Background
Relators Reynaldo Solano and Neals Maxilin filed a sealed qui tam action alleging that Barton Associates, Inc. operated a scheme to induce clients to submit false claims to Medicare and other government programs. The scheme allegedly involved recruiting medical organizations to solicit patients for unnecessary services and prescriptions. The district court granted Barton’s motion to dismiss, ruling that the complaint failed to plead fraud with the particularity required by Federal Rule of Civil Procedure nine point B because it lacked details on specific false claims, time periods, locations, or amounts. The relators appealed the dismissal and the denial of their motions for reconsideration and leave to amend.
The court’s reasoning
The Court of Appeals reviewed the dismissal de novo and the denial of reconsideration and amendment for abuse of discretion. The Court held that under the False Claims Act, a plaintiff must allege with particularity both the defendant’s submission of a claim and the falsity of that claim. This requires identifying the who, what, when, where, and how of the alleged fraud. The relators’ complaint, while describing a general scheme, failed to identify specific false claims submitted to the government or provide reliable indicia that such claims were actually submitted. The allegations were deemed too general to strengthen the inference of fraud beyond possibility. Consequently, the district court correctly dismissed the claims with prejudice.
What it means going forward
The decision reinforces the strict pleading standards for False Claims Act qui tam actions, requiring relators to provide specific details about false claims rather than general descriptions of fraudulent schemes.
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