Pleading Requirement Typically Relaxed in California FCA Cases

First, under California law, when the details of an alleged fraud are more within the knowledge of the defendant than the plaintiff, the requirement of pleading fraud with specificity is relaxed. See Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217 (superceded by statute on other grounds; citations omitted); see also Tarmann v. State Farm Mutual Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158; People v. Highland Fed. Savings & Loan (1993) 14 Cal.App.4th 1692, 1717.

In most qui tam cases, the facts underlying the defendant’s fraud undeniably lie more within the defendant’s knowledge than that of the plaintiff. For precisely this reason, defendants are often able to defraud the government for years, and frequently for millions of dollars. Accordingly, because “the facts lie more in the knowledge of” the defendants, the defendants “must necessarily possess full information concerning the facts of the controversy,” and the requirement of specificity is relaxed with respect to those facts. See Committee on Children’s Television, supra, 35 Cal.3d at 217.

Second, California courts have also recognized that where the plaintiffs allege a widespread fraudulent scheme, alleging the minutiae of the scheme is neither required, nor practical. In Sepulveda, for example, the court stated: “We acknowledge the allegations of fraud lack the specific detailed minutiae desired by the [] defendants. Those details, however, are properly the subject of discovery, not demurrer. The magnitude of the fraudulent scheme alleged and the number of plaintiffs involved invoke the analogy to the fact situation in Committee on Children’s Television,” supra, 35 Cal.3d 197, 214.  People ex rel. Sepulveda v. Highland Fed. Savings & Loan (1993) 14 Cal.App.4th 1692, 1718 (“Sepulveda”). Quoting Committee on Children’s Television, the Sepulveda court affirmed that where a broad pattern of fraud is alleged,    

to require plaintiffs to plead the specifics of each [fraudulent] advertisement would render a suit challenging the overall program impractical. The complaint would have to include thousands of pages setting out specifics which are largely within defendants’ knowledge. The cost and difficulty of compiling, organizing, and setting down the information would seriously deter the filing of such complaint. The effect of such a pleading requirement, moreover, would not be limited to discouraging private suits; it would also seriously hamper suits by public officials seeking to enjoin schemes of unfair competition and deceptive advertising.

Sepulveda, supra, 14 Cal.App.4th at 1718 (quoting Committee on Children’s Television, Inc., supra, 35 Cal.3d at 214) (emphasis added). Similarly, in most FCA cases, especially those dealing with healthcare billing fraud, if plaintiffs were required to detail each false claim submitted by defendants, complaints would regularly exceed thousands of pages. 


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