Olshan Secures Dismissal of False Claims Act Health Care Fraud Action in California

Olshan successfully obtained the dismissal of a qui tam action alleging health care fraud claims under the False Claims Act against client Kaysan Ghasseminejad and his related companies in the U.S. District Court for the Central District of California. In Lifschutz v. Ghasseminejad et al., Judge Michelle Williams Court granted defendants’ motion to dismiss after plaintiffs had already amended their complaint in response to an earlier dismissal motion. The decision is particularly significant in the current enforcement environment, where False Claims Act and health care fraud cases frequently proceed beyond the pleading stage, especially in California. Olshan Litigation and White Collar & Government Investigations partner Derrelle Janey and Litigation counsel Katherine Mateo represented the defendants and focused their motion on the heightened pleading requirements for fraud under Federal Rule of Civil Procedure 9(b), as well as the rule’s prohibition against improper group pleading. The motion argued that the amended complaint relied on generalized allegations of a fraudulent scheme without alleging specific facts connecting the defendants to the purported misconduct. In her 12-page opinion, Judge Court agreed, emphasizing that “conclusory allegations regarding direction, operation or control are insufficient.” The court concluded that the complaint failed to plead with particularity the alleged fraudulent conduct and failed to adequately link the defendants to the claimed scheme. The ruling reinforces Rule 9(b)’s continuing role as a meaningful gatekeeping standard in False Claims Act litigation. The decision underscores that plaintiffs alleging health care fraud must do more than describe an alleged scheme in broad terms and must instead plead with specificity who engaged in the alleged misconduct, when the conduct occurred and how the alleged fraud was carried out, particularly where multiple defendants are involved. “Eliminating the matter at the pleading stage is a result we are especially proud of,” Derrelle said, whose practice focuses heavily on defending clients in civil and criminal health care fraud matters in California and across the country. Earlier this year, Derrelle authored a Law360 article examining effective defense strategies in False Claims Act litigation, including approaches for challenging insufficient pleadings at the outset of a case. You can read Derrelle’s article, “To Survive FCA Actions, Small Cos. Must Take Offensive Steps,” here.