8th Circuit Upholds FCA Dismissal for Lack of Particularity

The U.S. Court of Appeals for the Eighth Circuit recently affirmed the application of the heightened pleading requirement for fraud claims to uphold the dismissal of a qui tam action brought under the False Claims Act.

As background, the qui tam relators were an EMT and paramedics at a county-owned nonprofit hospital.  The relators alleged that the hospital submitted false claims for Medicare reimbursement, and made false statements to have their claims paid.  First, they alleged that, pursuant to a wide-ranging fraudulent scheme, the hospital required employees to record breathing treatments at 30 minutes, regardless of the actual length, in order to bill Medicare for a higher reimbursement.  Second, they alleged that the hospital billed for services provided by people who were not properly licensed for the services billed.  Finally, the relators alleged that the hospital reported improper expenses to Medicare.

The district court dismissed the relators’ claims for failure to plead fraud with particularity in accordance with the Federal Rules of Civil Procedure, because the complaint did not contain facts showing how false claims were submitted or how the relators acquired that information.

On Appeal, the Eighth Circuit affirmed the district court’s ruling.  It noted that relators can satisfy the requirements for pleading fraud by either providing representative examples of fraudulent claims for payment or by providing the particular details of a scheme with “reliable indicia” that claims were actually submitted.  Here, the relators did not plead any representative examples.  Furthermore, while the relators included some details of a fraudulent scheme in their complaint, the Eighth Circuit explained that there was no reliable indication that claims were submitted for payment.  The relators did not have access to the billing department, and they did not allege that they had personal knowledge of the billing system or personal knowledge of the submission of false claims.  The claims were therefore properly dismissed.