The Supreme Court recently refused to resolve a long-time circuit split regarding the False Claims Act’s rule 9(b), which requires whistleblowers to “state with particularity the circumstances constituting fraud.” Circuits have been divided on the application of this standard and whether or not specific examples of fraudulent billing are required to avoid the dismissal of certain claims.
This split has resulted in varying whistleblower pleading standards, with circuits falling into one of two categories: those that require whistleblowers to present specific instances of fraudulent claims; or those that require particular details of a scheme paired with “reliable indicia.”
Pleading Standards by Circuit
The 1st, 2nd, 6th, and 1th Circuits have adopted a rigid approach to rule 9(b), requiring whistleblowers to provide specific examples of fraudulent billing claims to satisfy the Rule’s particularity requirement. These circuits argue that this strict application of the Rule is necessary to avoid purely speculative or inferential allegations, which the Rule was explicitly designed to prohibit. However, these circuits may relax their absolute particularity requirement when overwhelming circumstantial evidence suggests a fraudulent scheme.
On the other side of the split are the 3rd, 5th, 7th, 9th, and 10th Circuits, which have adopted a more relaxed pleading standard. This requirement does not require specific billing examples but does require claims to allege particular details of a fraudulent scheme paired with reliable indicia, meaning that some indications or circumstances point to the existence of fraud. These circuits argue that the nature of False Claims Act cases means that billing information is not always available to whistleblowers and, therefore, should not be required when there is a strong indication of fraud.
The 4th and 8th Circuits have fallen in the middle of the divide adopting standards on both sides of the split.
What this means for Whistleblowers
This split will likely remain unresolved for the foreseeable future and will undoubtedly result in venue shopping among relators. Therefore, it’s essential for whistleblowers to carefully consider what information they have on hand before filing and understand if their claims are likely to meet their Circuit’s pleading standards.
It is essential to have an attorney who understands the importance of the Rule 9(b) split and the varying pleading standards required by each circuit. At Hoyer Law Group, PLLC, our experienced whistleblower attorneys can assist you in understanding what the pleading standard is for your case and determine if your claims satisfy the requirement.
