The False Claims Act prohibits individuals and organizations from knowingly “[c]ausing to be presented” to the government false claims for payment or approval. See 31 U.S.C. 3729(a)(1)(A). In order for a defendant to be liable, the False Claims Act requires that a claim must have actually been submitted to the Federal Government for payment. See U.S. ex. rel. Nathan v. Takeda Pharm. N.A., Inc., 707 F.3d 451 (4th Cir. 2013).
In Takeda, the Fourth Circuit addressed whether a whistleblower properly alleged that the defendant, Takeda, had in fact presented false claims for payment. It is helpful to understand the Court’s analysis and holding as presentment of a claim is fundamental to establishing liability under the False Claims Act.
The whistleblower in Takeda was a sales manager for the company. The whistleblower alleged that his employer marketed certain drugs to doctors who do not treat patients for the conditions in which the drugs were approved. The whistleblower also alleged Takeda marketed higher doses of its drug for conditions where only a low-dose had been approved by the FDA. Id. at 454.
The whistleblower in Takeda, unfortunately, was unable to allege that his employer ever presented a false claim for payment by the federal government. As the circuit court explained:
Fatal to the claim, [the whistleblower] does not allege in the amended complaint that the targeted rheumatologist wrote any off label prescriptions that were submitted to government for payment, a critical omission in a case brought under the [False Claims] Act. Id. at 458.
Takeda stands for the proposition that claims presented under the False Claims Act cannot merely allege fraud in a vacuum. Here, the court summarizes why the whistleblower’s claim was deficient:
The critical question is whether the defendant caused a false claim to be presented to the government, because liability under the act attaches only to a claim actually presented to the government for payment, not to the underlying fraudulent scheme. Therefore, when a [whistleblower] fails to plead plausible allegations of presentment, the [whistleblower] has not alleged all the elements of a claim under the act. Id. at 456.
The Takeda decision reminds us of the importance of pleading all elements of a claim under the False Claims Act. Takeda is helpful to whistleblowers because it acknowledges decisions which upheld whistleblower claims even though the whistleblower could not allege exact dates when fraudulent claims were presented. For example, Takeda cites US ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009), where the Fifth Circuit found a plausible claim was alleged. The whistleblower’s allegations in Grubbs constituted “more than probable, nigh likely, circumstantial evidence that the doctor’s fraudulent records caused the hospital’s billing system in due course to present fraudulent claims to the government.” Id. at 457.
The Fourth Circuit in Takeda affirmed the lower court’s dismissal of the whistleblower’s complaint. In doing so, the court held that when a defendant’s actions, as inferred from the allegations, could have led, but need not necessarily have led to the submission of a false claim, the whistleblower must allege in the complaint with particularity that specific false claims actually were presented to the government for payment. Id. at 457.
Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at firstname.lastname@example.org.