Reinforcing Rule 9(b) Particularity in False Claims Act Qui Tam Suits

Introduction

The Third Circuit’s decision in John Collado v. Bracco USA, Inc., No. 24-1668 (3d Cir. May 1, 2025), clarifies and reinforces the heightened pleading requirements under Federal Rule of Civil Procedure 9(b) for qui tam actions brought under the False Claims Act (FCA), 31 U.S.C. § 3729 et seq. Relator-Plaintiff John Collado sued manufacturers of radiological contrast agents (Bracco USA, Bracco Diagnostics, and Acist Medical) and a group of hospitals and health systems (collectively, “Providers”), alleging that “free” power injector machines provided by Bracco in exchange for volume purchase agreements violated the federal Anti-Kickback Statute and resulted in “legally false” Medicare and Medicaid claims. The district court dismissed Collado’s complaint for failure to plead fraud with particularity, and the Third Circuit affirmed.

Key issues:

Whether the relator’s complaint satisfied Rule 9(b) by specifying the “who, what, when, where, and how” of the alleged fraudulent submissions;
Whether boilerplate allegations “on information and belief” suffice where the underlying documents (the injector agreements) express compliance with the Anti-Kickback Statute;
Whether Rule 9(b) may be relaxed when factual information lies primarily within the defendants’ control.

Parties:

Relator-Plaintiff: John Collado (former employee of a competitor)
Defendants: Bracco USA, Inc.; Bracco Diagnostics, Inc.; Acist Medical Systems, Inc.; NYU Langone Health System, Inc.; DuPage Medical Group; HonorHealth; Southern Illinois Healthcare Enterprises, Inc.; Kern County Hospital Authority (among others).

Summary of the Judgment

The Third Circuit affirmed the district court’s dismissal of Collado’s FCA and state false-claims claims with prejudice. It held:

FCA and state-law fraud claims must satisfy Rule 9(b)’s heightened particularity requirement, going “well beyond Rule 8’s threshold of plausibility.”
Collado’s second amended complaint offered only conclusory allegations—“on information and belief”—that the Providers failed to disclose the value of free injectors on cost reports and that Bracco failed to report those discounts in its average sales price filings.
The attached “Injector Placement Agreements” expressly required compliance with the Anti-Kickback Statute, suggesting a legitimate explanation and undermining any strong inference of fraud.
Collado did not show that the relevant facts lay exclusively within defendants’ control, so there was no basis to relax Rule 9(b).

Accordingly, the court reinforced that mere opportunity to defraud or bare “information and belief” allegations cannot satisfy the “reliable indicia” standard for pleading FCA fraud.

Analysis

Precedents Cited

United States ex rel. Bookwalter v. UPMC, 946 F.3d 162 (3d Cir. 2019): Emphasized that FCA pleadings must “go well beyond Rule 8” and articulate particular details of the fraudulent scheme.
Foglia v. Renal Ventures Management, 754 F.3d 153 (3d Cir. 2014): Adopted the “reliable indicia” test—plaintiffs must pair detailed scheme allegations with facts strongly suggesting that false claims were submitted.
United States ex rel. Greenfield v. Medco Health Solutions, 880 F.3d 89 (3d Cir. 2018): Defined “legally false” claims under the FCA in the context of Anti-Kickback Statute violations.
United States ex rel. Silver v. Omnicare Inc., 903 F.3d 78 (3d Cir. 2018): Clarified that facts consistent with legitimate explanations erode any inference of fraud.
In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410 (3d Cir. 1997): Held that even under a relaxed standard, plaintiffs must show why allegations are not baseless.
Craftmatic Securities Litigation, 890 F.2d 628 (3d Cir. 1989): Established that relaxation of Rule 9(b) is warranted only if the omitted facts lie exclusively within defendants’ control.

Legal Reasoning

The court applied a de novo review to the district court’s dismissal for failure to state a claim. It reiterated that in FCA qui tam actions:

Rule 9(b) requires plaintiffs to plead “the who, what, when, where, and how” of the alleged fraud.
A complaint must include “reliable indicia” demonstrating a strong inference that false claims were actually submitted to the government.
Ambiguous boilerplate allegations—especially those “on information and belief” without factual underpinning—do not suffice.
Exhibits that affirm contractual compliance with relevant statutory obligations can undermine a fraud allegation by pointing to legitimate explanations.
Relaxation of Rule 9(b) is unavailable unless a plaintiff demonstrates that critical facts are solely in defendants’ hands—a showing Collado did not make.

Impact

This decision sends a clear message to FCA litigants and relators:

Plaintiffs must investigate and marshal concrete, documentary, or testimonial evidence before filing a qui tam complaint.
Contracts or other documents that explicitly require compliance with anti-fraud statutes can cut both ways—either supporting or undercutting an inference of illicit scheme.
Courts will not permit complaints that rest on speculative or conclusory allegations to proceed to discovery, thereby curbing fishing expeditions.
Future relators should gather indicia such as cost-report entries, pricing submissions, internal communications, or other contemporaneous records to demonstrate non‐disclosure or misrepresentation.

Complex Concepts Simplified

Qui Tam Action: A lawsuit filed by a private individual (relator) on behalf of the government to recover funds lost to fraud.
False Claims Act (FCA): Federal statute imposing liability on anyone who submits false or fraudulent claims to the U.S. government.
Anti-Kickback Statute: Prohibits offering or receiving remuneration to induce referrals or purchases reimbursable by federal healthcare programs.
“Legally False” Claim: A reimbursement claim that violates a statutory condition of payment (e.g., concealment of kickbacks).
Rule 9(b) “Particularity”: Requirement that allegations of fraud specify the exact nature of the fraudulent statements or omissions, including time, place, actor, and content.
“Reliable Indicia”: Tangible facts or documents that make it plausible—not merely possible—that false claims were submitted.

Conclusion

John Collado v. Bracco USA, Inc. reaffirms the Third Circuit’s rigorous approach to pleading FCA fraud. By rejecting conclusory “information and belief” allegations and emphasizing the importance of “reliable indicia,” the court has raised the bar for qui tam relators. This decision will guide practitioners in assembling well‐substantiated complaints and deter unsupported FCA filings, thereby protecting defendants from undue discovery burdens and preserving judicial resources for bona fide fraud claims.