U.S. & State v. Planned Parenthood Heartland

• Decision Date: 29 August 2014
• Docket Number: No. 13–1654.,13–1654.
• Citation: 765 F.3d 914
• Parties: UNITED STATES of America and State of Iowa, ex rel Susan Thayer, Plaintiffs–Appellants v. PLANNED PARENTHOOD OF THE HEARTLAND, Defendant–Appellee United States of America; State of Iowa, Interested parties.
• Court: U.S. Court of Appeals — Eighth Circuit

765 F.3d 914

UNITED STATES of America and State of Iowa, ex rel Susan Thayer, Plaintiffs–Appellants

v. PLANNED PARENTHOOD OF THE HEARTLAND, Defendant–AppelleeUnited States of America; State of Iowa, Interested parties.

No. 13–1654.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 20, 2013.

Filed: Aug. 29, 2014.

M. Casey Mattox, argued, Washington, DC, (J. Russell Hixson, West Des Moines, IA., M. Casey Mattox, Catherine Glenn Foster, Washington, DC., Michael J. Norton, Greenwood Village, CO, on the brief), for Plaintiffs–Appellants.

Tiffany L. Amlot, argued, Chicago, IL, (Stanley J. Thompson, Jonathan C. Wilson, Des Moines, IA., Alan Scott Gilbert, Kristen C. Rodriguez, Tiffany L. Amlot, Chicago, IL., on the brief), for Defendant–Appellee.

Before WOLLMAN, COLLOTON, and GRUENDER, Circuit Judges.

WOLLMAN, Circuit Judge.

Susan Thayer brought this qui tam action against Planned Parenthood of the Heartland, Inc. (Planned Parenthood), alleging that Planned Parenthood violated the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, and the Iowa False Claims Act (IFCA), Iowa Code Ann. §§ 685.1–.7, by submitting false or fraudulent claims for Medicaid reimbursement. The district court dismissed her complaint for failure to plead fraud with the particularity required by Federal Rule of Civil Procedure 9(b). We affirm in part, reverse in part, and remand for further proceedings.

I. Background

Planned Parenthood is an Iowa non-profit corporation that provides reproductive healthcare services to patients, including Title XIX Medicaid-eligible patients. From 1991 to December 2008, Thayer was employed as the center manager of Planned Parenthood's clinic in Storm Lake, Iowa. From 1993 to 1997, Thayer also served as the center manager of Planned Parenthood's clinic in LeMars, Iowa. Planned Parenthood operated a total of seventeen clinics throughout Iowa during the period of Thayer's employment.

Thayer's action seeks to recover funds that Planned Parenthood allegedly obtained in violation of the FCA and the IFCA. Thayer's second amended complaint (hereinafter the complaint), alleges that Planned Parenthood wrongfully obtained Medicaid reimbursements for prescriptions and services that either were not reimbursable or were not reimbursable in the amounts claimed. Specifically, Thayer alleges that Planned Parenthood: (1) filed claims for unnecessary quantities of birth control pills that often were prescribed without examinations or were not received by Planned Parenthood patients; (2) sought reimbursement for abortion-related services in violation of federal law and instructed patients who experienced abortion-related complications to give false information to medical professionals at other hospitals, causing those medical professionals to unknowingly file claims for services performed in connection with abortions; (3) filed claims for the full amount of services that had already been paid, in whole or in part, by “donations” Planned Parenthood coerced from patients; and (4) filed claims for more expensive services than were actually performed by engaging in a process known as “upcoding.” Thayer alleges that all of Planned Parenthood's clinics participated in these four fraudulent schemes from early 2006 to December 2008. The complaint, however, does not include any representative examples of the false claims that Thayer alleges that Planned Parenthood submitted for reimbursement.

Planned Parenthood moved to dismiss the complaint, arguing that Thayer failed to allege fraud with particularity as required by Rule 9(b). The district court granted Planned Parenthood's motion, concluding that Thayer failed to meet the pleading requirements of Rule 9(b) as articulated in United States ex rel. Joshi v. St. Luke's Hospital, Inc., 441 F.3d 552 (8th Cir.2006), because she failed “to provide a single specific example of a particular fraudulent claim Planned Parenthood submitted to the government, let alone any representative examples.” D. Ct. Order of Dec. 28, 2012, at 6.

