Rule 9(b) and Complaints in False Claims Act Cases

Federal Rule of Civil Procedure 9(b) requires a party alleging fraud or mistake to state the circumstances of the alleged fraud or mistake with particularity. The rule allows a person’s intent, knowledge, malice, and other conditions of mind to be alleged generally.

When people discuss the pleading requirements, what they really mean is the complaint. What has to be in the complaint to fulfill a pleading requirement is what is dictated by the Federal Rules of Civil Procedure. When it comes to Rule 9(b) and complaints in False Claims Act cases, an experienced False Claims Act lawyer could help you draft the complaint and make sure that it includes a pleading requirement.

What Could Someone Do if they Fail to Meet the Pleading Requirement?

If you cannot meet the burden of the pleading requirement, you can try again. You usually can file for leave to amend the complaint. The court doesn’t have to give you leave to amend more than once by right, but generally, you are liberally granted leave if there’s good cause to show that, if given leave, you can amend the complaint sufficiently to overcome any pleading deficiencies. That’s not endless, though, and there’s only so much information you can obtain.

With that said, you can be dismissed for failure to plead a cause with particularity under Rule 9(b), and it happens a lot when the plaintiff-relator can not obtain enough information to satisfy the rule to the court’s understanding. That’s why people pay a lot of attention to Rule 9(b).

The case can be dismissed for a lack of pleading for particularity. In fact, usually, that is the first line of defense in a case. The defendants will take a look at the case, and the first motion that they will usually file is that plaintiffs have failed to plead fraud with particularity under Rule 9(b), and everybody is off to the races in terms of litigating that issue just to begin with.

The Importance of Thorough Investigations

With respect to cases that the plaintiff files, you want to attempt to get all the information that the whistleblower has and put it together. There are two burdens: one is under Rule 9(b), but there is also the statutory duty to provide the government with all the evidence that we have in the case under the False Claims Act.

Obtaining information through the client and presenting that to the government is something a DC whistleblower lawyer does. Once the government takes over the investigation after the initial complaint is filed, it’s the government’s investigation. The government generally does not want plaintiffs and their lawyers investigating the matter after the complaint has been filed. There are exceptions to this, and it’s usually something the government works out with an individual later, but that’s usually the procedure that follows.

Generally, if the government intervenes in a case, they have the means through civil investigative demands and through other investigative techniques to obtain the information that would satisfy any pleading requirements. At some point, the case is likely, if the government intervenes, to be sufficiently well-pled and of substance to overcome this burden. As a result, the government’s investigation can be helpful or can be a big part of overcoming that burden if the plaintiff has not been able to do so. It’s usually best to have a specific and as detailed a complaint as possible given all the other burdens that a plaintiff and a plaintiff’s attorney may have prior to filing the case.

What Does Federal Rule of Civil Procedure 9(b) Require?

Federal Rule of Civil Procedure 9(b) requires allegations of fraud or mistake to be stated with particularity. This creates a heightened pleading requirement and an additional burden on plaintiffs and the United States when filing a False Claims Act case. Put more simply, if you file a complaint in federal court alleging fraud, you generally must provide more specificity than you would for a typical tort case, such as a car crash. The complaint should identify the relevant circumstances with sufficient specificity to satisfy Rule 9(b).

What Does Pleading Fraud With Particularity Mean?

Pleading fraud with particularity generally means providing enough factual detail to identify the who, what, when, where, and how of the alleged fraud. Rather than simply alleging that a defendant committed fraud, a complaint should provide specific facts describing the alleged fraudulent conduct and the circumstances surrounding it.

Although Rule 9(b) requires the circumstances of fraud to be pleaded with particularity, the rule permits conditions of a person’s mind, including intent and knowledge, to be alleged generally.

What Are the Federal Rules of Civil Procedure?

The Federal Rules of Civil Procedure are, as the name implies, rules that apply to file a case in federal court and a civil case. They are adopted by all federal courts in order to have some uniformity of procedure in any type of civil case. There are also local rules which are enacted pursuant to the specific Court regarding how to proceed. They tell you everything that one has to do to conform with the rules of the court in terms of where to file, how to file, what documents to file, what deadlines there are, and that sort of thing, as well as impose burdens such as Rule 9(b) regarding the type of pleading that might be involved.

