Supreme Court to Potentially Review Two Fourth Circuit False Claims Act Cases

The Supreme Court of the United States could review two False Claims Act (FCA) cases from the Fourth Circuit: U.S. ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc., 707 F.3d 451 (4th Cir. 2013) and U.S. ex rel. Carter v. Haliburton Co., 710 F.3d 171 (4th Cir. 2013).  The relator in Takeda and the defendants in Carter filed their petitions for a writ of certiorari on May 10, 2013, and June 24, 2013, respectively.

Generally, the chances that the Supreme Court will grant a writ of certiorari in any given case is extremely low.  However, in both Takeda and Carter the Supreme Court has called for the views of the Solicitor General.  When the Supreme Court asks for the Solicitor General’s views, those cases are 37 times more likely to ultimately be reviewed by the Supreme Court.  See David C. Thompson & Melanie F. Wachtell, An Empirical Analysis of Supreme Court Certiorari Petition Procedures: The Call for Response and the Call for the Views of the Solicitor General, 16 Geo. Mason L. Rev. 237, 273 (2009).

One of the main issues in the Carter decision was the application of the Wartime Suspension of Limitations Act (WSLA).  The WSLA tolls the statute of limitations for fraud committed against the United States when the country is at war.  The Fourth Circuit addressed a number of issues regarding the WSLA, specifically the meaning of “at war” in the prior version of the Act (and thus whether  the conflict in Iraq qualified to trigger the WSLA’s tolling provisions), whether the WSLA applied to both criminal and civil cases, and whether the WSLA applies in cases where the United States is not a party.  The majority held that the United States was “at war” for purposes of the WSLA with regard to the conflict in Iraq, that the WSLA did apply in civil cases as well as criminal cases, and that the WSLA’s tolling provisions could apply in cases where the United States is a party, such as the non-intervened, relator-initiated suit at issue in the case.  Since the holding in Carter, the WSLA has been applied in at least one district court FCA case.  See United States v. Wells Fargo Bank, 2013 U.S. Dist. LEXIS 136539 (S.D.N.Y. Sep. 24, 2013).  Another district court, in opposition to Carter, held that the WSLA does not apply to cases where the government is not a party.  See U.S. ex rel. Emanuele v. Medicor Assocs., 2013 U.S. Dist. LEXIS 104650 (W.D.P.A. July 26, 2013).

Takeda, arguably the more important case of the two, involved the level of specificity needed in order to successfully plead an FCA claim.  In Takeda, the Fourth Circuit dismissed the relator’s suit for failure to conform to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b).  The Takeda court, in adopting an arguably strict standard for FCA pleadings, held the following:

[W]e hold that when a defendant’s actions, as alleged and as reasonably inferred from the allegations could have led, but need not necessarily have led, to the submission of false claims, a relator must allege with particularity that specific false claims were actually presented to the government for payment.  To the extent that other cases apply a more relaxed construction of Rule 9(b) in such circumstances, we disagree with that approach. 

Takeda, 707 F.3d at 457-58.  With regard to the relator’s suit, the court stated that the relator had failed to show that the physicians, to whom the defendant allegedly engaged in off-label marketing, wrote prescriptions as a result of that off-label marketing and actually submitted claims for payment to the government.  Because the relator’s claim did not “involve an integrated scheme in which presentment of a claim for payment was a necessary result”, the Fourth Circuit held that the relator “failed to plead with particularity a plausible claim that any off-label prescriptions were presented to the government for payment.”  Id. at 461.

There appears to be a true circuit split regarding the interpretation of Rule 9(b) as it applies to FCA actions.  The Sixth, Eighth, and Eleventh Circuits have adopted standards in cases essentially requiring that an FCA claim be dismissed unless the relator can state with particularity that a false claim was actually presented.  In contrast, the First, Fifth, Seventh, and Ninth circuits have adopted a much less stringent standard, requiring that the relator merely  state “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.”  Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998-99 (9th Cir. 2010).  The Supreme Court had an opportunity to address the pleading circuit split in 2010 but declined to do so.  Hopefully this time around, the Supreme Court will choose to look at this important issue and provide some clarity.


If you have a False Claims Act case,  please contact the Rabon Law Firm.

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