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U.S. Court In Pennsylvania Dismisses Whistleblower Action For Failing To Plead At Least On Specific False Claim

 
 

U.S. Court In Pennsylvania Dismisses Whistleblower Action For Failing To Plead At Least On Specific False Claim

Relators in a qui tam action under the False Claims Act (FCA) must allege at least one specific claim by the defendants that was submitted to the government as an evidentiary example of such claims to survive a motion to dismiss, a federal district court in Pennsylvania held recently.

In dismissing an action against a number of healthcare providers, the court found that the complaint failed the specificity requirement of Fed. R. Civ. P. 9(b) because the relators did not single out any claims in particular, but rather generally pointed to a group of claims over a long period of time.

�[P]ermitting the Plaintiffs to generally plead that fraudulent claims were submitted without providing any reference dates or naming the referring physicians involved would be unacceptable as it would not permit a defendant to defend against such a claim,� the court said.

Plaintiff relators Thomas Bartlett, who was employed by Quorum Health Resources, L.L.C. (Quorum) and who served as the former Chief Executive Officer of Tyrone Hospital (Tyrone), and Kimberly Gummo, Tyrone�s Human Resources Director, brought a whistleblower lawsuit against various defendants, including Tyrone and Quorum. Plaintiffs alleged that defendants engaged in a scheme to defraud the government through the submission of false patient claims and hospital cost reports submitted to federal healthcare programs beginning in January 1994.

Plaintiffs based their FCA action on an �implied certification theory��namely that defendants participated in various arrangements that violated the Anti-Kickback Statute and the Stark Law and that they submitted claims to the government in which they certified that these statutes had not been violated. Plaintiffs also asserted defendants retaliated against them in violation of the FCA. The government declined to intervene. Defendants moved to dismiss plaintiffs� complaint.

The U.S. District Court for the Western District of Pennsylvania granted the motions to dismiss without prejudice. The court concluded that, while plaintiffs could proceed under the �implied certification theory,� they failed to plead fraud with particularity as required with Rule 9(b).

The court noted that plaintiffs had described the various alleged kickback and self-referral schemes, but offered no other specific evidence as to which actual claims were false. Plaintiffs pointed to claims for CT scans dating back to 1994, but did not differentiate the suspect claims in any other manner such as by date or the names of certain physicians who made the referrals, said the court.

The court found it significant that defendants would have a difficult time identifying which claims, from the thousands made during that time period, they would need to defend against. While Rule 9(b) does not require dates to establish the required specificity, it does require some means of identifying which claims are at issue, said the court.

The court acknowledged that it needed to strike a balance with the mandate of Rule 8 to keep pleadings as simplistic as possible such that plaintiffs need not plead the facts of every claim. But at the same time, the court said, it would be unfair to defendants if the fraudulent claims were pled so generally that they could not defend against them.

Plaintiffs failed �to even allege a single specific claim that was falsely submitted to the Government.� Plaintiffs were both �insiders� in that they held high-level positions in defendant organizations; therefore, they could not argue that the Rule 9(b) requirement should be relaxed on the grounds the claims were too numerous to identify or were within the exclusive control of defendants.

The court also dismissed plaintiffs� conspiracy claim. The court rejected defendants� contention that the conspiracy claim failed because plaintiffs� underlying fraud claim was insufficient, but nonetheless dismissed the conspiracy claim because plaintiffs failed to plead an agreement to defraud the government.

After addressing the remaining arguments of the individual defendants, the court dismissed the complaint without prejudice. The court declined to dismiss the complaint with prejudice, noting �that the False Claims Act is not intended to necessarily prevent the amendment of a complaint, particularly for the failure to comply with Rule 9(b), but only the amendment of a complaint through the help of discovery.�

United Statesex rel. Barlett v. Tyrone Hosp., Inc., No. Civ.A. 04-57J (W.D. Pa. Jan. 27, 2006).

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