Professional Documents
Culture Documents
No. 11-1726
Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Richard D. Bennett, District Judge.
(1:08-cv-00390-RDB)
Argued:
Decided:
HOGAN
LOVELLS
US
LLP,
Baltimore,
PER CURIAM:
Relator
dismissal
of
his
Paul
R.
Amended
Black
appeals
Complaint,
the
district
alleging
courts
various
claims
over
Blacks
claims,
and
even
if
it
did
Black also
We
I.
A.
On February 12, 2008, Relator Black filed this FCA qui
tam action in the United States District Court for the District
of Maryland against Appellee Health and Hospital Corporation of
Marion
County,
political
Indiana
subdivision
of
(HHC),
the
State
municipal
of
Indiana
corporation
that
owns
and
and
Although the
He then
obtained
for
nursing
home
expenditures
that
HHC
Specifically,
the
Amended
Complaint
includes
four
counts:
Count I, that HHC caused state Medicaid agencies to
submit factually false claims to the Centers for
Medicare and Medicaid Services (CMS), in violation
of 31 U.S.C. 3729(a)(1); 3
Count II, that HHC caused state Medicaid agencies to
submit legally false claims to CMS, in violation of 31
U.S.C. 3729(a)(1);
1
The subsections under which these claims arose were renumbered in May 2009.
At the time that Blacks initial
Complaint was filed, 3729(a)(1) provided that a person could
be held liable for a civil penalty and treble damages if he or
she knowingly presents, or causes to be presented, to an
officer or employee of the United States Government or a member
of the Armed Forces of the United States a false or fraudulent
claim for payment or approval[.]
31 U.S.C. 3729(a)(1)
(2006), amended May 2009.
153-55.
The
following
excerpt
from
Blacks
Amended
be held
or she
a false
paid or
(2006),
See Mem.
defer the period for him to move to amend until after the Court
resolves the Motion to Dismiss and stated, the Court will be
in a better position to evaluate any motion for leave to amend .
. . after it has decided HHCs pending Motion to Dismiss.
Mem.
2011
WL
1161737
(J.A.
559-84)
(D.
Md.
Mar.
28,
See J.A.
8-24.
On April 11, 2011, Black filed a Motion for Leave to
File
Second
Amended
Complaint,
along
with
Motion
for
B.
1.
The
backdrop
to
Relator
Blacks
Amended
Complaint
See Ark.
Dept of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275
(2006); 42 U.S.C. 1396, et seq.
the
Secretary
of
the
United
States
Department
of
Health
and
275.
In
order
to
receive
federal
funds
for
Medicaid,
42 U.S.C. 1396a.
The State
and
the
scope
of
[the
states]
Medicaid
program
and
42 C.F.R.
serve
as
basis
for
Federal
Id.
financial
400.203.
Each
state
must
provide
42
prospective
years,
state
governments
have
utilized
various
are
limit
relevant
mechanism
to
this
(UPL)
appeal.
allows
First,
states
to
the
upper
reimburse
for
the
same
services.
See
42
C.F.R.
447.272(b).
72 Fed. Reg.
2236,
2238
certified
(Jan.
public
2007). 7
18,
Finally,
expenditures
(CPEs),
states
which
also
allow
utilize
Medicaid
CPEs must
the
early
42 C.F.R. 433.51(b).
2000s,
the
Medicaid
funding
landscape
changed when Congress adopted a system that would set new UPLs
on overall aggregate payments to Medicaid providers by class
(e.g.,
state
government-owned,
local
government-owned,
or
3148 (Jan. 12, 2001); Alameda County Med. Cntr. v. Leavitt, 559
F. Supp. 2d 1, 2 (D.D.C. 2008) (explaining that CMS had refined
a system based on [UPLs], with reimbursements calculated using
aggregate,
revisions
and
were
not
meant
provider-specific,
to
limit
the
cost
ability
of
data).
the
states
The
to
10
payment
to
any
provider
in
class
and
could
It could
then recoup that payment through an IGT from the same provider.
This method was permissible under the new regulations.
2.
CMS repeatedly and publicly expressed concern with the
UPL/IGT financing scheme used by the states to take advantage of
aggregate UPLs, beginning at least as early as 2000.
CMS
sought
to
issue
new
regulation
that
In 2007,
would
have
See
72
Fed.
Reg.
2236
11
(Jan.
18,
2007)
(the
2007
Proposed Rule). 8
In
2.
During the time leading up to the introduction of the
2007 Proposed Rule and thereafter, however, public debate on
this issue thrived.
the subject.
