Thomas Foglia v. Renal Ventures Management
2014 U.S. App. LEXIS 10725
| 3rd Cir. | 2014Background
- Relator Thomas Foglia, a former Renal Ventures nurse, filed a qui tam False Claims Act (FCA) suit alleging Renal submitted fraudulent Medicare claims related to the drug Zemplar and reused single‑use vials. The United States declined to intervene.
- District Court dismissed Foglia’s second amended complaint (SAC) for failure to plead fraud with the particularity required by Fed. R. Civ. P. 9(b), and for failing to show noncompliance was a condition of payment; dismissal was with prejudice.
- Foglia alleged Renal billed Medicare as if 5 mcg Zemplar vials were used single‑use, while in practice Renal harvested leftover drug from vials and administered it to other patients.
- HHS had issued guidance allowing multiple use of injectable vials if six safety conditions were met; Foglia alleged Renal did not follow those conditions.
- Foglia relied on Renal inventory and patient logs showing daily vial usage (29–35 vials/day) inconsistent with the number of patients treated if all doses were from single‑use 5 mcg vials, suggesting reuse and overbilling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 9(b) requires identification of specific false claims or "representative samples" in an FCA case | Foglia: need only plead scheme details plus reliable indicia that claims were submitted; specific claim IDs unnecessary | Renal: Rule 9(b) requires representative examples identifying time/place/content/actors (rigid standard) | Court: adopts a relaxed, "nuanced" standard — particular scheme details + reliable indicia that claims were submitted satisfy Rule 9(b) |
| Whether allegations here meet the Rule 9(b) standard for factually false claims (overbilling Zemplar) | Foglia: inventory/patient logs, reimbursement rules, and access to billing records create a strong inference that false claims were submitted | Renal: logs are consistent with lawful reuse under HHS conditions or lawful billing for actual amounts; plaintiff hasn’t shown a strong inference of submission of false claims | Court: factual allegations (logs, billing incentive, alleged noncompliance, and defendant's exclusive access to records) suffice to give notice under Rule 9(b); reversal of dismissal on factually false claim portion |
| Whether alleged HHS safety conditions constitute a condition of payment (legal falsity) | Foglia suggested noncompliance rendered claims false | Renal: even if noncompliant, plaintiff failed to show those conditions were preconditions of Medicare payment | Court: notes FCA targets rules that are preconditions of payment but treats this case as factually false; declines to resolve whether HHS conditions are payment prerequisites here |
| Whether dismissal with prejudice was appropriate after two amendments and initial discovery | Foglia: should be allowed further proceedings to develop proof | Renal: prior amendments and discovery justified dismissal with prejudice | Court: reverses dismissal as to the factually false claim and remands for further proceedings |
Key Cases Cited
- United States ex rel. Wilkins v. United Health Group, 659 F.3d 295 (3d Cir. 2011) (discusses requirement of identifying specific claims at pleading stage and factually vs. legally false claims)
- United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009) (Rule 9(b) satisfied by scheme details plus reliable indicia that claims were submitted)
- United States ex rel. Noah Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451 (4th Cir. 2013) (advocates stricter representative‑sample pleading standard)
- United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002) (endorses representative sample requirement under Rule 9(b))
- United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493 (6th Cir. 2007) (applies particularity requiring representative examples)