Late last month, a three-judge panel of the Eleventh Circuit Court of Appeals reinstated portions of a former executive’s False Claims Act (“FCA”) whistleblower action against Health Management Associates Inc. (“HMA”), alleging that the company engaged in an illegal to generate referrals of Medicare and Medicaid patients to its facilitates.
In its ruling, the Eleventh Circuit affirmed the dismissal of plaintiff-relator Michael Mastej’s claims relating to events in 2008 and 2009. It only reversed the Middle District of Florida’s dismissal of Mastej’s allegations concerning events in 2007. The district court had dismissed his claims for failure to satisfy the heightened pleading standards of Rule 9(b) of the Federal Rules of Civil Procedure.
The court noted it employs a “nuanced, case-by-case approach” to the Rule 9(b) analysis, emphasizing that there are no “bright-line rules.” The panel concluded that Mastej’s personal knowledge of and active participation in HMA’s business and revenue operations in 2007 – when he served as a Vice President and the CEO of one of HMA’s hospitals – provided the “the required indicia of reliability” to support many of his allegations. The Eleventh Circuit reinstated Mastej’s claims as they related to conduct in 2007, despite the fact that he did not provide details about a single claim submitted to Medicare for reimbursement as part of the illegal kickback scheme alleged in his complaint.
The court, however, ruled that Mastej’s allegations from 2008 and 2009 were those of a “corporate outsider” because he left to work for an HMA subsidiary in 2007. As such, after 2007, he did not have access to details regarding HMA’s business practices. His allegations from that time period therefore lacked the indicia of reliability necessary to satisfy Rule 9(b)’s particularity requirement. The court concluded that Mastej failed to provide the factual basis necessary to support his assertion that the alleged scheme continued after 2007.
Although Rule 9(b) analyses are necessarily case and fact specific, the Eleventh Circuit’s decision reminds defendants to carefully scrutinize qui tam complaints to ensure that the plaintiff’s allegations are sufficiently supported. Moreover, defendants can use this decision to rebut arguments that personal knowledge of past alleged wrongdoing is sufficient to support allegations that the wrongdoing continued beyond the period when the plaintiff had personal knowledge.
A copy of the 11th Circuit’s decision is available here.