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(Article from Insurance Law Alert, January 2017)

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The Second Circuit affirmed a New York federal district court decision dismissing a False Claims Act suit against insurers and other entities.  Takemoto v. Nationwide Mut. Ins. Co., 2017 WL 214572 (2d Cir. Jan. 18, 2017).

Takemoto filed a complaint pursuant to the False Claims Act, 31 U.S.C. §3729 et seq., accusing insurers, corporations and administrators of failing to comply with reimbursement obligations under the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b).  A New York district court dismissed the complaint, finding that it failed to plead facts as to each defendant’s obligation to reimburse the government, a required element under the False Claims Act.  Affirming the ruling, the Second Circuit held that Takemoto failed to allege facts establishing an inference of a reimbursement obligation on the part of any defendant.  In particular, the court explained that the complaint failed to identify any specific beneficiaries to whom payment was allegedly due; rather, allegations were based on statistics about the overall Medicare population.  As such, the court concluded that Takemoto’s allegations “‘supply nothing but low-octane fuel for speculation’ about the requisite reimbursement obligation element of his claims, which cannot defeat Rule 12(b)(6) dismissal even under the basic pleading requirements of Rule 8(a)” (citations omitted).  The Second Circuit denied Takemoto’s request to amend the complaint based on his failure to indicate how the defects would be cured.  Simpson Thacher partner Bryce Friedman represents the Travelers Companies in this matter.