thank you and good morning your honour's i would like to reserve three minutes of my time for rebuttal your honour's able in this case is alleging a very straightforward fraud and a fraud that can only occur in the context of first going through the f h a specific procedures that are required known as the last mitigation steps it did not it did not begin that process as the regulations require by affirmatively going to the homeowner in a face to face meeting and then discussing with the homeowners plans to avoid foreclosure allowing the homeowner to keep their their home but also saving the government a great deal of money for each claims the district court however incorrectly found that this did that these allegations were barred by the false claims act public disclosure bar the public disclosure it's bar by its terms applies only worth substantially the same allegations or transactions and i ask you about that let's some of this is consisting of the facts and some of this to be a hypothetical so let's say the prior litigation the consent decrees related to last minute geisha measures and just with federally issued mortgages ok let's just say hypothetically that's what they said so that's a hypothetical not reality and then let's say this complaint talk just about last minute geisha measures at that level of generality and just federally insured mortgages i take it you would agree that would be a prior public disclosure that would bar the case on the i'm thinking about your hypothetical right now i take it you're in your hypothetical dealt with the key level of generality is lost medication measures and just federally insured mortgages that the lawsuit the key tam lawsuit is just about loss mitigation measures and just about federally insured mortgages in theory depending upon what the prior consent order is i just gave you all the facts and that's all i have ok if that's the case if the prior consent decree purports to deal with all loss mitigation violations essentially writ large then yes we would be then there would be a problem that would be a problem faced in this case the difference the things that i think you think distinguish it is well the prior case didn't focus just on federally insured mortgages that dealt with all mortgages and then in this case you say we're it's true we're talking about loss mitigation measures but we're drilling down to some types of loss mitigation measures say face to face meetings that's your basic theory of the case isn't it i think i think i think were it were not so technical is that when you look at when you look at these claims that for example deal when you look at the for example the articles dealing with last mitigation and servicing issues for non f h a insured loans it's not simply that those were not insured by the government it's that in those cases because the what the what the actual text of the public disclosure bar deals with is obligations it doesn't deal with the it doesn't deal with the remedy that theoretically could cover this the fact i mean it deals with whether is i mean this is more than an allegation this is beyond an allegation this is more doubt it's not less that is what made me notice to the public eye shortly i want make sure i understand judge jones question just correctly you can of law and that would not prohibit a key t m plaintiff from coming in and talking about a specific type of violation of law your problem here in my view is that consent decree drills down pretty far it's at last medication measures and it seems to me one of your point is if it doesn't contain a limiting lying would be and it would include any and all that again requirements that the remedy could be construed that that broadly does not mean that there's been any allegation there's nope there has been no allegation of the specific wrongdoing that's that's described here there's nothing in that you know that's the key the key phrase you know the specific yes your key point that's the hope thing you're doing you're saying listen if you have a category that's not doesn't bar us if the next time down we focus on a type of one type of issue under that category and that i think that's your theory of the case it's a it's just a level of generality issue well my problem is loss mitigation measures is a lot more specific than something that's u s bank has been charged with violations of law i agree with you if it was at that level of generality you could come in and bring a ke lawsuit that focuses one on one type of violation of law but this seems to me you know really slicing it very thinly i guess is the way i'd put it i would argue that that saying that there have been violations of loss mitigation is not actually that is not actually that slicing at that that that at all if you're not distinguishing between the different programs requirements which are fundamentally different the requirement at issue here is the requirement that the bank proactively go to the homeowner and initiate with the homeowner these wasit mitigation procedures that did not mean one is face to face meetings is that the main one won't the face to face meetings or are emblematic of that word's a requirement that the bank be proactive that it's the banks responsibility to initiate it's not it's not that we do have i don't know what you mean by it's the banks duty to initiate loss mitigation by definition requires initiative well what it means i guess you're not adding anything when you say that well here's here's what i'm getting for that with respect to these other programs and you'll see it in the consent decrees and in the other documents it's the homeowner who goes to the bank and asks for a loan modification or or a forbearance or any of those other remedies and then there's allegations that the banks misled them for example as to whether those were available and what the terms