II. Discussion

We review de novo a district court's decision to dismiss a complaint under Rule 9(b). In re Baycol Prods. Litig., 732 F.3d 869, 874 (8th Cir.2013). The FCA imposes liability on those who knowingly “present false claims, or cause false claims to be presented, to the government for payment or approval; [knowingly] use false statements, or cause false statements to be used, to get a false claim paid or approved by the government; or conspire to defraud the government, among other things.” ¹United States ex rel. Raynor v. Nat'l Rural Utils. Coop. Fin., Corp., 690 F.3d 951, 955 (8th Cir.2012) (citing 31 U.S.C. § 3729(a)(1)-(3)). Under the FCA, private individuals are permitted “to bring a civil action in the name of the United States against those who violate the [FCA]'s provisions.” Baycol Prods. Litig., 732 F.3d at 874. Liability under the FCA attaches “not to the underlying fraudulent activity, but to the claim for payment.” Id. at 875 (quoting Costner v. URS Consultants, Inc., 153 F.3d 667, 677 (8th Cir.1998)).

A. Pleading Standard Under the FCA

“Because the FCA is an anti-fraud statute, complaints alleging violations of the FCA must comply with Rule 9(b).” Joshi, 441 F.3d at 556. Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud[.]” “This particularity requirement demands a higher degree of notice than that required for other claims.” United States ex rel. Costner v. United States, 317 F.3d 883, 888 (8th Cir.2003).

We explained in Joshi that to satisfy Rule 9(b)'s particularity requirement, “the complaint must plead such facts as the time, place, and content of the defendant's false representations, as well as the details of the defendant's fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result.” 441 F.3d at 556. In other words, “the complaint must identify the ‘who, what, where, when, and how’ of the alleged fraud.” Id. (quoting Costner, 317 F.3d at 888). Moreover, we stated that although an FCA complaint need not include the “specific details of every alleged fraudulent claim” when a relator alleges that a defendant engaged in a systematic practice or scheme of submitting fraudulent claims, the complaint “must provide some representative examples of [the defendant's] alleged fraudulent conduct, specifying the time, place, and content of [the defendant's] acts and the identity of the actors.” Id. at 557.

Thayer concedes that she did not provide any representative examples of the false claims in the complaint. She argues, however, that neither Rule 9(b) itself nor Joshi requires that representative examples be pleaded in every FCA complaint that alleges a systematic practice or scheme of submitting false claims. We agree, and conclude that Joshi 's representative-examples requirement need not be satisfied with respect to some portions of the complaint.

Dr. Joshi was an anesthesiologist who had practiced at St. Luke's Hospital from 1989 to 1996. Id. at 554. His April 2004 qui tam action against the hospital and the hospital's chief of anesthesiology alleged, among other things, that the hospital had systematically violated the FCA over a sixteen-year period by seeking Medicare reimbursements at higher rates than those to which it was entitled and by submitting claims for services that were not performed and supplies that were not provided. Id. at 554, 557. He did not identify the details of any of the false claims in his complaint but instead alleged that every claim submitted was fraudulent. Id. at 554–56. In concluding that the complaint failed to satisfy Rule 9(b), we explained that “Dr. Joshi's allegation that ‘every’ claim submitted by St. Luke's was fraudulent lack[ed] sufficient ‘indicia of reliability[,]’ ” id. at 557, because, as an anesthesiologist rather than a member of the hospital's billing department, he failed to provide the factual basis for his “knowledge concerning the alleged submission of fraudulent claims,” id. at 558. We held that to satisfy Rule 9(b), he was required to plead at least some representative examples of the false claims. Id. at 557.

Unlike Dr. Joshi, who had no direct connection to the hospital's billing or claims department and could only speculate that false claims were submitted, Thayer was the center manager for two of Planned Parenthood's clinics, oversaw Planned Parenthood's billing and claims systems, and was able to plead personal, first-hand knowledge of Planned Parenthood's submission of false claims. In these circumstances, we find persuasive the approach of those circuits that have concluded that a relator can satisfy Rule 9(b) by “alleging particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” ²United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir.2009); see also Chesbrough v. VPA, P.C., 655 F.3d 461, 471 (6th Cir.2011); Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998–99 (9th Cir.2010); United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1172 (10th Cir.2010); cf. United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 457 (4th Cir.2013) (indicating that a relator need not identify individual false claims in order to satisfy Rule 9(b) if the “specific allegations of the defendant's fraudulent conduct necessarily led to the plausible inference that false claims were presented to the government[,]” but that representative examples are required if a defendant's actions “ could have led, but need not necessarily have led, to the submission of false claims”), cert. denied, – –– U.S. ––––, 134 S.Ct. 1759, 188 L.Ed.2d 592 (2014); United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 29 (1st Cir.2009) (explaining that in qui tam actions in which the defendant allegedly caused third parties to file...