Outsider FCA Relators Must Plead Particularized Presentment and Rigorous Materiality—Regulatory “Gray Areas” and Agency Guidance Alone Do Not Suffice

1. Introduction

In A. Samuel Enloe v. Heritage Operations Group, LLC (7th Cir. Aug. 17, 2026), relator A. Samuel Enloe—a long-term-care pharmacy competitor rather than an insider—brought a qui tam action under the False Claims Act (FCA) against Heritage Operations Group, LLC (operator of Illinois long-term care facilities) and Green Tree Pharmacy, Inc. (a Medicare Part D sponsor providing pharmacy services to those facilities).

Enloe alleged that defendants unlawfully dispensed Schedule II controlled substances from “emergency narcotics kits” without a pharmacist’s prior receipt/approval of a valid prescription, purportedly violating the Controlled Substances Act (CSA) and its implementing regulation for emergency oral prescriptions, 21 C.F.R. § 1306.11(d). From that alleged CSA noncompliance, Enloe inferred that Medicare reimbursement claims were “false” under the FCA.

The district court dismissed the FCA claims under Rule 9(b) for failure to plead fraud with particularity, dismissed the CSA claims for lack of a private right of action, and dismissed unjust enrichment as derivative. On appeal, Enloe challenged only the FCA dismissal.

2. Summary of the Opinion

The Seventh Circuit affirmed. The court held that Enloe’s pleading failed to satisfy Rule 9(b) because it rested on speculative, layered assumptions rather than particularized facts supporting a plausible inference that defendants submitted false claims to Medicare. The majority also found it doubtful that Enloe adequately alleged a CSA violation given regulatory ambiguity about what constitutes “receipt” of an oral prescription when a physician leaves a voicemail after hours.

Independently, the court held Enloe failed to plead FCA materiality: he did not allege facts showing that the alleged regulatory noncompliance would actually influence the government’s payment decision, and settlements involving other pharmacies and a DEA communication were insufficient to establish materiality.

Judge Jackson-Akiwumi concurred in the judgment on narrower grounds: in her view, 21 C.F.R. § 1306.11(d) is “clear,” and Enloe plausibly alleged a CSA violation and pleaded the “who, what, when, where, and how.” But she agreed dismissal was required because Enloe did not meet the “rigorous materiality requirement” articulated in Universal Health Servs., Inc. v. United States.