were that is not our case our case is not the homeowners went to the bank and got bad information are our case is in the f h a program and only in the f h a program the bank has to go to the homeowner and initiate that process and the bank didn't do that that didn't make that requirement doesn't even igs system the other programs and therefore could not have been covered no matter how broadly some some decree says all this covers all got lost mitigation issues narrowing i'm narrowing into this the bank's failure to take proactive steps with the homeowner to make was mitigation happen in the absence of the homeowner going to the bank to get loss mitigation that that's what specific to the f h a program and the face to face contact is certainly a big part of that aside as i said that guarantees sort of a minimum standard of efforts to make sure i'm following it's everything the u s bank says is a prior disclosure consent decrees in the like you're saying not one of them covered federally insured mortgages and b i want you to answer what i'm asking not what you want to answer it's not did they say that it's did bite terms it potentially cover federally insured mortgages what's the answer to that question i think the answer to that question is they they could potentially the remedies could cover it but we think as a matter of law the statute is quite clear it doesn't say do the remedies potentially cover and you can see that for example in the quote that we gave you from the o c c decree if you read the if you read that quote as it doesn't care about allegations of law versus remedies it cares about disclosure notice that's what it's asking it was what it but but but you know in terms of the purposes of the public disclosure bar the fact that the u s bank has agreed to do all these things under federal law which by the way it agreed to do before that consent decree by by that reasoning the violation had been disclosed before it ever entered into the consent decree because it already had that up location the question is was it wrong doing disclose not was its obligation disclose but that and that's all the consent decree as is an additional obligation to have been enough if you had news articles that said you know all around the country u s bank is systematically failing failing to proactively contact homeowners to do the face to face meeting and other requirements of the watch mitigation cop trawlers report that indicates that it was definitely not concerned with the type of lie about which you're concerned to put language in the cop trawlers report should we look specifically speaks to i think she was medication procedures where i'm going to disagree with you is what what is the import of that the import of that is that the comptroller was not focusing on it well but if the comptroller was not focusing as narrowly issue are that really does it get us very far because if the cop trolling allegations are broader if you want to call if you want to differentiate between a consent decree is giving the contra part comptroller report it's not the case that everything the comptroller doesn't specifically mention in exclude is therefore publicly disclosed that would be rather anomalous to say as i understand it that everything it didn't mention is therefore publicly disclosed it had to specifically mention wrongdoing in order to not disclose it that seems to me to have the public disclosure part to make sure that maybe just another way to variation on the first question i asked you to see your theory of the case let's say that prior consent decrees talk at always about loss mitigation measures but never drill down to types of loss mitigation measures that were violated you just say in gross there was a lot there were lost medication measure violations and let's say it's even just about federally insured mortgages ok and then the key plaintiff comes along and says ah that didn't put us on notice because we're not we're not complaining about loss mitigation measures in general we're just complaining about the failure to initiate the face to face meetings is i understand your theory of the case you would say that keating and plaintiff can go forward well that would be a mark i just want to hear yes or no and that i know it's a hypothetical not exactly this case isn't your theory of the case that that would not be a disclosure because the prior consent decree the prior allegations were only at the level of loss mitigation measures violations not the specific type i'm hard pressed to give you a definite yes or no but i will say that would be a that would be a much much harder question if there were if there were actually something that spoke general very generally to f h a wasc mitigation failings that would be a much harder case than we had here and the fact that you are that they were the only difference is that the prior stuff was about all types of mortgages looting federally insured ones but didn't but the reason why that's different is because the programs the requirements of loss mitigation the a potential for fraud are fundamentally different minutes for each side ok i'm sorry i misunderstood i forgot what we were doing i mean we made that decision in the boy but the way the case was just under i understand your honor is it appropriate for me yeah i think correctly held that the complaint alleges a false claims act violation and if this court reaches that part of the appealed it should affirm that decision u s banks certify that it complied with all hundred delay sions including regulations that required it to   in loss mitigation if u s bank tried to collect if they change churns benefits without engaging in loss mitigation that would violate hard regulations and u s bank would be subject to a travel damages penalty that would return the claim benefits to what in short relator is alleged that