The Reasons That FCA Suits Can Be Dismissed

Sometimes, when a qui tam suit is brought under the False Claims Act (FCA), if it is not brought properly, or if the merits of the case are not adequate to meet certain standards, the case can be dismissed. We’ve written previously about pleading a case with particularity, and the need to meet the standards of Federal Rules of Civil Procedure (FRCP) Rule 9(b). (Under 9(b), cases are thrown out for lack of specific supporting details and evidence.)

Getting rid of meritless FCA cases can be a good thing. The suits that should not legitimately go forward take away available court time from the legitimate whistleblower cases, making it harder for them to be heard in a timely fashion. It also costs the government—meaning the taxpayer—money to hear cases, so the sooner that a meritless case is dismissed, the better it is for the cases with substance and merit that are waiting to be heard.

The number of whistleblower-initiated cases in the U.S. is exploding, making it take longer than before for a relator’s (whistleblower’s) case to be heard.

With regard to the reasons that a false claims case can be dismissed, Title 31 of the U.S. Code § 3730 addresses these reasons. Title 31 of the U.S. Code § 3731(b) applies to the statute of limitations for FCA suits. Additionally, two federal procedural rules can play a part in dismissals. We will take each reason in turn.

Reason for Dismissal: Failing to Satisfy FRCP Rule 9(b)

As mentioned above, not meeting the standards of the Federal Rules of Civil Procedure’s Rule 9(b) (not pleading with particularity) is a commonplace and effective way to dismiss an FCA case. U.S. circuit courts are split on how specific they want the particular details to be in order to proceed with the case. The Eighth Circuit has upheld a more stringent pleading standard, requiring an FCA case to plead facts as specific as:

• The location, date and time, and relevant material relating to the false claims
• Details of the false claims or fraudulent actions, including who was involved, when the fraud was committed, and what resulted from committing the fraud.

During a relevant 2013 qui tam case heard in the Fourth Circuit (which includes South Carolina), United States ex rel. Nathan v. Takeda Pharmaceutical Co., included combined data about expenditures for one of four drugs. There was no identification of those who submitted the false claims or of those who were the government program’s payers. Circumstances, times, and amounts were also not specified. As a result the Fourth Circuit found the presented materials to be insufficient for the case to move forward.

Reason for Dismissal: Failing to Satisfy FRCP Rule 12(b)(6)

FCA defendants may attempt to have a case dismissed by invoking Federal Rules of Civil Procedure Rule 12(b)(6), “failure to state a claim upon which relief can be granted.” Common grounds for a motion based on this Rule often include failing to sufficiently plead knowledge of a false claim, the falseness of the claim, or the materiality of the claim.

Rule 12(b)(6) may be used in conjunction with Rule 9(b). In the 2013 qui tam case United States ex rel. Ge v. Takeda Pharmaceutical Co., the district court granted the defendants’ motion to dismiss. The court’s decision stated that the relator (whistleblower) did not plead fraud with particularity under Rule 9(b) and also failed to state a claim under Rule 12(b)(6). The whistleblower did not successfully show that compliance with the FDA’s reporting requirements by Takeda’s pharmaceuticals was a required precondition for receiving payment from the government.

Reason for Dismissal: The Public Disclosure Bar

If it turns out that a qui tam suit involves the same allegations of wrongdoing or the same transactions that have already been publicly disclosed, the suit can be dismissed under the public disclosure bar if the relevant information was revealed in:

• A federal case—administrative hearing, civil, or criminal—in which the government or an agent of the government was a party
• A congressional report, Government Accountability Office report, other federal report, or other federal investigation, hearing, or audit
• The news media.

The one exception to the bar occurs when the whistleblower is an “original source.” This means either:

• The whistleblower must have provided the government with their information before any public disclosure; or,
• The whistleblower possessed independent information that substantially added to any publicly-disclosed allegation, and also gave that knowledge to the government before they filed their false claims suit.

In a 2016 FCA suit against Planned Parenthood of the Great Northwest, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a $100 million FCA case by a district court under the public disclosure bar. The appeals court concluded that the relator was not a genuine whistleblower because their allegations had been previously disclosed both in a federal lawsuit and also in a report by a federal agency.

Reason for Dismissal: The First-to-File Bar

The first-to-file bar signifies that only the first whistleblower to bring the case gets to go to court. The point of the first-to-file bar is to encourage whistleblowers to step forward quickly, before someone else does, in order to bring the case successfully and receive an award. The bar is also meant to prevent new claims from entering the court system, when related claims are already pending. If the related claims are dismissed, that action opens the way to new claims.

