United States ex rel. Bledsoe v. Community Health Systems, Inc.

Community Health Systems, Inc. (defendant) owned Sparta Hospital Corp., d/b/a White County Community Hospital (White County) (defendant), where Sean Bledsoe (plaintiff) worked. Bledsoe contacted government officials to report the defendants’ fraudulent billing practices and was encouraged to file a qui tam lawsuit. Bledsoe sued under the False Claims Act (FCA), 31 U.S.C. § 3729, alleging the defendants knowingly presented fraudulent claims to Medicaid and Medicare. Bledsoe’s amended complaint named the proper defendants and added claims. Bledsoe alleged the defendants billed for services that did not occur, charged for unbillable procedures, miscoded items, and inflated charges. The district court concluded that FCA claims were fraud claims required to be pled with particularity under Federal Rule of Civil Procedure (FRCP) 9(b). The district court dismissed with prejudice, because Bledsoe had time to amend the complaint to meet the particularity requirement. Bledsoe appealed, and the United States Court of Appeals for the Sixth Circuit reversed, holding that whether FCA claims were fraud claims had been unsettled and dismissal should not have been with prejudice. Bledsoe filed another amended complaint, alleging a “fraudulent scheme” by the defendants and citing examples. The defendants moved to dismiss, and numerous claims were dismissed for failure to plead with particularity under FRCP 9(b) and statute of limitations issues. Bledsoe appealed.