u s bank presented with a pulse claim and deprive the government of its benefit of the bargain u s banks claim for insurance benefits implied that it had engaged in loss mitigation as required by if there's two things about this issue one as you pointed out in your briefing just now we don't know it's we don't have to resolve the issue that's point one point two is there a supreme court case that a is addressing this something isn't that like a second reason not to address this point is that we're likely to get some guidance from the court on this point by june that's correct your honor and it may very well make sense for this court if it's to reach the implied certification three of the case to hold it decision until the supreme court issues its opinion in universal health services versus escobar that case is currently scheduled for argument on april nineteenth and there should be a decision by june barring  issue here i'm sorry your honor to hear i got to decide this issue of generality we've got here i don't i don't think necessarily that the supreme court's opinion would decide the particular issue in this case but it is considering both the search warrants asking whether it's going to decide the issue that your friend was just arguing and the answer to that question is no the case at the u s supreme court does not involve the public disclosure point correct your honor i'm sorry i misinterpreted court it was granted us to two questions one was the scope of the implied certification theory and whether there can be a claim under the implied certification theory the second was whether the implied certification theory in terms of materiality needs to be based on an expressed statement in the regulation that it is a condition of the game and nothing to do with the if you were so i would interested in public disclosure it does not that's what i think of the issue that are in the united states there's not take a position on the public disclosure bar issue and i'm not prepared to address it today before the court because i was not authorized to make any statements on behalf of the united states on the public disclosure bar and issue or statement of interest in the district court has not gone after the bank to collect any money or anything like that the united states sa the point of your being here with us the point of us being here is so we wanted a way to let you be here for which we are very grateful your honor our interest in this case is to ensure that there still is a venue under the false claims act to pursue claims against mortgagees who violate the particular regulation here it issue that they have to engage in loss mitigation the failure to engage in loss mitigation results in a tr damages penalty that recoups that payment what a police have argued is that because there is an income testability provision that the initial if they change surance benefits will be made and then are subject to recruitment and a triple damages penalty that insulates them from false claims act liability we disagree with that theory and we wanted to present argument to explain to the court why it should not adopt that novel theory sounds like our focus is elsewhere doesn't it which is perfectly fine are two policy reasons that animate the public disclosure bar one is that on the one hand the law should encourage true whistleblowers with inside information to come forth and alert the government to misconduct that the government might not otherwise discover and to on the other hand the statute can't go so far as to encourage parasitic lawsuits that basically repackage information that's already in the public realm and then seek to benefit from the bounty provisions of the false claims act the district court's decision struck the right balance in this case abel is not a the model of whistleblowers the district court referred to it the allegations that mr sandberg champeen is focusing on today in the knowing submission of false claims go to the knowledge of the bank able as a whistleblower has no knowledge of the bank it's never been in the bank unless they went to the a t m what  are your responses to his main two points the first one is that prior consent decrees and disclosure related to investigations that one across all mortgages and the f h a ones have a lot of very specific requirements and that's what this lawsuit is focused on so what about that point yes there are the case law supports the view and this is particularly in the dingell case and in the mid tronic case that where the prior just public disclosure is respect to a car's engine wouldn't bar a subsequent case about car seats and what the case then went on to say was but if the prior public disclosure is at a broader level of generality and is about the car it would bar a subsidiary issue such as the car seats or the car engine and that's exactly what we have here the the o c c consent order the inner agency report were about the back the banks residential mortgage loan program specifically its last mitigation program it was not limited to certain types of products the bank has a number of products it has if you change your loans it is v a insured loans it has loans that are sold to fannie it is loans that it's sold to freddie it is loans that it keeps on its own book the interagency review in the consent order you know i probably covered all of it would probably respond by saying ok i get your car level of generality point but this is really about different models of cars because there really are quite different requirements for loss mitigation under some of these programs for sellers so how do you respond to that i mean because that is their point that the f h a ones have a bunch of proactive scotia requirements that or mos requirements that might not have been required these other areas yes your honor and each of the programs has its own unique