Case Explained: UNITED STATES OF AMERICA EX REL. LIESA KYER Plaintiff – v. THOMAS HEALTH SYSTEM, INC

Court: United States Court of Appeals for the Fourth Circuit Filed: 2026-06-04 The fourth-circuit affirmed the district court’s dismissal of a qui tam action brought under the False Claims Act by former nurse Liesa Kyer against Thomas Health System and related entities. The court held that the complaint failed to state a claim because it did not plead fraud with the particularity required by Federal Rule of Civil Procedure 9(b). The court applied the standard that a plaintiff must allege “the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation,” or a pattern of conduct that necessarily led to the submission of false claims. The court found the complaint insufficient because it failed to plausibly allege violations of the underlying Stark Law or Anti-Kickback Statute with sufficient factual detail to support the False Claims Act liability. Specifically, regarding the Stark Law, the court ruled that the complaint did not adequately allege a prohibited “financial relationship” where physician compensation varied with the volume or value of referrals for designated health services; the wRVU-based compensation structure described in the complaint was tied to the physicians’ personally performed work, which is excluded from the definition of “referrals.” Regarding the Anti-Kickback Statute, the court found that allegations regarding cash transfers to cover operating deficits and above-market compensation were equally consistent with lawful business practices and did not plausibly allege remuneration intended to induce referrals. Consequently, because the underlying conduct was not sufficiently alleged as unlawful, the claims for conspiracy and reverse false claims also failed. The practical consequence is that the dismissal of the complaint stands, and the district court’s denial of Kyer’s motions for vacatur and leave to amend under Rules 59(e), 60(b), and 15(a) is upheld due to prejudice caused by undue delay and the failure to cure deficiencies despite access to extensive discovery. The case is closed without further proceedings on the merits. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.