Academic journal article Missouri Law Review

The Plight of the Tattletale: How the Eighth Circuit's Relaxing of Rule 9(b) Means More Unpredictability for FCA Whistleblower Claims

Academic journal article Missouri Law Review

The Plight of the Tattletale: How the Eighth Circuit's Relaxing of Rule 9(b) Means More Unpredictability for FCA Whistleblower Claims

Article excerpt

United States ex rel. Thayer v. Planned Parenthood of the Heartland, 765 F.3d 914 (8th Cir. 2014).

I. Introduction

The False Claims Act ("FCA") was enacted during the Civil War for the purpose of combatting pervasive fraud by government contractors. (1) The FCA prohibits any person from knowingly "causing] to be presented" to the government false claims for payment or approval. (2) To encourage insiders to report fraud and to improve the FCA's enforcement, the FCA contains a qui tam provision, which permits private persons, known as "relators," to bring civil actions on behalf of the United States and to claim a sizeable portion of the resulting award. (3)

The FCA's importance to the federal government cannot be overstated. (4) For fiscal year 2014, the Department of Justice reported a record $5.69 billion in settlements and judgments from civil fraud and false claims cases. (5) Meanwhile, the FCA continues to serve as the government's primary mechanism for combatting false claims for funds under government contracts, including Medicare, defense contracts, federally-insured loans and mortgages, and veterans' benefits. (6)

Despite the FCA's tremendous importance and the increasing number of claims brought under the FCA each year, (7) the pleading standard required of a relator bringing suit under the FCA remains an unfortunate source of confusion. Federal appellate courts are sharply divided over whether a whistleblower complaint can survive a motion to dismiss under Federal Rule of Civil Procedure 9(b) if it pleads a fraudulent scheme to submit false claims but fails to plead with particularity that false claims were actually presented to the government, known as "presentment." (8)

The Eighth Circuit's decision in United Slates ex rel. Thayer v. Planned Parenthood addresses this very issue. (9) As this Note argues, the Thayer decision not only departs from the Eighth Circuit's previous position within the circuit split, but it also further contributes to the confusing variance of nuances and interpretations that exist regarding how to apply Rule 9(b) to FCA claims. (10) Because the Thayer decision arguably increases the muddled confusion of Rule 9(b)'s application to FCA claims, it is imperative that the Supreme Court resolve the circuit split in the near future. In Part II, this Note analyzes the facts and holding of Thayer. Next, in Part III, this Note explores the legal background of the FCA and the development and current state of the circuit split surrounding Rule 9(b)'s application to FCA claims. Then, Part IV examines the court's rationale in Thayer. Lastly, Part V more closely examines the circuit split, noting the complexity and divergence of the different standards being applied within the circuits that are adopting what appears to be a uniform "relaxed" approach to Rule 9(b). In addition, Part V argues that the Supreme Court should review these inconsistent approaches, and it assesses Thayer's immediate implications for Missouri businesses that contract with the government.

II. FACTS AND HOLDING

Defendant Planned Parenthood of the Heartland, Inc. ("Planned Parenthood") is a non-profit corporation that provides reproductive healthcare services to patients, including patients who qualify for Title XIX Medicaid. (11) From 1991 to December 2008, Plaintiff Susan Thayer worked as the center manager of Planned Parenthood's Storm Lake, Iowa clinic. (12) Simultaneously from 1993 to 1997, Thayer also worked as the center manager of Planned Parenthood's LeMars, Iowa clinic. (13)

In (2008), Planned Parenthood dismissed Thayer. (14) Following her termination, she brought a qui tarn action against Planned Parenthood in the U.S. District Court for the Southern District of Iowa seeking to recover funds that Planned Parenthood had allegedly obtained in violation of both the federal FCA and the Iowa False Claims Act ("IFCA"). (15) In her Complaint, Thayer alleged that all of Planned Parenthood's clinics participated in four fraudulent schemes from early (2006) to December (2008), each of which involved submitting false or fraudulent claims for Medicaid reimbursement to the United States and Iowa governments. …

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