Health Law Daily Wrap Up, FALSE CLAIMS ACT—5th Cir.: Fifth Circuit upholds dismissal of False Claims Act whistleblower suit, (Nov 5, 2025)

By Elena Eyber, J.D.

The Fifth Circuit affirmed dismissal of a whistleblower’s False Claims Act case alleging false Medicare billing, finding the claims lacked factual support and particularity.

The Court of Appeals for the Fifth Circuit affirmed the district court’s dismissal with prejudice of a whistleblower’s qui tam action under the False Claims Act (FCA). The relator, a former sales representative at a rehabilitation hospital, alleged that the facility submitted false Medicare claims by allowing non-clinical employees to influence patient admission decisions. The Fifth Circuit held that the complaint failed to allege sufficient facts or particular details showing that false claims were submitted or that any alleged misconduct was material to government payments. The Fifth Circuit also upheld the denial of further leave to amend, concluding that any amendment would be futile (U.S. ex rel. Gentry v. Encompass Health Rehabilitation Hospital of Pearland, L.L.C., No. 25-20093 (5th Cir. Nov. 3, 2025)).

Medicare rules allow non-clinical involvement. The relator argued that the hospital’s process for preadmission screenings (specifically the use of non-clinical staff in gathering and drafting screening narratives) violated Medicare requirements and resulted in improper reimbursements. The Fifth Circuit disagreed, emphasizing that Medicare regulations expressly permit non-clinical personnel to collect information for screenings, provided that clinicians make the ultimate admission decisions. The relator, the Fifth Circuit found, did not allege facts showing that the information submitted was false, that clinicians failed to exercise independent judgment, or that any patients were inappropriately admitted.

Insufficient particularity and futility of amendment. The Fifth Circuit further held that the complaint lacked the particularity required by Rule 9(b) for fraud-based claims. The relator did not identify any specific false claim actually submitted to Medicare, nor provide reliable indicia supporting an inference that false claims were submitted. Allegations that physicians “rubberstamped” non-clinical recommendations were deemed speculative and unsupported by factual detail. As a result, the deficiencies in pleading falsity and causation doomed the claims for false presentment, false records, and conspiracy.

Concurring opinion on constitutional concerns. Finally, the Fifth Circuit agreed that dismissal with prejudice was proper. Although the district court applied the stricter Rule 16 “good cause” standard instead of Rule 15’s more permissive amendment rule, the Fifth Circuit deemed the error harmless because the relator had already amended the complaint twice without adding meaningful factual support. Judge James Ho concurred separately to reiterate his view that the False Claims Act’s qui tam provisions raise serious constitutional concerns regarding the separation of powers and the President’s Article II authority.

The case is No. 25-20093.

Judge: Per Curiam.

Attorneys: Volney LeRon Brand (Brand Law, P.L.L.C.) for Deidre Gentry. Robert Jeffrey Layne (Reed Smith, L.L.P.) for Encompass Health Rehabilitation Hospital of Pearland, L.L.C.

Companies: Encompass Health Rehabilitation Hospital of Pearland, L.L.C.

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