February 6, 2023

Volume XIII, Number 37

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February 03, 2023

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Third Circuit Adopts Less Demanding False Claims Act (FCA) Pleading Standard

Last week, the Third Circuit reversed a New Jersey district court’s decision to dismiss a False Claims Act (FCA) qui tam law suit, holding that the court applied an overly demanding pleading standard to relator Thomas Foglia’s complaint.  The Third Circuit’s decision joins the growing debate that has split the circuits as to whether whistleblowers have to provide specific examples of false claims to survive a 12(b)(6) motion to dismiss.

In his complaint, Foglia alleged that his former employer overcharged Medicare for vials of a hyperparathyroidism drug by using vial overfills for treatments of more than one patient.  Foglia alleged that his employer failed to follow U.S. Department of Health and Human Services guidelines for use of single-use vials for multiple treatments.  Although Foglia did not identify specific overpayments made by Medicare, the court concluded that his allegations established “an opportunity for the sort of fraud” he alleged.

The Third Circuit’s opinion deepens a circuit split on the issue of whether relators must meet Rule 9(b)’s requirement that plaintiffs plead allegations of fraud with particularity.  Last year, in United States ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc. et al., the Fourth Circuit upheld the dismissal of a whistleblower action because the relator’s complaint failed to meet that standard.  The Supreme Court denied the relator’s petition for certiorari in that case.

Likewise, the Sixth, Eighth, and Eleventh circuits have adopted a heightened standing requiring relators to identify specific claims for payment at the pleading stage to survive dismissal.  Other circuits – including the First, Fifth, Seventh, and Ninth Circuits – have adopted a less demanding standard, requiring only that relators allege “particular details” of a scheme to submit false claims and “sufficient indicia” that false claims were in fact submitted to the government.

© 2023 Proskauer Rose LLP. National Law Review, Volume IV, Number 164
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About this Author

Daniel J Davis, Proskauer Law Firm, Labor Employment Attorney
Special Counsel

Daniel J. Davis is Special Labor & Employment Law Counsel in the Labor & Employment Law Department, resident in the Washington, DC office. He represents employers in a range of employment and labor issues, including equal employment, whistleblower and wage payment laws administered by the Department of Labor, Equal Employment Opportunity Commission, and National Labor Relations Board. He litigates class and collective claims, including claims under Title VII, the ADEA, ERISA, NLRA and the FLSA. He represented The Boeing Company in a high-profile case by the National Labor Relations...

202-416-6815
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