3. Analysis

A. Precedents Cited

  • United States ex rel. Hanna v. City of Chicago, 834 F.3d 775 (7th Cir. 2016): cited for de novo review of a Rule 12(b)(6) dismissal. It supplies the appellate lens: accept well-pleaded facts, draw reasonable inferences for the relator.
  • United States ex rel. Prose v. Molina Healthcare of Ill., Inc., 17 F.4th 732 (7th Cir. 2021): serves two roles. First, it frames pleading-stage inferences. Second—and crucially—it supplies the circuit’s demanding approach to FCA materiality, emphasizing that it is not enough to allege “the government required compliance”; the relator must allege facts showing the government “attaches weight” to the requirement in deciding to pay.
  • United States ex rel. v. Automation Aids, Inc., 896 F.3d 834 (7th Cir. 2018) (quoted as “Berko-” in the slip): cited for qui tam posture, Rule 9(b)’s applicability to FCA fraud, and the proposition that informational asymmetry does not excuse failure to plead FCA elements with particularity.
  • United States ex rel. Gross v. AIDS Rsch. All.-Chi., 415 F.3d 601 (7th Cir. 2005): provides the classic three-part FCA falsity/knowledge framing: (1) statement to get government money; (2) falsity; (3) knowledge.
  • United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770 (7th Cir. 2016): anchors the “some substantiation” requirement and the idea that a relator need not plead actual invoices, but must plead facts allowing a plausible inference that claims were submitted. The majority uses Presser to characterize Enloe’s allegations as “speculation” lacking concrete support; the concurrence uses Presser to caution against “overly rigid” Rule 9(b) demands and recognizes variability in what details are required.
  • United States ex rel. Mamalakis v. Anesthetix Mgmt. LLC, 20 F.4th 295 (7th Cir. 2021): reinforces that invoices are not required at the outset and illustrates how detailed examples of improper conduct can support a strong inference of claim submission. The majority contrasts Mamalakis’s concrete procedural detail with Enloe’s assumptions.
  • Universal Health Servs., Inc. v. United States, 579 U.S. 176 (2016): provides the controlling “strict/rigorous” FCA materiality standard. Both the majority and concurrence treat materiality as independently dispositive here.
  • United States ex rel. Main v. Oakland City Univ., 426 F.3d 914 (7th Cir. 2005): cited for the limiting principle that “Tripping up on a regulatory complexity does not entail a knowingly false representation.” The majority deploys it to reject attempts to convert vague guidance and regulatory ambiguity into “knowing” falsity.
  • District court comparators invoked by Enloe:
    • United States ex rel. Stop Ill. Marketing Fraud, LLC v. Addus HomeCare Corp., No. 13 CV 9059, 2017 WL 467673 (N.D. Ill. Feb. 3, 2017): cited to show how kickback allegations plus referral/revenue effects can create a “strong inference” of Medicare claim submission; the majority distinguishes it as fact-rich and tied to unambiguous rules.
    • United States ex rel. Myers v. Am.’s Disabled Homebound, Inc., No. 14 CV 8525, 2018 WL 1427171 (N.D. Ill. March 22, 2018): an insider-directed upcoding case; distinguished because Enloe lacked insider billing detail and did not plead comparable concrete instructions and implementation.
    • United States ex rel. Graziosi v. Accretive Health, Inc., No. 13-CV-1194, 2018 WL 4503366 (N.D. Ill. Sept. 20, 2018): relied on internal documents and clear Medicare admissions rules; the majority finds Enloe’s “hypothetical regulatory violations” unlike Graziosi’s specific, rule-bound misconduct; the concurrence views Graziosi as supportive of Enloe’s Rule 9(b) theory (though ultimately not materiality).
  • Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436 (7th Cir. 2011): appears through Presser’s quotation to reinforce that Rule 9(b) details may vary with context—an interpretive tool the concurrence invokes to resist overly rigid pleading demands.
  • United States v. Molina Healthcare of Ill., Inc. (as referenced in the concurrence’s citations to “United States v. Molina Healthcare of Ill., Inc., 17 F.4th 732”): used to describe FCA-violative conduct in connection with Medicare Part D’s statutory requirement that covered drugs be “dispensed only upon a prescription.”

B. Legal Reasoning

1) Rule 9(b): “Some substantiation,” not speculation

The majority treats Enloe’s theory as an inferential chain: (i) the after-hours voicemail practice means pharmacists did not “receive” prescriptions before nurses dispensed; therefore (ii) dispensing violated the CSA; therefore (iii) Medicare Part D claims for such drugs were false. The court rejects this as layered assumption rather than pleaded fact. Unlike cases where relators provide concrete examples (e.g., procedures improperly billed in United States ex rel. Mamalakis v. Anesthetix Mgmt. LLC), Enloe offered no patient-level instances, no specific dates of dispensing events, no identified claim submissions, and no internal billing mechanics—only a policy document plus general assertions.

The court reiterates that invoices are not strictly required (United States ex rel. Presser v. Acacia Mental Health Clinic, LLC), but a complaint must still allege enough detail to support a plausible inference of presentment of false claims. The policy document, by itself, did not plausibly show unlawful dispensing occurred “hundreds” or “thousands” of times, nor that Medicare claims actually incorporated any false representation traceable to CSA noncompliance.

2) Falsity/illegality: regulatory “gray areas” and nonbinding guidance

The majority further questions whether Enloe plausibly alleged a CSA violation at all. The emergency dispensing regulation allows a pharmacist to dispense a Schedule II substance “upon receiving” oral authorization. The court treats “receipt” in the voicemail context as ambiguous: if the voicemail exists before dispensing, did the pharmacist “receive” it even if it is not listened to until the next day? Because the regulation does not explicitly require real-time pharmacist listening/approval, Enloe’s theory occupies a “gray area.”

Enloe attempted to cure that ambiguity with (i) settlements involving Omnicare and PharMerica and (ii) a 2016 DEA communication. The majority rejects both as insufficient: the cited settlements involved dispensing without any prescription (a different factual core), and the DEA communication at most created more interpretive questions rather than establishing an unambiguous legal duty. Under United States ex rel. Main v. Oakland City Univ., even a genuine regulatory complexity does not automatically equate to knowing falsity under the FCA.

3) Materiality: the dispositive missing link

Even assuming illegality, the court holds Enloe failed to plead that the alleged noncompliance was material to payment. Following Universal Health Servs., Inc. v. United States and circuit applications such as United States ex rel. Prose v. Molina Healthcare of Ill., Inc., the opinion stresses that materiality is “strict” and demands factual content showing the government actually relies on the requirement—e.g., a consistent practice of refusing payment for such violations.

