False Claims Act -- 2017

United States ex rel. Customs Fraud Investigations LLC v. Victaulic Co.   (U.S. Supreme Court)

False Claims Act pleading standard

On June 22, 2017, the NAM filed an amicus brief in the U.S. Supreme Court urging the Court to consider a decision out of the Third Circuit involving pleading standards for the False Claims Act (FCA). In particular, this case concerns Rule 9(b) pleading requirements for a qui tam relator filing a reverse false claim. Under Rule 9(b), a party pleading fraud is required to “state with particularity the circumstances constituting fraud. . . ”

Eleven courts of appeals have adopted conflicting tests to evaluate the sufficiency of a relator’s complaint under 9(b). The Third Circuit’s standard is the most lenient of those adopted, requiring relators to show nothing more than the opportunity for fraud – effectively eliminating Rule 9(b)’s particularity requirement.

The NAM argued that the Third Circuit’s lenient standard will increase abusive, unfounded FCA qui tam litigation against manufacturers harming those businesses, their employees, their owners, shareholders, the public at large, and even the Government. Furthermore, the NAM reasoned that resolving the circuit split would ensure consistent and appropriate application of Rule 9(b) and prevent speculation and forum shopping by outsider relators.

On October 2, 2017, the Supreme Court denied the petition for certiorari.

Related Documents:
NAM amicus brief  (June 22, 2017)


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