False Claims Act (FCA) lawsuits often rise or fall before they even begin. Courts demand that allegations of fraud against the government be made with a certain amount of precision and detailed support. This requirement derives from Federal Rule of Civil Procedure 9(b), which says that fraud must be pled with “particularity.” In plain terms, a whistleblower must do more than allege misconduct generally; the complaint must describe the “who, what, when, where, and how” with enough detail to meet the Rule. But courts disagree on how much is enough. Some insist on examples of actual fraudulent billing records. Others accept a detailed insider account as sufficient. Understanding how courts apply Rule 9(b) can determine whether a case survives long enough to reach settlement or other resolution.
A Flexible Approach: Duxbury v. Ortho Biotech
Mark Duxbury, a former sales representative, alleged that his company pushed its anemia drug through questionable tactics: free samples, rebates, consulting fees, and other inducements for doctors. He named the hospitals and clinics where he said these practices occurred but he was not able to provide specific examples of prescriptions and reimbursement claims resulting from the allegedly improper inducements.
Nevertheless, the First Circuit allowed Duxbury’s case to proceed. His detailed insider account of the scheme—names, dates, and places—was enough for the court to conclude that Rule 9(b) was satisfied. That makes sense in healthcare, where the employees who observe questionable inducements are rarely the same people who later prepare and submit reimbursement claims.
Takeaway: In some courts, detailed knowledge from an insider can carry a case forward, even without documentary proof of fraudulent billing. For whistleblowers, this means credible insider detail can sometimes substitute for prescription or billing records. For defendants, it means that insider accounts—if specific enough—may defeat early attempts at dismissing the matter.
A Strict Approach: Nathan v. Takeda
By contrast, Noah Nathan, a sales manager at Takeda Pharmaceuticals, alleged that the company improperly promoted its drug Kapidex for uses and doses not approved by the FDA. He claimed Takeda distributed only the high-dose version and targeted specialists who had no reason to prescribe it for its approved use.
But Nathan could not identify any actual prescriptions or reimbursement claims for Kapidex resulting from the improper marketing and distribution practices. The Fourth Circuit dismissed his case, stressing that speculation was not enough—without invoices or something close to it, the complaint failed. The problem, of course, is that employees who see aggressive marketing or patient-side misconduct almost never have access to the claim submissions that would prove their allegations.
Takeaway: In stricter jurisdictions like the Fourth Circuit, descriptions of an improper scheme are not sufficient without specific examples of prescriptions or reimbursement claims to Medicare resulting from the scheme. Whistleblowers need hard proof that false claims were submitted. For defendants, this strict approach provides a powerful tool to end speculative lawsuits early.
A Middle Ground: Foglia v. Renal Ventures
Thomas Foglia, a nurse at a dialysis center, alleged that his employer cut corners on patient safety and reused single-use vials of a costly drug while billing Medicare as if each patient received a new one.
The trial court dismissed the case for lack of specific representative reimbursement claims to Medicare, but the Third Circuit reinstated it. The Circuit Court reasoned that Foglia’s detailed insider observations about drug handling and billing practices created a “strong inference” that false claims were submitted. In doing so, the court recognized a practical reality of healthcare: most relators can describe misconduct they see firsthand, but they are rarely positioned to watch the bills “go out the door.”
Takeaway: In the Third Circuit, a well-pleaded insider account can be enough. Billing records help, but they are not strictly required at the pleading stage. This approach offers whistleblowers a chance to proceed without documents that may be inaccessible before discovery, and it makes early dismissal harder for defendants.
Why This Matters
The Rule 9(b) “particularity” requirement is the first real hurdle in many FCA cases. How courts apply it varies widely:
- In some places, like the Fourth Circuit, you need invoices or other hard proof.
- In others, like the First and Third Circuits, detailed insider accounts may be enough.
The division of labor in healthcare explains why this split is so important. Frontline providers may see corners cut in patient care, but they usually never touch the claims. Billing staff may see reimbursement forms but lack context about how services were (or were not) delivered. Very few relators have access to both sides of the fraud. Flexible courts acknowledge that reality and allow strong insider detail to create a reasonable inference of billing fraud. Strict courts treat the absence of claim examples as fatal, even though the people best positioned to see misconduct are often shut out of billing records altogether.
For whistleblowers, that means venue matters—and so does careful FCA case preparation. For defendants, Rule 9(b) remains a strong shield against weak or speculative suits.
Conclusion
FCA cases are often decided at the starting line, not the finish line. The same allegations may survive in Boston but fail in Richmond. Whether you are a whistleblower considering coming forward, or a company facing allegations, the critical question is whether the complaint connects the dots clearly enough from misconduct to government payment.
Frier Levitt attorneys have deep experience guiding both whistleblowers and defendants through this pivotal early stage—building strong cases that can survive dismissal, or dismantling weak ones before they reach costly discovery.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
