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The relator brought a qui tam action against the defendant, alleging that it operated a fraudulent kickback scheme designed to secure referrals to its dialysis clinics. The relator claimed that the defendant’s practices resulted in the submission of false claims to Medicare and Medicaid, thereby violating the FCA. The First Circuit held that the relator failed to plead facts with sufficient specificity.
United States ex rel. Flanagan v. Fresenius Medical Care Holdings, Inc., 1st Cir., No. 23-1305
- Pleading with Particularity – The court held that the relator did not meet the heightened pleading standard required for fraud cases under Rule 9(b) of the Federal Rules of Civil Procedure. The relator failed to specify any particular false claims submitted for government payment that were allegedly made due to kickbacks. The court emphasized that the relator must plead facts with sufficient specificity to allow the court to infer that the claims were linked to the fraudulent scheme.
- Causation – The court also addressed the issue of causation under the FCA. It held that the relator needed to demonstrate a “but-for” connection between the alleged kickback scheme and the false claims submitted to the government. The relator was unable to provide sufficient evidence that the claims would not have been made and paid had the alleged kickback arrangement not existed. Consequently, this failure resulted in the dismissal of the relator’s FCA claims.
- Denial of Leave to Amend – Lastly, the court ruled that the district court did not abuse its discretion in denying the relator’s motion for leave to amend his complaint. The court noted that the relator had sufficient time to address deficiencies in his claims but instead delayed seeking additional information. The significant time lapse and potential prejudice to the defendant were deemed valid reasons for denying the amendment.
— Case summary by Joshua Lim, Assistant Editor.
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