Whether Escobar overruled or modified the Twombly/Iqbal pleading standard for Rule 12(b)(6) motions to dismiss in False Claims Act cases

QUESTION PRESENTED It is, or at least, was well established that in order to withstand a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face” Ashcroft v. Iqbal, 556 U.S. 662 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). No “proof” or “evidence” was required at this initial pleading stage and certainly no evidence or proof was to be weighed by the reviewing court in deciding a motion to dismiss. In United Health Servs. v. United States ex rel: Escobar, 136 S. Ct. 1989 (2016), a False Claims Act case, this Court recently ruled that “evidence” or “proof” of the element of materiality will be required by the trial court, and that such evidentiary requirement would be “demanding” and “rigorous”. What this Court did not make clear in Escobar was when, in the life of the litigation, is such demanding proof required. That case was on appeal to the Supreme Court as a result of the granting of a Rule 12(b)(6) motion to dismiss, which could obviously lead one to surmise from its reading that the demanding and rigorous proof of materiality must be applied at the 12(b)(6) motion to dismiss stage, when, by definition, no proof exists ~ only pleadings. Such a reading means that, at least with respect to FCA cases, Twombly and Igbal have been overruled. The Ninth Circuit, in United States ex rel: Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017), construing Lscobar's language regarding materiality, specifically held that, even in a False Claims Act case, no evidence or proofis required at the initial pleading stage at which a Rule 12(b)(6) motion to dismiss might come into play. Instead, the only question that the reviewing court should ask is whether there are sufficient allegations regarding materiality that there is “more than the mere possibility that the government would be entitled to refuse payment if it were aware of the violations.” 862 F3d at 907. Campie, applying the Twombly and Igbal standard, held ii that proof would be something that will be required by Escobar later in time, but not at the initial pleading stage. In the case presented by this appeal, the Fifth Circuit did exactly the opposite. It relied on Escobar as controlling the standard of review for a motion to dismiss, and never even mentions the word “plausible”, or any derivative thereof. Instead, it relies on Escobar and uses a new standard of review in a Rule 12(b)(6) context; one requiring “demanding” and “rigorous” proof of materiality and goes further to weigh the evidence (using language in Escobar) to determine the sufficiency of the proof in the case and determine if it can withstand what it perceives as the new standard governing the motion to dismiss. Accordingly, there is a split in the Circuits regarding the interpretation of Escobar, and how it should be used in a 12(b)(6) context. The question presented is whether the Supreme Court ruling in Zscobar overruled or modified the standard of review to be used in ruling upon Rule 12(b)(6) motions to dismiss in cases involving the False Claims Act so as to require “proof” or “evidence” at the initial pleading stage above and beyond the plausibility standard set forth in Twombly and Igbal. And if so, how is the reviewing court to weigh the “evidence”, and to what other types of cases, or elements of particular cases, if any, does this new heightened standard of review now apply. iii