Only a few days after we noted that the Sixth Circuit seems to be deciding an usually large number of healthcare decisions, the Court was at it again yesterday. In Chesbrough v. VPA, PC, Case No. 10-1494, the Court considered a False Claims Act brought by a qui tam relator, alleging fraudulent Medicare and Medicaid billing practices. The case afforded the Sixth Circuit an opportunity to apply Rule 9(b)’s pleading standards in a post-Twombly world, all in the context of an FCA claim (which are ever popular in the healthcare field).
The relator was a radiologist who claimed that the defendant conducted deficient x-ray exams and improperly presented them to the government for payment. Because there was no Medicare standard that set an industry standard as a requirement for payment, the relator effectively had to claim that the tests were wholly fraudulent and of no value. The Sixth Circuit held that some of their allegations (barely) made out a fraudulent scheme, but the relators could not surmount the presentment barrier. The relators relied on an “implied certification” theory, and sought the application of a “relaxed” Rule 9(b) standard that the Court had previously held could apply when it is apparent that false claims were made but the relator could not produce such allegations through no fault of his own.
Without overruling the “relaxed” Rule 9(b) standard, the Court declined to apply it in a post-Twombly setting. Even though the radiologist here had no access to the defendant’s billing records, that gave the Circuit no pause in upholding dismissal. The Court both expressed skepticism as to the underlying “scheme” and pointed to its recent New Albany Tractor decision (which we reported on here), which held that a plaintiff could not survive a motion to dismiss on the basis that necessary information for the claim rested within the defendant’s exclusive control. This case reinforces the Court’s recent trend in insisting on rigorous pleading post-Twombly. It also showcases how the Twombly Rule 8 pleading standard can be incorporated in the Rule 9(b) context. Given the recent increases in FCA litigation, Chesbrough could carry great significance in future FCA cases within the Circuit.