For years, courts have muddied the judicial waters when it comes to the appropriate pleading standards for False Claims Act complaints. Most of this confusion has centered on the heightened pleading standards mandated by Federal Rules of Civil Procedure 9(b), which requires a plaintiff to plead fraud “with particularity.” When courts have applied this “particularity” standard to the False Claims Act, they have fashioned various additional hurdles, with some requiring FCA plaintiffs to plead the details of the individual false claims that were actually submitted to the government. For a wide variety of practical reasons, this level of detail is simply not available to most qui tam relators.
However, a recent court decision spotlights a viable “particularity” avenue for relators alleging that their pharmaceutical company-employers entered into arrangements with healthcare providers that ran afoul of the federal Anti-kickback statute. In this case, a former Novartis Pharmaceuticals sales representative filed a qui tam action alleging that the pharmaceutical company agreed to provide various kickbacks to several specialty pharmacies, in exchange for the pharmacies recommending the company’s drugs to doctors and patients. Novartis and the specialty pharmacies filed motions to dismiss the qui tam complaint, arguing that the relator failed to plead the alleged fraud with particularity.
While granting the defendants’ motion to dismiss in large part, the court refused to dismiss the relator’s claim that the defendants’ actions ran afoul of the False Claims Act’s conspiracy provision:
Because conspiracy is an inchoate crime, the plaintiff need not prove that the defendant actually achieved the object of the conspiracy and completed a substantive FCA violation (such as the presentment of a false claim). Since no false claim need have been submitted for [FCA Conspiracy Provision] liability to attach, no claim need be identified with particularity.
This commonsense court opinion recognizes that under the recent amendments to the False Claims Act, illegal kickback arrangements are, in effect, agreements between two or more parties to violate the False Claims Act. FCA conspiracy liability attaches even when the plaintiff is unable to recite the resulting false claims with particularity. Witnesses to such kickback arrangements should now be emboldened to step forward.
More information for whistleblowers is located at the Nolan Auerbach & White website.