False Claims Act cases are filed as civil matters, and they, therefore, fall under the jurisdiction of the federal rules of civil procedure. False Claims Act law has within it its own procedural requirements, which conform to the federal rules of civil procedure but are also added to them. Most civil cases are not filed under seal in the way False Claims Act cases are. That’s certainly within the federal rules and certainly conforms to federal rules, but it is unusual to have a sealed case proceed in civil court. There are certainly other kinds of cases that do have that happen. It does have its own procedure, in fact, in most cases.

Usually, when you file a complaint, you have to immediately serve it on the defendants. Under the federal rules, you have a certain amount of time to serve the defendants with the complaint. Under the False Claims Act, that step is suspended while the case is under seal. In other words, once the government takes over the investigation, the time to serve the complaint is delayed until the government makes a decision about whether it’s going to join the case.

How Does Rule 9(b) Apply to False Claims Act Cases?

Courts have held that the False Claims Act, while not exactly a fraud statute, still falls under Rule 9(b) in many circumstances. Therefore, a complaint filed under the False Claims Act may need to satisfy Rule 9(b)’s heightened pleading requirements for a plaintiff to maintain an action in court. So that imposes a burden on the plaintiffs, usually the whistleblower. Usually, the government can state pretty specifically what the defendants did that was in violation of the False Claims Act in order to maintain an action, because the government has the benefit of an investigation prior to filing its pleadings.

Courts have been stringent in upholding this requirement. There’s a feeling that you don’t want to let people just accuse a contractor of fraud without putting them on notice of exactly the behavior they are accused of doing which violates the law. In some instances, courts have gone too far, but that’s the overall direction that the courts have gone with respect to Rule 9(b).

In False Claims Act cases, courts have differed on how specifically a relator must identify the allegedly false claims. Depending on the jurisdiction and circumstances, a complaint may need to identify specific claims or provide other reliable facts showing that false claims were actually submitted to the government.

Pleading Requirements in Different Courts

The interpretation of the Rule 9(b) pleading requirement in regard to False Claims Act cases differs from judge to judge. The reality of this is tricky. The fact is, judges see a case that is supported by the United States government, and the United States government having investigated the case is likely to also be able to produce more facts than a whistleblower and their whistleblower lawyer on their own. These cases are extremely fact-intensive, so it may not always be possible to tell from a previous ruling how a Court may act on this matter.

For whistleblowers acting on their own without the added benefit of a government investigation and additional facts, that burden is much greater and harder to maintain. Therefore, you see a lot of cases dismissed on Rule 9(b) grounds when the government declines to intervene.

Rule 9(b) Requirements Can Vary by Circuit

While requirements may technically differ from circuit to circuit as to what 9B is, judges have a great deal of leeway to determine what 9B means because it’s such a fact-based analysis. Our firm once had a case that had a great DC attorney who handled the appeals before the Circuit, but the case was dismissed ultimately for a lack of Rule 9(b). The court said they were dismissing it because our whistleblower was neither an outsider nor, strictly speaking, an insider to the action, which left me wondering in what metaphysical space my whistleblower actually was living, because if he wasn’t an outsider and he wasn’t an insider, I’m not exactly sure where he was.

The court nonetheless dismissed the case on that basis. That was a wrong decision by the court. I don’t know if the Court would have acted that way had the government intervened either. These are really fact-based analyses, and as a result, courts can make their own determinations as to Rule 9(b) a great deal of the time.

The Chilling Effect of Rule 9(b) Interpretations

Certainly, this rule can discourage whistleblowers from bringing cases that are declined. It can make it very hard to maintain an action if you look at a string of cases saying that, absent government investigation and additional facts, the court will likely dismiss. That is one of the things that rightfully deters counsel from telling clients, “Look, you have a declined case, but let’s go marching up the hill and try to pursue it anyway.”

It’s an added burden, and it serves to discourage bringing cases before the court. To be fair, though, a defense counsel would say fraud cases, or certainly false claims built around the False Claims Act with its treble damages provisions, are not the type of case that should bring lightly ever.

Heightened pleading requirements may be appropriate. I just happen to think that it’s gotten too difficult for whistleblowers to overcome that burden and get a day in court, and so I think it’s gotten a little strenuous. But that’s an ongoing argument between plaintiffs, lawyers, and defense counsel, with the government sort of in the middle.

Seeking Legal Help With Rule 9(b) and Complaints in False Claims Act Cases

For more information on the importance of Rule 9(b) and complaints in False Claims Act cases, call a knowledgeable DC lawyer today.