The Fourth Circuit’s recent decision in United States ex rel. Wheeler v. Acadia Healthcare Co., No. 23-2101, 2025 U.S. App. LEXIS 2350 (4th Cir. Feb. 3, 2025). (United States ex rel. Wheeler v. Acadia Healthcare Company, Inc., No. 23-2101 (4th Cir. 2025) :: Justia), underscores the need for relators in False Claims Act (FCA) lawsuits to present concrete evidence when alleging broad, corporate-wide fraudulent schemes.
Acadia Healthcare is one of the country’s “largest addiction treatment and behavioral health care service providers.” In Wheeler, a physician assistant at an Acadia Healthcare facility in Asheville, North Carolina, alleged that therapists and counselors fabricated patient notes for services, such as group counseling sessions, that were never rendered, leading to improper billing of Government healthcare programs. Although her complaint cited multiple instances of fraudulent documentation, all were tied to the Asheville facility where she worked and other North Carolina facilities. However, she lacked supporting evidence beyond North Carolina. The government declined to intervene, and the district court dismissed her case entirely “because her claims relied solely on general compliance with applicable laws and regulations, rather than demonstrating that Acadia’s failure to provide therapy was ‘material to any Government Healthcare Program’s payment decisions.’”
On appeal, the Fourth Circuit partially revived the lawsuit but significantly limited its scope. The court held that because Wheeler’s evidence pertained only to North Carolina, she could not extend her allegations nationwide without further proof. Under Federal Rule of Civil Procedure 9(b), which requires fraud claims to be pleaded with particularity, her unsupported assertion of a corporate-wide policy was deemed insufficient.
This ruling is significant because relators often attempt to extrapolate company-wide fraud from incidents limited to a specific facility or a specific geographical area. Wheeler provides a potential safeguard for defendants, emphasizing that broad allegations corporate-wide fraud requires “substantial pre-discovery evidence of the facts.”