106th
V.
Cong.
Roth,
1-2
Jr.,
(Sept.
Chairman)
6,
2000)
(statement
(describing
the
use
of
of
Sen.
UPL
12
RL31021,
Upper
Intergovernmental
Transfers:
Regulatory
Legislative
and
Legislative reports
Payment
Current
Action
Limits
Issues
and
(2005);
and
Recent
U.S.
Govt
media
outlets
also
featured
these
issues.
A9
(J.A.
400-01);
Nursing
Homes,
Medicaid
Make
Deal,
Indianas
Medicaid
financing
scheme
drew
In
national
his
Amended
Complaint,
Black
alleges
that
HHC
(OMPP),
the
Indiana
state
agency
responsible
for
proposed
Compl. 51.
amendment
to
the
Indiana
State
Plan.
Am.
state
additional
expended
Medicaid
[UPL
such
agencies
payments],
amounts
on
to
claim
and
receive
that
the
state
provided
nursing
facility
care.
actually
Id.
52
(emphases in original).
The
amendment
to
the
State
Plan
about
which
Black
under the fraudulent scheme entered into between HHC and OMPP,
no expenditures were actually made by OMPP and, ultimately, only
CMS paid any part toward the supposed supplemental UPL Medicaid
Payments.
certified
it
had
spent,
and/or
amounts
that
were
Id. 64.
Black also claims that HHC and OMPP entered into a
[s]ecret
obtain
FFP
agreement
written
for
agreement
UPL
shows,
in
February
payments[.]
he
says,
Am.
that
2002
to
Compl.
HHC
unlawfully
92.
provided
This
false
or
reduction
in
accounts
14
receivable.
Id.
98-99.
he
claims
that
HHC
reported
Id. 106.
contrived
CPEs
in
authority
is
already
societys
interests,
purpose.
and
qui
in
tam
position
action
to
would
vindicate
serve
no
This is
the
the
Amended
Complaint
was
filed,
the
(i)
in
a
Federal
criminal,
civil,
or
administrative
hearing
in
which
the
Government or its agent is a party;
(ii)
in
a
congressional,
Government
Accountability
Office,
or
other
Federal
report, hearing, audit, or investigation; or
(iii) from the news media,
unless the action is brought by the Attorney
General or the person bringing the action is
an original source of the information.
31 U.S.C. 3730(e)(4). The Supreme Court has observed that the
new statute lacks the explicit language that would make it
retroactive.
See Graham Cnty. Soil & Water Conservation Dist.
v. United States ex rel. Wilson, ___ U.S. ___, 130 S. Ct. 1396,
1400 & n.1 (2010).
Even if it would apply retroactively,
however, as explained infra, Blacks claim still does not
survive under the narrower reading adopted by this court prior
to March 23, 2010.
16
Id. at 14.
II.
As
an
initial
matter,
we
are
obliged
to
satisfy
United States v.
Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 218 (4th Cir.
2011)
([A]
assess
its
federal
court
subject-matter
marks omitted)).
has
an
independent
jurisdiction.
obligation
(internal
to
quotation
the
truth
of
such
facts
17
by
preponderance
of
the
evidence.
We review a district
Id. at 348.
We review
Id.
See Easley v.
mistake
has
been
committed.
United
States
v.
U.S.
III.
A.
In adopting the FCA, Congress intended to protect the
funds and property of the Government from fraudulent claims[.]
18
This
2010)
also
(internal
United
citations
States
ex
and
rel.
quotation
Owens
v.
marks
First
omitted).
Kuwaiti
Gen.
Trading & Contracting Co., 612 F.3d 724, 728 (4th Cir. 2010).
FCA actions may be brought by the Attorney General or by a
private party.
If a private
A relator may
plus
attorneys
fees
and
costs.
See
31
U.S.C.
3730(d).
notifies
the
government,
and
the
government
will
either
Id. 3730(b),
between
encouraging
stifling
parasitic
private
persons
lawsuits[.]
19
to
Graham
root
Cnty.
out
Soil
fraud
&
and
Water
nonetheless
individual
who
entitled
has
to
direct
original
and
source
independent
status
as
knowledge
an
of
the
United
528
F.3d
292,
299
(4th
Cir.
2008),
revd
on
other
public
disclosure
bar
is
10
triggered
by
The pre-March
the
public
20
ex rel. Grayson v. Advanced Mgmt. Tech., Inc., 221 F.3d 580, 582
(4th Cir. 2000).