requirements and the inner agency reviewing its own order were not limited to that in the consent order that remedied the quote deficiencies found in the investigation they specifically required that servicing guidelines of the f h a be part of the remedy and so those specific requirements were captured as part of the process so the fact that there are different  a standards there's also different v a standards but it can't be the case that the day after this lawsuit someone could then file a lawsuit and say oh and now we're going to sue over the v a loans of us bank right and argue there that will be a loans have different regulations they do have different regulations but where is the ending point that's why these the law doesn't want to have parasitic suits going forward because then as the dingell court  it's a it's a broad question in terms of u s bank obviously the justice department investigated for several months the allegations in this key tam at the end of that investigation declined to intervene in this case there was also par this file yes your honor as far as i know and there are also investigations that the justice department of done with respect to the mortgage origination particular with but the f h a loans that was actually ongoing simultaneous to the investigation that the justice department was doing here with respect to servicing and i think the larger point we were making in the brief was on the issue of and encouraging true whistleblowers to come forward and tell the government something you didn't already know certainly the justice department the state attorney generals the regulatory agencies the o c c in the fed they were all over the issue of loss mitigation not only for us bank but specific to u s banks irish or years ago investigate the problem about why the mortgage situation arose and found out that there was a good bit of do much but was focused on the problem at least congress certainly did investigate the causes of the financial crisis the frank law in particular was passed as a result of that they uncovered some of these guys with problems it's certainly been it widely reported that these types of problems you know that with respect to lost mitigation with respect to foreclosure with respect to not contacting borrowers before your foreclose i point out with respect to the remedy in the o c c case that was uncovered with in the congressional investigation your honor i'm actually not that familiar with the details of the congressional investigation which i think may have been broadly focused on the financial crisis as a whole as opposed to the specific issue of  get a congressional investigation which i would have supposed it was fairly thorough would be hard to do such an investigation without disclosing some of these kinds of problems relying on a series of court cases that had been brought specifically on the face to face rule specifically alleging you know failure to comply with f h a regulations including again you know this is really a question for both of you but let's say i realize this is a consent decree and not a class action so the three specific plaintiffs involved in the key team action would have been covered in that sense by the consent decree but just let's just say for the sake of argument consent decrees aren't forcible by third parties by individuals could these three individuals have brought an action to enforce a violation of the consent decree your honor based i don't know the answer to that i don't well you  nothing to my question has nothing to do with whether an individual can enforce a consent decree i'm asking you whether the consent decree by its terms would cover these plaintiffs and what happened to van by us bank it would your honor because of the remedy that says that going forward part of legal requirements the phrase legal requirements being a defined term in the o c c consent order at the bank has to ensure compliance with the legal requirements and those requirements include f h a servicing requirements and so these particular allegations would be f h a servicing and loss mitigation requirements they're part of the legal requirements and therefore it's subsumed within the scope of that phrase in that consent or presumably the individuals could have because you didn't comply with hugs face to face rule but there's some we're not really allowed to use state court cases anymore and where it's at least it's complicated after the health care law a couple points on that your honor there's a complicated after the health care law yes the the allegations here are failures of loss mitigation and failures of complying with a face to face rule that with respect to the only three borrowers out of the twenty two thousand that they ultimately seek to recover for as to those three those violations allegedly occurred in two thousand and nine which would have been before the change in the law in two thousand and ten so they have an alleged a failure to comply with a face to face for a loss mitigation after that except to the extent that they say that these would have been covered by the the barrel arguing the point if it was zero nine and there was a requirement to do face to face before two thousand and ten would it be fair to go so i see what you're saying because that is so that was when the state court stuff was relevant i correct i got it and even since then there are since two thousand and ten the articles that were about this whole series of cases in state court with respect to the face to face issue qualify as news articles act in the mortgage situation and efforts to get some relief from four debtors in federal court some of which most of which have been unsuccessful but have there been a lot of federal cases in all of the circuits about that there's certainly been a lot of federal litigation over the over the issues written