Law360 (May 16, 2022, 11:02 PM EDT) — The U.S. Supreme Court on Monday sought the U.S. solicitor general’s views for the second time this year on the amount of detail required in False Claims Act lawsuits, making crystal clear its interest in a long-standing circuit split.
Monday’s invitation, which occurred in a case alleging Medicare fraud, appeared in the high court’s periodic list of orders regarding pending petitions for certiorari. It consisted solely of the boilerplate language for such invites: “The solicitor general is invited to file [a brief] expressing the views of the United States.”
The court’s request in Owsley v. Fazzi Associates — a whistleblower case that the Sixth Circuit rejected — effectively asks the U.S. Department of Justice to provide feedback on the FCA landscape with respect to Rule 9(b) of the Federal Rules of Civil Procedure, which requires that fraud be alleged with “particularity.” The court made the same request four months ago in Johnson v. Bethany Hospice — a whistleblower case that the Eleventh Circuit rejected — and is still awaiting a response.
FCA lawyers were already buzzing after January’s initial request, which marked the first time in nearly a decade that the Supreme Court had asked the solicitor general for feedback on Rule 9(b) in the FCA context. Monday’s follow-up request immediately turned up the volume of that chatter, and some observers said it suggests that the justices are leaning toward tackling the topic.
“I think there’s about a 90% chance they’re going to grant cert” in one or more cases, Nichols Liu LLP partner Bob Rhoad said in a Monday interview. “It demonstrates that … they view this as a true split that will not resolve on its own.”
Arnold & Porter partner Craig D. Margolis shared a similar sentiment, telling Law360, “I hope it’s an indication of interest, and that they’ll take it,” because the Rule 9(b) debate is “an important issue that the courts of appeals and the district courts need guidance on.”
DOJ representatives, who previously declined to say when the solicitor general will respond to the first request, could not immediately be reached for comment on Monday. A source familiar with the matter told Law360 on Monday that a response was expected by May 24. However, it wasn’t clear if the high court’s invitation on Monday might affect the timing.
Virtually all the circuit courts have interpreted the meaning of Rule 9(b), and for more than a decade, they have generally been divided into two camps. One camp requires FCA cases to identify specific examples of fraudulent billing claims from the get-go, and the other camp allows FCA cases to survive motions to dismiss without such examples, so long as they contain reliable descriptions of potentially improper billing.
The two cases present identical questions, asking whether Rule 9(b) “requires plaintiffs in False Claims Act cases who plead a fraudulent scheme with particularity to also plead specific details of false claims.” The justices are also eyeing a third case, Molina Healthcare v. Prose, that asks the justices to address a very similar question about Rule 9(b).
Shortly after the justices asked for the government’s views on Monday, Molina Healthcare filed a reply brief in support of its petition for review. The reply took note of the latest call for the views of the solicitor general, and it also addressed a second question that Molina has presented about the meaning of the high court’s landmark FCA decision in Universal Health Services v. Escobar .
The Escobar decision in 2016 outlined a test for whether regulatory violations were “material” under the FCA. Molina, a major Medicaid contractor, wants the high court to clarify whether Escobar’s test always looks for “specific representations” about goods or services that contractors promised but didn’t deliver.
“This court should grant review in this case because it raises not one but two certworthy questions over which circuits are divided, and the court would benefit from considering them together,” Molina wrote Monday.
Rhoad told Law360 that the Rule 9(b) issue, standing alone, could make for a case as significant as Escobar.
“If the court takes up this issue, the decision will be in the same category as the Escobar decision,” Rhoad said. “It’ll be a game-changer.”
Representatives of the whistleblower and the home health company defendants in Owsley v. Fazzi Associates had no comment on Monday.
The cases are Johnson et al. v. Bethany Hospice and Palliative Care LLC, case number 21-462, Molina Healthcare of Illinois Inc. et al., Petitioners v. Thomas Prose, case number 21-1145, and U.S. ex rel. Owsley v. Fazzi Associates Inc. et al., case number 21-936, before the Supreme Court of the United States.
–By Jeff Overley; Editing by Emily Kokoll.
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