United States ex rel. Eberhard v. Physicians Choice Laboratory Services, LLC
642 F. App'x 547
6th Cir.2016Background
- Relator Brian Eberhard, a former PCLS sales employee (Sept. 2012 onward), sued PCLS under the False Claims Act (FCA) alleging it paid commissions to independent 1099 sales agents that violated the Anti-Kickback Statute (AKS) and led to false claims to Medicare/Medicaid.
- Eberhard attached PCLS’s Sales Representation Agreement and alleged thousands of samples submitted by 1099 agents in April–May 2014; he estimated >50% were paid by Medicare/Medicaid, equating to ~7,000 claims for May 2014.
- The United States declined to intervene. PCLS moved to dismiss under Rules 9(b) and 12(b)(6); Eberhard sought limited discovery to obtain billing and commission records.
- Eberhard conceded he did not identify specific claims or presentment dates but argued Rule 9(b) should be relaxed because he had "personal knowledge" and reliable indicia that claims were submitted.
- The district court dismissed for failure to plead fraud with particularity (no specific false claims or false certifications) and denied discovery as a prohibited fishing expedition.
- The Sixth Circuit affirmed, holding Eberhard failed to plead distinct false claims or facts giving a strong inference that specific claims were submitted despite leaving open a possible narrow relaxed Rule 9(b) standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 9(b) requires identification of specific false claims in an FCA suit | Eberhard: Rule 9(b) may be relaxed where relator has personal knowledge that claims were submitted; his alleged numbers and >50% Medicare/Medicaid rate suffice | PCLS: Sixth Circuit requires identification of actual false claims or representative samples; speculation is insufficient | Court: Affirmed strict Rule 9(b) application; relator must identify specific claims or plead facts giving a strong inference of submission; Eberhard failed |
| Whether Eberhard’s alleged personal knowledge justified relaxing Rule 9(b) | Eberhard: As an employee with knowledge of payors and submission volumes, he raised a strong inference claims were submitted | PCLS: His knowledge covered only the alleged scheme, not actual billing or presentment to government | Court: Personal-knowledge exception not met—he alleged the scheme but not facts showing submission of specific fraudulent claims |
| Whether the district court abused discretion by denying discovery prior to Rule 12(b)(6) dismissal | Eberhard: Limited discovery needed to identify specific false claims and payments | PCLS: Discovery would permit a fishing expedition and defeat Rule 9(b)/12(b)(6) purpose | Court: No abuse of discretion; broad, unlimited requests justified denial to prevent fishing expedition |
| Whether the complaint stated an implied-certification FCA theory adequately | Eberhard: Implied-certification theory based on AKS noncompliance and PCLS’s compliance assertions on its website | PCLS: Insufficient particulars to link certifications to specific claims | Court: Dismissal affirmed on pleading particularity grounds, not resolving implied-certification doctrinal issues |
Key Cases Cited
- Chesbrough v. VPA, P.C., 655 F.3d 461 (6th Cir. 2011) (discusses Rule 9(b) strictness and limited circumstances for relaxation based on personal knowledge)
- Bledsoe v. Community Health Sys., Inc., 501 F.3d 493 (6th Cir. 2007) (requires relators to identify actual false claims; relaxation possible only in narrow circumstances)
- Sanderson v. HCA-The Healthcare Co., 447 F.3d 873 (6th Cir. 2006) (FCA liability attaches to the claim for payment; pleading the scheme alone is insufficient)
- Marlar v. BWXT Y-12, LLC, 525 F.3d 439 (6th Cir. 2008) (reiterates requirement to plead specific false claims under Rule 9(b))
- Foglia v. Renal Ventures Mgmt., L.L.C., 754 F.3d 153 (3d Cir. 2014) (discusses circuit split and representative-sample approaches to pleading false claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard for Rule 12(b)(6))
- United States ex rel. Hobbs v. MedQuest Assocs., Inc., 711 F.3d 707 (6th Cir. 2013) (discusses implied-certification theory under the FCA)