Court
Opinion
11-12
(internal
quotation
marks
and
citations omitted).
Black
contends
that
[t]he
district
court
did
not
and
Congress,
as
compared
with
the
highly
Br. of Appellant
21
specific
There is no
requirement
matches
under
with
relator.
our
case
specificity
Indeed,
the
law
the
that
the
allegations
Supreme
Court
public
made
has
disclosure
by
recognized
qui
tam
that
the
put[s]
potential fraud.
Since
unpublished
the
Federal
Government
on
notice
of
opinion
County,
that
SEC
this
forms
court
were
has
held
public
in
an
disclosures
to
wrongdoing,
notice
of
[]
[they]
certainly
transactions
provide[]
.
from
easily
which
an
United States ex
held
that
public
disclosures
need
not
match
the
rel. Gear v. Emergency Med. Assocs. of Ill., 436 F.3d 726, 729
(7th Cir. 2006) (citing GAO reports and medical news reports
about
improper
Medicare
billing
as
examples
of
public
disclosures, even when they did not name the FCA defendant);
United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386,
389 (6th Cir. 2005) ([W]e do not require specific disclosure of
fraud to find public disclosure.).
22
public
mechanism.
discussion
As
the
about
the
district
propriety
court
of
the
UPL/IGT
acknowledged,
CMS,
manifested
in
GAO
reports,
The discussion
congressional
within
the
statute,
and
Federal
as
Government
confines
result,
on
of
they
notice
of
the
were
a
reports
and
public
disclosure
sufficient
potential
to
put
fraud.
bar
the
Graham
that
Blacks
allegations
underpinning
his
FCA
claims
the
2010
revisions
to
the
public
disclosure
In Siller
21 F.3d
in
favoring
language.).
narrow
reading
of
the
based
upon
disclosures.
Vuyyuru,
555
F.3d
at
351-52
(emphasis
added).
Blacks
Amended
Complaint
at
the
very
least
court
parrot[s]
the
found
that
concerns
the
Amended
outlined
in
Complaint
the
2007
The
essentially
Proposed
Rule;
clearly erroneous.
First, the Amended Complaint reflects the core of the
2007 Proposed Rule and other public disclosures.
For example,
he
regulations
reviewed
the
2007
related
to
IGTs,
CMS
proposal
CPEs,
and
to
UPL
adopt
new
financing
J.A. 500.
court did not clearly err in its decision on the second prong.
25
3.
Finally,
Blacks
last
opportunity
to
survive
HHCs
direct
and
independent
knowledge
of
the
information
on
which his allegations are based and has voluntarily provided the
information to the Government[.]
(pre-March
2010).
acquired
it
agency,
and
dependent
on
through
it
is
public
relators
his
own
31 U.S.C. 3730(e)(4)(B)
knowledge
efforts,
is
direct
without
independent
if
the
disclosure.
Grayson,
an
if
he
intervening
knowledge
is
not
221
at
583
F.3d
Complaint.
In
this
regard,
he
proffered
that
he
to
Black,
they
discussed
the
UPL/IGT
J.A. 496.
mechanism
at
Id. at
HHC
as
share
of
the
extra
FFP
HHC
has
received
and
had
Blacks
purported
status
as
the
original
As explained in
initial Complaint that he never had access to all the books and
records of Defendants that may be relevant to this action and
was therefore not in a position to identify, in all cases, all
the
specific
claims[.]
documents
used
to
make
the
false
or
fraudulent
knew in my gut that HHCs UPL deal with the State was illegal.
J.A. 498.
11
C.
Black also asks us to reverse the district courts
denial
of
his
Complaint.
request
for
leave
to
file
Second
Amended
2011, and then, the Motion for Leave to File Second Amended
Complaint and Motion for Reconsideration of the courts denial
of the Motion to Defer on April 11, 2011.
three, and Black argues that the court erred in doing so.
We
procedural
posture
in
his
filing
of
the
Motion
to
We disagree.
As the district
(quoting Francis
F.3d
v.
Gaicomelli,
588
186,
197
(4th
Cir.
2009)).
28
J.A. 722.
complaint,
sufficient
to
Black
survive
still
a
motion
Supreme
Court
has
failed
to
to
provide
dismiss,
and
allegations
that
held
that
repeated
failure
further
Indeed,
to
cure
are
acceptable
grounds
for
denying
request
for
IV.
For
the
foregoing
reasons,
the
judgment
of
the
district court is
AFFIRMED.
29