The U.S. Court of Appeals for the Eleventh Circuit has concluded that a successful False Claims Act (FCA) claim should “allege not just a scheme, but a scheme that actually led to false claims being submitted to the government”—and must do so with particularity.
This heightened pleading standard cost the qui tam relators in United States ex rel. Vargas v. Lincare, Inc. et al., 24-11080, 2025 WL 1122196 (11th Cir. Apr. 16, 2025), three out of the four claims in their fourth amended complaint. The U.S. District Court for the Middle District of Florida had dismissed the entire complaint for failing to plead sufficient facts under Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”).
The Eleventh Circuit reversed in part, holding that certain allegations of upcoding were adequately pleaded under Rule 9(b) to survive a motion to dismiss. The complaint alleged that the defendants, a medical supplier and its subsidiary, improperly coded the accessories (i.e., batteries, chargers, and cables) of continuous positive airway pressure (CPAP) machines as ventilator accessories. Ventilator accessories are covered by TRICARE, a health insurance program for military personnel and their families; CPAP accessories are not.
The Eleventh Circuit affirmed the dismissal of claims alleging: (1) the routine waiver of patient copays in violation of TRICARE conditions of participation; (2) automatic shipments of CPAP supplies, such as masks (TRICARE covers these supplies only upon a request); and (3) illegal kickbacks to employees of labs or medical offices who could choose which supplier was used.
“The most direct way to satisfy [Rule 9(b)] is by identifying specific claims submitted to the government: invoices, billing records, reimbursement forms,” wrote Senior U.S. Circuit Judge Gerald Bard Tjoflat. Alternative means (other than documentary proof) may satisfy Rule 9(b), the court noted, as long as the claim has “sufficient indicia of reliability”—a case-by-case determination.
Reliability and Falsity
The Eleventh Circuit concluded that the relators successfully pleaded specific allegations relating to the CPAP accessory scheme. The court rejected the defendants’ arguments that: (1) there were insufficient indicia of reliability to show that an actual claim was submitted, and (2) even if claims were submitted, they were not false. On these points, the court determined the following:
- Reliability: The relators adequately alleged hands-on access to private records, including patient files, billing correspondence, and authorizations for payment—“the type of inside information that [is] sufficient at the pleading stage.” The relators identified specific claims (i.e., specific instances of upcoding), with dates, amounts, and billing codes.
- Falsity: The relators adequately alleged that the coding practices were improper and the resulting claims were false. Though the defendants claimed that TRICARE allowed the substitute ventilator codes, this was a factual dispute and not grounds for dismissal, per the court.
Meanwhile, the relators identified no specific false claims submitted to TRICARE in connection with: (1) any co-pay waiver, (2) the auto-ship scheme involving CPAP replacement supplies, or (3) the alleged kickbacks.
No Shotgun Pleadings
In a separate concurrence, Judge Tjoflat called attention to a “foundational pleading defect that the District Court did not reach.” The relators’ fourth amended complaint, he noted, packed all four of the fraud claims described above into a single count—burdening the courts, defendants, and the appellate process.
“That is not how litigation works,” he wrote. “The fourth amended complaint is a shotgun pleading—something we have condemned time and time again. It…forces courts to play detective rather than umpire.”
Shotgun pleadings, the judge stated, run counter to Rule 8 (requiring statements in a claim to be “short and plain,” with allegations that are “simple, concise, and direct”) and Rule 10 (requiring each claim founding on a separate transaction or occurrence to be stated in a separate count, “if doing so would promote clarity”). When confronted with a shotgun complaint, he said, a defendant should move for a more definite statement under Rule 12(e). And a district court should sua sponte strike it—“early and firmly.”
Takeaways
The Vargas decision offers clarity in the Eleventh Circuit on the rigorous application of the Rule 9(b) “reliable indicia” standard in the FCA context. With this decision, the Eleventh Circuit has made clear that merely alleging fraudulent schemes or practices is not enough to survive a Rule 9(b) challenge. Relators must allege concrete details connecting alleged schemes to actual false claims submitted to the government. Failure to do so is likely to result in dismissal. As demonstrated in Vargas, the Eleventh Circuit’s strict application of the standard underscores the high bar that relators must clear to avoid dismissal at the pleading stage.
Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.
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