Enloe’s materiality allegations were essentially: Medicare requires compliance with anti-fraud laws and controlled-substance rules; other pharmacies settled similar allegations; therefore payment here was conditioned on CSA compliance. The court deems that inadequate: it is not enough to assert a condition of payment in the abstract, and the settlements were not shown to reflect payment denial for the same conduct alleged here.

4) The concurrence’s refinement: pleadings may suffice on conduct, but not on materiality

Judge Jackson-Akiwumi reads 21 C.F.R. § 1306.11(d) as straightforward: a pharmacist may dispense “upon receiving oral authorization,” and independent pharmacist judgment in verifying prescriptions is central to controlled-substance regulation. She would treat dispensing before pharmacist authorization as a CSA violation and finds Enloe’s pleading sufficiently specific about actors (Green Tree leadership, Heritage nurses), time period (2014–2022), mechanism (emergency kit policy), and unlawful step (dispensing without prior pharmacist authorization).

Nonetheless, she concurs because, even with falsity plausibly pleaded, Enloe did not allege facts satisfying Universal Health Servs., Inc. v. United States materiality—an independent, necessary element.

C. Impact

The decision reinforces (and in outsider-relator cases, effectively heightens) two practical constraints in FCA litigation in the Seventh Circuit:

  • Outsider relators must bridge the inference gap with particularized facts. A policy document, industry experience, and generalized predictions of widespread noncompliance will not substitute for factual allegations that allow a strong inference of actual false claim submission. The opinion signals skepticism of competitor-led FCA cases built primarily from external inference rather than internal access.
  • Materiality remains a high bar for “regulatory-violation-as-falsity” theories. Even if a relator pleads a plausible violation of a healthcare or controlled-substance rule, the complaint must still allege concrete facts showing that the government would refuse payment (or meaningfully alter payment behavior) because of that type of violation.
  • Nonbinding agency guidance and other entities’ settlements are weak materiality proxies. The court’s treatment suggests that settlements—especially those involving different conduct—will rarely establish that the government considers a requirement payment-material in the demanding way Universal Health requires.

The concurrence also tees up a future dispute: whether “receipt” under 21 C.F.R. § 1306.11(d) is satisfied by a voicemail left before dispensing, or requires contemporaneous pharmacist awareness/authorization. The majority avoids resolving that definitively, but flags ambiguity; the concurrence characterizes the rule as clear. Future cases with stronger factual pleadings may force a merits resolution of that interpretive question.

4. Complex Concepts Simplified

  • False Claims Act (FCA): A statute imposing liability on those who knowingly submit (or cause submission of) false claims for government payment.
  • Qui tam / relator: A private person (the relator) suing on behalf of the government; if successful, the relator may receive a portion of the recovery.
  • Rule 9(b) particularity: Fraud must be pleaded with specifics—typically the “who, what, when, where, and how”—so defendants have fair notice and courts can screen speculative accusations.
  • Presentment: The act of submitting a claim for payment to the government. FCA pleadings must support a plausible inference that claims were actually submitted.
  • Materiality: The requirement that the alleged misrepresentation matters to the payment decision. Under Universal Health Servs., Inc. v. United States, it is not enough that a rule exists; the relator must show the government actually treats compliance as important when paying.
  • Schedule II / emergency oral prescription rule: Schedule II drugs are highly regulated. In emergencies, a pharmacist may dispense based on oral authorization if promptly documented and followed by a written prescription within seven days. The dispute here centers on what “upon receiving” oral authorization means in an after-hours voicemail workflow.
  • Medicare Part D sponsor: An entity administering prescription-drug benefits; payment and coverage rules can tie reimbursability to legal dispensing requirements (but FCA liability still requires materiality and particularized pleading).

5. Conclusion

A. Samuel Enloe v. Heritage Operations Group, LLC underscores that FCA cases—especially those brought by outsiders—cannot be built on regulatory ambiguity, nonbinding guidance, and inferential leaps from internal policies to widespread illegality to presumed billing fraud. The Seventh Circuit affirms dismissal because Enloe did not plead particularized facts supporting actual submission of false claims and, independently, did not satisfy the FCA’s “rigorous” materiality requirement under Universal Health Servs., Inc. v. United States. The concurrence highlights that even a plausibly pleaded underlying regulatory violation may fail without concrete allegations showing that the government would treat that violation as payment-determinative.