In Defense of a Strict Pleading Standard for False Claims Act Whistleblowers
In the last five years, the volume of False Claims Act (FCA) litigation has skyrocketed with over $20 billion in settlements and judgments. The FCA imposes civil liability on government contractors who defraud government programs. Most FCA recoveries are realized with the assistance of whistleblowers (“relators”), who act as so-called private attorneys general by filing qui tam suits on behalf of the United States and bringing key information to the attention of the DOJ. Relators are rewarded handsomely for their efforts. As the real party in interest, the government must decide whether to intervene and take control of the litigation. If the government declines to intervene, the FCA’s unique public-private enforcement mechanism permits the relator to continue the litigation on the government’s behalf.
The heightened pleading standard of Federal Rule of Civil Procedure 9(b) applies to FCA claims: “In alleging fraud . . . a party must state with particularity the circumstances constituting fraud.” Since the FCA was resurrected as an enhanced antifraud tool in 1986, courts have disagreed about what this pleading standard requires from relators who continue their suits without DOJ intervention. A strict interpretation of Rule 9(b)—requiring a relator’s complaint to identify representative samples of the allegedly false claims—is falling out of fashion across the circuits. Most courts instead opt for a relaxed standard, refusing to dismiss claims that provide particularized details of a fraudulent scheme along with reliable indicia that false claims were actually submitted. Over the last six years, the Supreme Court has refused three times to resolve this question, and the Rule 9(b) pleading standard continues to be applied inconsistently across the circuits.6 This Comment presents and explores new arguments in favor of the strict pleading standard.