Landmark Clausen Decision Reaffirmed
Without even hearing argument, the Eleventh Circuit Court of Appeals affirmed the dismissal of a qui tam relator's FCA complaint that had been filed by a former sales employee of two of the defendants. See Corsello v. Lincare, Inc., 2005 WL 2663288 (11th Cir. Oct. 20, 2005). The basis of the dismissal was the relator's failure to plead his fraud claims with particularity as required by Rule 9(b) of the Federal Rules of Procedure Under Rule 9(b), "the circumstances constituting fraud or mistake shall be stated with particularity."
When Mr. Corsello first brought his qui tam action in 1998, he named as defendants 56 entities and 99 John Does and John Doe Corporations. By the time he filed his second amended complaint, only three DME suppliers and a physician remained as defendants.
The Corsello opinion reinforced the court's decision in United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002), especially its finding that the act of submitting a fraudulent claim to the government is the "sine qua non" of a False Claims Act violation. Corsello 2005 WL2663288 at *4. Parenthetically, sine qua non is Latin for "without which not," meaning something like "an absolute prerequisite." Accordingly, it was not sufficient for Mr. Corsello, like Mr. Clausen before him, merely to allege that the defendants disregarded government regulations or failed to maintain proper internal policies. Rather, "[b]ecause it is the submission of a fraudulent claim that gives rise to liability under the False Claims Act, that submission must be pleaded with particularity and not inferred from the circumstances." Id. at *5.
Corsello also appealed the denial of his motion to file a third amended complaint. The district court's denial was based on Mr. Corsello's waiting over one year from the dismissal of his second amended complaint, not explaining why he did not plead the necessary facts in the previous versions of his complaint, and failing to offer an amendment that cured the deficiencies of his complaint. The Eleventh Circuit found no error in the district court's denial. In fact, the Court of Appeals concluded that allowing Mr. Corsello to amend his complaint would be "futile" because Mr. Corsello had admitted in his proposed third amended complaint that '"sales people do not .have access to the specific billing information that is submitted to the government' which evidenced that the revised complaint still lacked indicia of reliability." Id. at *6-7.
On January 6, 2006, the Eleventh Circuit Court of Appeals denied Mr. Corsello's petition for rehearing and rehearing en banc.