Rule 9(b) issue.
Nonetheless, Intermountain faces challenges in having the Court grant its petition on that question. First, the Court has rejected numerous petitions raising variations of the Rule 9(b) specificity issue in recent years. Intermountain’s petition is unclear as to what developments arose since the Court last rejected review that would merit review this time around. Absent a compelling explanation why a different course should be taken now, the Supreme Court could refrain again from addressing Rule 9(b)’s pleading requirements and continue to allow the lower courts to define the contours of those requirements.
Moreover, the Rule 9(b) issue is likely not dispositive of the case. The Tenth Circuit reversed the district court not only because the relator should have been excused from pleading certain details about Intermountain’s knowledge but also because those details must only be pleaded “generally,” which it held the relator did. Because reviewing the Rule 9(b) issue would not necessarily reverse the Tenth Circuit’s decision, the Court may determine that its limited resources are better spent on a petition dispositive of the underlying case.
The Appointments Clause and FCA
Intermountain also argues that the FCA’s qui tam provisions violate the Appointments Clause because relators are either officers of the United States – and therefore must be appointed by the president – or non-officers, and thus impermissibly carrying out civil law enforcement efforts. The Tenth Circuit considered this issue forfeited by Intermountain’s failure to raise it before the district court and did not address it.
Intermountain relies on a footnote from a 2000 Supreme Court case, Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens. Writing for the Court, Justice Antonin Scalia noted that, while FCA relators have standing under Article III of the U.S. Constitution, the Court “express[es] no view on the question whether qui tam suits violate Article II, in particular, the Appointments Clause of § 2.” Following Justice Scalia’s observation in Vermont Agency, petitioners have raised the Appointments Clause issue to the Supreme Court but without success. In fact, the Supreme Court in 2006 granted a petition for writ of certiorari that raised the issue but chose only to address a separate question in the petition, leaving the Appointments Clause issue unresolved. See Rockwell Int’l Corp. et al. v. United States.
So, why raise the issue before the Supreme Court now, 13 years after the Court avoided the issue in Rockwell and 19 years after Justice Scalia first highlighted the issue in Vermont Agency? One answer may be the new composition of the Court with the recent additions of Justices Neil Gorsuch and Brett Kavanaugh. Another answer could be the recent nomination of William Barr for Attorney General of the United States. While serving as a U.S. Assistant Attorney General 20 years ago, Barr wrote that the FCA’s qui tam provisions “plainly violate the Appointments Clause.” 42 Op. Off. Legal Counsel 207, 221 (1989). Or, perhaps the Department of Justice’s perceived new stance toward the FCA – given actions like the issuance of the Granston Memo (discussed here) – spurred Intermountain to raise the question.
Whatever the reason for Intermountain’s inclusion of the Appointments Clause issue, granting review on that issue may remain a longshot. The Supreme Court already has declined multiple opportunities to address the issue in the past. Moreover, the Tenth Circuit refused to address Intermountain’s Appointments Clause argument because the argument had not been made before the district court. The Supreme Court is less likely to grant certiorari on arguments that have not been addressed first by the lower courts.
Following the filing of Intermountain’s petition, both the relator and the United States waived their rights to respond to the petition. However, on February 21, 2019, the Supreme Court requested that a response be filed by March 25, 2019, indicating that there may be at least some interest by the Court in fleshing out whether review of either of the questions presented is warranted.
For more information about this case or issues arising under the FCA, contact a member of the Bass, Berry & Sims Healthcare Fraud Task Force.