Supreme Court May Decide Issue of the Level of Specificity Required Under Rule 9(b) in FCA Whistleblower Suits

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The United States Supreme Court recently indicated its potential interest in hearing arguments in a key False Claims Act (FCA) case that would address a circuit split over the important issue of the level of specificity of pleadings required under Federal Rule of Civil Procedure 9(b), which requires allegations of fraud to be stated “with particularity.” 

On October 7, 2013, the Supreme Court invited the Solicitor General to file a brief expressing the views of the United States in the qui tam case United States ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc., No. 12-1349.  The relator’s petition for writ of certiorari is currently pending before the Supreme Court and seeks review of the Fourth Circuit’s dismissal of the FCA suit after finding that the relator failed to specifically state which false claims Takeda Pharmaceuticals allegedly submitted to the government for payment.  The question presented in the petition for writ of certiorari is whether Rule 9(b) requires that an FCA complaint “allege with particularity that specific false claims actually were presented to the government for payment,” or whether it is instead sufficient to allege the “particular details of” the “scheme to submit false claims” together with sufficient indicia that false claims were submitted. 

The relator was a sales manager for Takeda Pharmaceuticals.  In his whistleblower suit, he alleged that Takeda Pharmaceuticals engaged in fraudulent off-label promotion of the gastrointestinal drug Kapidex.  The relator alleged that two marketing practices caused presentation of false claims to the government:  (1) the alleged promotion of Kapidex to rheumatologists, who typically do not treat patients having conditions for which Kapidex has been approved; and (2) the alleged practice of marketing high doses of the drug for conditions for which only lower doses had been FDA-approved.  United States ex rel. Nathan v. Takeda Pharmaceuticals, 707 F.3d 451, 454 (4th Cir. 2013).  The Fourth Circuit rejected the relator’s argument that, under Rule 9(b), the relator need only allege the existence of a fraudulent scheme that supports the inference that false claims were presented to the government for payment.  Instead, the Fourth Circuit held that when a defendant’s actions could have led, but need not necessarily have led, to the submission of false claims, a relator must allege with particularity that specific false claims actually were presented to the government for payment.  Id. at 457.  The Fourth Circuit noted, for example, that the relator’s failure to allege that the targeted rheumatologists wrote any off-label prescriptions that were submitted to the government for payment was a “critical omission.”  Id. at 458.

By signaling its interest in the Takeda relator’s petition for writ of certiorari, the Supreme Court has set the stage for an important FCA ruling that could potentially resolve the uncertainty over Rule 9(b)’s application in FCA whistleblower cases.  Such a decision could have significant implications for the healthcare industry and the increasing volume of FCA whistleblower cases brought against healthcare providers each year.

The Fourth Circuit opinion is available here.  The petition for writ of certiorari is available here.  The Supreme Court’s order inviting the Solicitor General to file a brief in the case is available here.

Reporter, Jennifer S. Lewin, Atlanta, + 1 404 572 3569, jlewin@kslaw.com.

Topics:  False Claims Act, FDA, Federal Rules of Civil Procedure, Fraud, Pharmaceutical, SCOTUS, Whistleblowers

Published In: Business Torts Updates, Civil Procedure Updates, Conflict of Laws Updates, Health Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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