In 2011, Susan Thayer filed an action on behalf of the United States and the State of Iowa against Planned Parenthood of the Heartland, Inc. It alleges that Planned Parenthood violated the federal False Claims Act and its Iowa state analog. Thayer's complaint asserted that her former employer submitted false or fraudulent claims for Medicaid reimbursement by seeking payment for services that were either not reimbursable at all or not in the amounts sought. Thayer claimed her knowledge of Planned Parenthood's billing practices was gained during her years of employment as a manager of two of the organization's clinics in Iowa.
Planned Parenthood moved to dismiss the complaint on the grounds that Thayer failed to allege fraud with particularity as required by Federal Rule of Civil Procedure 9(b). The United States District Court for the Southern District of Iowa granted Planned Parenthood's motion, ruling that Thayer did not satisfy Rule 9(b) because she did not plead any "representative examples" of the alleged fraudulent conduct. Thayer appealed.
On August 29, 2014, the United States Court of Appeals for the Eight Circuit largely reversed the district court's decision, holding that an FCA plaintiff who pleads details of the defendant's billing practices and personal knowledge of the defendant's submission of false claims does not need to provide representative examples of the false claims in order to satisfy Rule 9(b).
Reimbursements at higher rates than permitted and the plaintiff alleged that every claim submitted over a sixteen-year period was fraudulent, but did not identify the details of any of the allegedly false claims. The Court dismissed Joshi's complaint for failing to plead fraud with particularity under Rule 9(b), holding that because Joshi was a doctor rather than a member of the hospital's billing department, he could not plead that false claims were actually submitted. Therefore, in order to establish a factual basis for the allegedly systematic practice of presenting false claims, the Court held that he would have to provide representative examples.
Declining merely to employ the test it adopted in Joshi, the Court observed that Thayer's allegations were based on personal knowledge of the billing practices at issue, suggesting greater reliability than the allegations in Joshi's complaint. In these circumstances, the Court held, the complaint could satisfy Rule 9(b) by identifying particular details of the alleged scheme, without the necessity of providing specific examples. Applying this standard to Thayer's allegations, the Court reinstated the majority of her claims, effectively reversing its own earlier decision in Joshi.
Coming soon after the Third Circuit's June 2014 ruling, the Thayer decision tips the balance, suggesting that the federal courts may coalesce around a more flexible standard for FCA complaints, rather than a strict requirement for representative examples. Such a development should be welcomed by whistleblowers who uncover FCA violations, because they are often unable to provide actual billing records.