Timothy Taylor is an Associate in Holland &
Knight's Tysons office
The U.S. Supreme Court recently denied certiorari in United
States ex rel. Walterspiel v. Bayer AG. This case, arising out
of the Fourth Circuit, raised yet again the question of how much
detail a False Claims Act (FCA) complaint must allege about the
alleged false claims themselves. The Supreme Court famously denied
certiorari two years ago in another Fourth Circuit case raising
similar questions, United States ex rel. Nathan v. Takeda
Pharmaceuticals North America, Inc. It thus appears that any
definitive resolution of this question will have to wait.
In Takeda, the issue was whether an FCA complaint must
allege with particularity that actual false claims were submitted
to the government, or whether it must simply allege a fraudulent
scheme from which a court can infer that claims were submitted.
Courts have not been uniform on the issue. Some courts have
reasoned that the "submission of a claim is . . . the sine
qua non of a False Claims Act violation," thus requiring
particulars about those claims. United States ex rel. Clausen
v. Lab Corp. of Am., Inc., 290 F.3d 1301, 1311 (11th Cir.
2002). Other courts have used less stringent language, requiring
only "reliable indicia that lead to a strong inference that
claims were actually submitted." United States ex rel.
Grubbs v. Ravikumar Kanneganti, 565 F.3d 180, 190 (5th Cir.
The petition in Walterspiel presented a narrower issue
than Takeda. It argued principally that an FCA complaint
need not allege details about the claims themselves when those
details are in the exclusive possession of the defendant. It is an
interesting argument that has been raised in a variety of other
contexts. Yet whatever its merits, the Supreme Court seemed to
conclude that Walterspiel was a poor vehicle to consider
it, given that the relator both failed to properly serve the
defendant that allegedly submitted claims and failed to properly
plead that defendant's link to any other defendant who was
properly served. See United States ex rel. Walterspiel v. Bayer
AG, No. 15-1459, slip op. at 7–8 (4th Cir. Jan. 20,
2016) (per curiam) (noting these problems with the case).
Even so, the Walterspiel petition serves as a reminder
that the False Claims Act's stringent pleading standards remain
a subject of scrutiny for the courts and relators. Neither
Takeda nor Walterspiel was a proper case for
clarifying those standards, but a future case might be. Defendants
and their counsel should bear that in mind when crafting motions to
dismiss and defending their cases on appeal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Committee on Foreign Investment in the United States (CFIUS, commonly pronounced "syphius") reviews M&A transactions that may pose a risk to national security through foreign control of a US business.
On February 24, 2017, US President Donald Trump issued an executive order on regulatory reform, directing federal agencies to take steps to strengthen their implementation of various executive orders...
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