Third Circuit Adopts More Liberal Pleading Standards For Claims Brought Under The False Claims Act

by Paul L. Croce

On June 6, 2014, the United State Court of Appeals for the Third Circuit issued a decision in Foglia v. Renal Ventures Management, LLC, Docket No. 12-0450, which reversed the New Jersey District Court’s dismissal of a False Claims Act (“FCA”) case for failure to satisfy the heightened pleading requirements in F.R.C.P. 9(b).

Foglia was a registered nurse formerly employed by the defendant, Renal Ventures Management, LLC (“Renal”), a dialysis care company.  Foglia alleged Renal violated the FCA by falsely certifying that it was in compliance with state regulations related to quality of care, falsely submitting reimbursement claims for the drug Zemplar, and reusing single-use Zemplar bottles.  The Disctrict Court granted Renal’s 12(b)(6) motion finding that because Foglia failed to “identify representative examples of specific false claims made to the Government” his pleading did not meet the standard of F.R.C.P. 9(b).

In reviewing the matter, the Third Circuit stated that it had not previously ruled specifically on what F.R.C.P. 9(b) requires of a FCA claimant, and noted that the other Circuits were split as to the appropriate requirements.  The Fourth, Sixth, Eighth and Eleventh Circuits require a FCA plaintiff to show “representative samples” of the alleged fraudulent conduct, specifying the time, place, and content of the acts, and the identity of the actors.  Conversely, The First, Fifth and Ninth Circuits require only that the plaintiff allege “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.”

The Third Circuit ultimately adopted the more nuanced standard of the First, Fifth and Ninth Circuits.  In doing so, it pointed out that “it is hard to reconcile the text of the FCA, which does not require that the exact content of the false claims in question be shown, with the ‘representative samples’ standard favored by” the other Circuits.  The court further noted that in a recent brief for the United States, as amicus curie, the Solicitor General indicated that the United States believed the more rigid standard followed by the Fourth, Sixth, Eighth and Eleventh Circuits, undermined the effectiveness of the FCA to combat fraud against the United States.

The Third Circuit ultimately reversed the District Court’s decision and remanded the matter for further proceedings.  A copy of the Third Circuit’s decision can be found here.