## Facts

- Sean Bledsoe, a former employee of Community Health Systems, Inc. (CHS), filed a qui tam action under the False Claims Act (FCA) on behalf of the United States against CHS and Sparta Hospital Corp., doing business as White County Community Hospital.
- The complaint alleged fraudulent Medicare and Medicaid billing practices, including schemes that produced inflated reimbursements through improper coding and billing.
- After an earlier appeal addressing FCA pleading standards, Bledsoe filed a second amended complaint asserting multiple fraud theories.
- The district court dismissed portions of the second amended complaint for failure to plead fraud with particularity under Federal Rule of Civil Procedure 9(b) and dismissed other portions as barred by the statute of limitations.
- The district court then dismissed the entire second amended complaint with prejudice, without explaining why claims previously deemed sufficient were being dismissed.
- Separately, CHS entered into a settlement with the federal government for $30,494,749.51 to resolve claims that arguably overlapped with Bledsoe’s allegations.
- Bledsoe moved for recognition of the settlement and an award of a relator’s share; the district court denied the motion.
- Bledsoe appealed the Rule 9(b) dismissals, the limitations rulings, the with-prejudice dismissal of the entire complaint, and the denial of his settlement-related motion.

## Issues

1. Whether Bledsoe’s FCA allegations in the second amended complaint satisfied Rule 9(b)’s particularity requirement.
2. Whether the district court correctly dismissed certain FCA claims as time-barred.
3. Whether the district court erred by dismissing the entire second amended complaint with prejudice, without explanation, after previously sustaining portions.
4. Whether the district court erred in denying Bledsoe’s motion concerning the government’s settlement with CHS and his potential relator’s share.

## Decision

- The Sixth Circuit affirmed in part, reversed in part, and remanded.
- The court held that Rule 9(b) applies to FCA claims and affirmed dismissal of generalized or conclusory fraud allegations lacking sufficient detail.
- The court reversed dismissal of adequately pled allegations where the complaint provided sufficiently detailed, concrete examples connecting alleged schemes to the submission of false claims.
- The court affirmed in part and reversed in part the statute-of-limitations rulings, holding that some claims were untimely while others fell within the limitations period.
- The court reversed the blanket dismissal with prejudice to the extent it extinguished viable claims and criticized the absence of an explanation for dismissing claims earlier upheld.
- The court remanded for further consideration of whether, and to what extent, Bledsoe was entitled to a relator’s share of the government’s settlement based on any overlap with his allegations.

## Legal Principles

- FCA fraud allegations must be pled with particularity under Federal Rule of Civil Procedure 9(b).
- A relator must connect alleged fraudulent schemes to the actual submission of false claims; describing a scheme in the abstract is insufficient.
- Rule 9(b) may be satisfied through “representative examples” of false claims pled with enough detail (e.g., time, content, billing particulars) to support a strong inference of false submissions, without identifying every claim.
- Dismissal with prejudice requires reasoned justification, especially where some claims are adequately pled and timely.
- A relator may be entitled to a share of settlement proceeds to the extent the settlement resolves claims based on, or overlapping with, the relator’s allegations and contribution.

## Conclusion

The Sixth Circuit required FCA relators to plead fraud with Rule 9(b) particularity but allowed pleading through representative examples tied to actual false claims, reversed dismissal of viable and timely allegations, and remanded both the unexplained with-prejudice dismissal and the determination of any relator’s share in a related government settlement.


United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493 (6th Cir. 2007)