large with respect to foreclosures we're not citing any of those specific or relying on them in connection with this appeal but certainly there's been no shortage of litigation none of them might not be implicated here but seems to me we've we've dealt in a number of contacts with this you know what the requirements are on the part of the you know foreclosure is a nice she did it's like that with one of the recurring he's certainly yes your muscle had the last few years ten or fifteen of these cases i mean the various and sundry for that haven't been done but there has been widespread series of cases about it yes your honor agreed court clearly was incorrect when it applied this court's precedents to find that there was a condition of payment here this circumstance is the exact opposite of a condition of payment the the  law at least until the supreme court thinks about it and the issue that the supreme court's going to think about it is actually broader than i think that was mentioned they're actually going to consider that the lydy of the entire implied certification theory and then assuming it there it finds that three viable it's then going to consider sort of the contours of it but as an additional matter it's going to decide whether or not there is an implied sort of the patient theory at all and on that point i would point out that you know we're accused in the in the government's brief in enables brief of you know posing talismanic significance on this whole condition of payment issue and you know focusing on judicially crafted language such as conditions of payment but as the supreme court will be addressing the entire concept of an implied certification is judicially created by what was u s bank doing it with mortgages it was buying mortgages from brokers what was it it was acting as a broker and then selling it to forward traunch suppliers to the market what was the u s bank doing exactly in the mortgage market with respect to the allegations here sing those loans for f h a insured it's and at that point they could either sell the loan or retain the loan depending on his business news both it i'm sure it did both i'm not sure it's in the record here we don't know how we don't know the has paid two point three billion dollars which is part of what the there really are seeking i would like to follow up on a thread that that judge sutton began talking about that were alleging violations with respect to different cars and i think that's correct and not only are they different cars but their cars with different requirements this is  the same as this hypothetical imagine that the government had investigated a car manufacturer for fueling problems with conventional cars and the car manufacturer entered into a settlement with the government in which it agreed to comply with all rules on all federal rules including those rules dealing with fuel intake now imagine that we had uncovered problems with that with that same manufacturers a lecture cars entirely different cars entirely different issues with with with with fuel but if the government allegation was that the car company was engaging in fraudulent loans with respect to all of its car sales then the key thing and playing it came back and said we're focusing on mustang sales doubt that the public disclosure bar would cover that that would be that would be a situation where no i don't think that it's more analogous to this case than the electric i don't think it is because there is nothing in the prior to the it's more like the government said were alleging were alleging fraud with respect to this specific thing and then were actually it was not even fraud but were respecting wrongdoing with respect to the specific thing and then we're going to have a blanket remedy that covers everything that's what that's what they're pointing to here they're not pointing to a situation which the government actually alleged anything regarding f h a loans they're just saying the remedy was broad enough that it could have covered it and so ok so a get the point you're making i don't think i got it completely before  me the best case this i read it i'll say you know that's a pretty fair distinction between allegations by the government or plaintiffs versus a remedy and that you can't use the remedy as the scope of the public disclosure what's the best case tell me frankly i haven't seen any cases that deal with that and that's why i go back to the words of the statute because the statute points to allegations the statute says allegations it doesn't say it doesn't say what remedies were ordered for there it's for the allegations the congressional investigation into the mortgage market because you know the allegation was that it was the mortgage market because of the great recession and lot of information developed in the course of congressional investigation yes and law was adopted that doesn't seem to have rewarded mortgage holders who were perhaps  mistreated in the process but wasn't all this kind of thing developed in that investigation that we're talking about here well that's i mean that's a very interesting question the sense there has been so much discussion about there being congressional investigations there's been news articles there been government investigations and yet not one of them can u s bank come forward with that actually details the kind of fraud that we're describing which  remarkable thing i mean they're speaking as in terms of mortgage servicing in foreclosure it's really large they can't point to a single instance in which anyone has previously disclosed the type of fraud that we're describing which is the knowing submission of f h a insurance claims without complying with the very f h a specific rules they can't point to a single incident that they have to rely on these broader mortgage industry things and i think that's very t