This rule has been interpreted as being in force when a qui tam suit that is filed later in time is based on the same kind of fraud, or the same material elements, or the same essential elements as the qui tam suit with the earlier filing date.

Some things to think about with regard to the first-to-file bar:

• If a whistleblower believes they have a case, they must bring it as soon as possible to avoid being barred.
• If another fraud at the same company exists and a case has already been brought, the whistleblower must distinguish their case from any previously-filed case, demonstrating that the new qui tam suit will garner a separate recovery for the government.

Reason for Dismissal: Statute of Limitations Violations

One of the two following statutes of limitations will be applied to federal False Claims Act cases:

• A case must be brought within six years following the date on which a violation occurred.
• A case must be brought within three years following the date when a U.S. official who had the ability to take action could have reasonably known the facts which were material to the right to take action. However, this date cannot be more than ten years after the date of the violation.

Currently, courts are split over whether a qui tam case can use the “tolling” provision, as the three-year deadline is known. Over half the courts deem that the tolling provision applies only to the cases in which the government intervenes. However, the remaining courts maintain that this provision should also apply to qui tam cases.

There is a separate FCA statute of limitations under The Wartime Suspension of Limitations Act (WSLA), should the United States be at war.

Reason for Dismissal (Sometimes): Seal Violations

The filing of a qui tam FCA suit is done “under seal.” The details of the suit are not available to the public during the time the case is under seal. The seal is rescinded by court order after the government investigates the alleged fraud. It is this investigation that determines whether the government will intervene, or join, a qui tam case. Imposing the seal also helps keep the target of the suit in the dark.

There is no FCA requirement, however, for total silence regarding the alleged fraud while under seal, so seal violations do not always get a case thrown out. A number of court interpretations have made that fact clear with regard to the seal requirement. Requiring total silence might place a burden on the person bringing the suit that goes beyond the original purpose of the FCA.

In December, 2016, the U.S. Supreme Court ruled that violations of the FCA’s seal requirement do not mean an automatic dismissal of the case. The Court also said that the proper penalties for such violations should be left up to the district court. The case in question involved intentional leaks to the press regarding allegations that State Farm Fire and Casualty Co. had defrauded the National Flood Insurance Program.

What Can You Do to Ensure That Your Case Goes Forward Successfully?

When you put in a lot of time and worry as a whistleblower, you do not want your case dismissed once it reaches court. We have some suggestions that could help you if you decide to blow the whistle:

• Once you have evidence of a false claims (FCA) fraud, act quickly. Remember the first-to-file rule, and seek legal assistance as soon as is reasonable.
• Research attorneys so that you choose the one that’s right for you. You want a law firm that is experienced with the type of qui tam suit you intend to bring, and which has a successful record, especially when it comes to convincing the government to join cases. You also want your case brought promptly and accurately with minimal chance of its being barred or dismissed.
• Once you and your lawyer have reached accord and the case has been filed, do not discuss your false claims suit with anyone except your lawyer. Remember that your allegations will be under seal for a while. You can only hurt your case if you talk about it. This means NO social media or other public discussion.
• Be sure you are ready for the long haul that a qui tam case entails. Discuss the pros and cons with your attorney, including an assessment of the strengths of your case and how likely you are to win. Filing a whistleblower case sets a lot of investigation in motion, and you may not be able to stop it even if you drop the case.

When you are bringing a False Claims Act (FCA) case, you need to ensure all the legal “i’s” are dotted and “t’s” are crossed.

Anything less can mean failure, with no second chance to bring the suit again. Successfully bringing an FCA case takes experienced and tireless legal assistance to present your case in the best light possible. We at the Louthian Law Firm work long hours to ensure that your case goes forward, minimizing the risk that it may be dismissed once it reaches the court. We hope that you will speak with us if you are committed to the whistleblower’s path because you believe you have substantial, significant evidence of wrongdoing.

Blowing the Whistle? We Can Help You with Your Next Step.

If you think you have the facts needed to bring a whistleblower case, the experienced whistleblower attorneys at the Louthian Law Firm can review your case and help you file the appropriate disclosure statement. Under some circumstances, the government will intervene, or join in your lawsuit.

Your chances of succeeding are greater if your whistleblower claim is substantive, clear, and to the point. Because of this, meeting with a qualified whistleblower attorney can increase your chances of winning. The Louthian Law Firm can help you form your claim so that the government will be more inclined to intervene in your case; government intervention can sometimes increase the chances of recovering reward money. Even if the government decides not to intervene, it could still be a good idea to pursue your case without government involvement. Our strong support system can assist you through every step of the process.

For a free, confidential evaluation of your case, call the Louthian Law Firm today at 1-803-454-1200 or, if you prefer, you can fill out our online contact form.