1. The FCA prohibits fraud against the government
The False Claims Act (“FCA”) imposes liability on any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment; knowingly makes or uses a false record or statement material to a false or fraudulent claim; or conspires to violate the FCA. 31 U.S.C. § 3729(a)(1)(A)–(C). The statute defines “knowingly” to include actual knowledge, deliberate ignorance, or reckless disregard, and does not require proof of specific intent to defraud. 31 U.S.C. § 3729(b)(1). Employers that fund operations and employees through receipt of Medicare and Medicaid dollars have a duty to know and comply with applicable statutes, regulations, and program guidance governing payment for covered services.
2. The employer’s fraud must be done knowingly
The employer’s knowledge of wrongdoing may be inferred where it continues a billing practice after being alerted that it violates governing requirements. See United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 776 (7th Cir. 2016). A sequence of warning, acknowledgment, audit planning, reserve-setting, and continued improper coding, may infer such knowledge.
The whistle blower, referred to as a Relator under the FCA, must allege at least initially, that the employer as an entity, acted with the requisite knowledge. As found in United States ex rel. Ceas v. Chrysler Grp., LLC, “Plaintiff alleges that he informed Defendant ‘of the widespread problem of New Chrysler customers having the wrong warranty coverage,’ which, read in context of Plaintiff’s second amended complaint, plausibly suggests that Defendant acted with knowledge, or at least with reckless disregard of the truth. This is sufficient to state a plausible claim of knowledge.” Case No.: 12-cv-2870, 2016 BL 18572, at *8 (N.D. Ill. Jan. 19, 2016).
3. The Relator must base fraud claims on specific code violations
In healthcare upcoding cases, the Relator’s Complaint may rely on binding Medicare Regulations defining requirements for provider certification and coverage, supplemented by CMS manuals that explain how those requirements are applied in practice. (42 C.F.R. § 414.605; Medicare Policy Manual) Such guidance is routinely considered in FCA cases to assess falsity and scienter. See, United States v. Lakeshore Medical Clinic, Ltd., No. 2:11-cv-00892-LA, 2013 BL 83984, at *7 (E.D. Wis. Mar. 28, 2013); United States ex rel. Ivanich v. Bhatt, No. 1:13-cv-04241, 2014 BL 197728, at *2 (N.D. Ill. July 14, 2014); United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 743 (10th Cir. 2018); Yates v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1295 (11th Cir. 2021); United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 312 (3d Cir. 2011).
The Relator’s Complaint may also explain that medical coding originates in HCPCS and how it is processed for billing purposes. “[F]or a supplier to obtain reimbursement . . . , the supplier must identify its products using a coding system known as the Healthcare Common Procedure Coding System (“HCPCS”). Vargas ex rel. Alvarez v. Lincare, Inc., 134 F.4th 1150, 1163 (11th Cir. 2025).
In United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770 (7th Cir. 2016), the Court found that Presser’s allegations involved an affirmative billing code misrepresentation. “Ms. Presser’s complaint sufficiently alleges that the defendants misused a billing code and falsely represented to the state and federal governments that a certain treatment was given by certain medical staff when in fact it was not.” (Id. at 779-80.)
4. Fraud must be alleged with particularity under Rule 9(b)
A formal Complaint by the Relator must identify the who, what, when, where, and how of the fraudulent scheme. However, Rule 9(b) does not require invoice numbers where the scheme and resulting false claims are plausibly alleged. In the healthcare fraud context, the allegations should specify how the services billed by the employer did not qualify for the higher reimbursement under Medicare and Medicaid. Claims submitted for services that do not meet applicable coverage requirements are false under the False Claims Act. A Complaint must explain in detail why the claims were false with a technical explanation grounded in Medicare regulations and CMS guidance, instead of a conclusory allegation.
Rule 9(b) does not require a relator to plead invoice numbers, claim IDs, or attach billing records where the complaint alleges a detailed scheme that necessarily resulted in the submission of false claims. United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 854–55 (7th Cir. 2009)(We don’t think it essential for a relator to produce the invoices (and accompanying representations) at the outset of the suit.)
5. Upcoding and overbilling must be material to qualify under the FCA
“[T]he term ‘material’ means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” United States ex rel. Streck v. Eli Lilly & Co., 152 F.4th 816, 849 (7th Cir. 2025), quoting Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 192-93 (2016) (quoting 31 U.S.C. §3729(b)(4)).
The Relator’s Complaint must plausibly allege materiality, based on, for example, Medicare pays significantly more for the service coded, instead of the service provided, and beneficiaries are responsible for higher copayments. Upcoding that directly affects the amount the Government pays and the costs imposed on beneficiaries, is classic indicia of materiality under Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 193–94 (2016).
As stated in United States v. Molina Healthcare of Ill., Inc., courts and litigants should not “take an overly rigid view of the formulation”; the allegation must be “precis[e]” and “substantiat[ ed],” but the specific details that are needed to support a plausible claim of fraud will depend on the facts of the case. 17 F.4th 733, 739 (7th Cir. 2021).
6. A retaliation Complaint must plausibly allege the Relator’s FCA conduct caused the firing
The protected conduct element of a FCA retaliation claim does not require the plaintiff to have developed a winning qui tam action before he is retaliated against. United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1522 (10th Cir.1996). It requires only that the plaintiff have engaged in “acts … in furtherance of an action under this section.” 31 U.S.C. § 3730(h) (emphasis added).
There is nothing in that language to suggest that the employee must already have discovered a completed case. To the contrary, § 3730(h) expressly includes “investigation for … an action filed or to be filed” within its protective cover. This manifests Congress’ intent to protect employees while they are collecting information about a possible fraud, before they have put all the pieces of the puzzle together. See Neal v. Honeywell Inc., 33 F.3d 860, 864 (7th Cir.1994). Indeed, it is for this reason that courts have held employees’ activities protected although they have not filed qui tam suits. See id. at 864-65; Childree v. UAP/GA AG CHEM., Inc., 92 F.3d 1140, 1144, 1146 (11th Cir.1996); Ramseyer, 90 F.3d at 1522.
7. The employer’s retaliation may take myriad forms
A Relator’s activity may be protected when reporting what he or she reasonably believed to be fraud against Medicare and Medicaid and by attempting to stop unlawful billing practices. Retaliation may take the form of the employer excluding the Relator from information needed to perform, stripping of job responsibilities, imposing materially different and more onerous work conditions than those imposed on similarly situated employees, or forcing resignation through intolerable working conditions. Causation is plausibly alleged based on the totality of the circumstances.
The Seventh Circuit instructs that a complaint must be read “sensibly and as a whole[.]” Engel v. Buchan, 710 F.3d 698, 710 (7th Cir. 2013). Thus, when considering claims of retaliation, courts should not parse events in such a way that they lose “sight of the bigger picture, which show[s] an ongoing pattern of retaliation.” Carlson v. CSX Transp., Inc., 758 F.3d 819, 829 (7th Cir. 2014). The temporal proximity of the employee’s protected activity with the employer’s retaliation supports the inference that they were retaliatory.
CONCLUSION
Alleging a viable FCA claim involves an employer’s knowing and material fraud against the government in violation of specific Medicare and Medicaid codes. In retaliation cases, the Relator must specifically show his or her activity was in furtherance of the FCA and the employer retaliated because of that protected activity. ~ Alan C. Olson
Alan C. Olson & Associates, S.C. 2880 S. Moorland Rd. New Berlin, WI 53151 Telephone: (262) 785-9606
