morning your honour's may please the court my name is scott cook and i write to represent the relator in this false claims act case this case involves allegations of false claims made by hospice companies for medicare reimbursement the district court dismissed the case in its entirety on the pleadings ultimately concluding that what the relator had played was not fraud but rather in its words mere laziness bungled paperwork and mistakes that had been corrected this conclusion misconstrued the legal standards and failed appropriately consider the first minute complaint well you know to be fair to judge hughes i think you got off on the wrong foot with him when you didn't when you said your clients to know for fresh air from him they were i agree with your honor i got off on the wrong foot the exact nature of who they work for and this corporate structure here is unclear of course employer status is not an element of the false claims act and what is clear is that you had a number of related in its into t's all headquartered by the pleadings in texas city operating out of one location all showing a vice principal that was the same present c e o all doing business under the train all the same train names we also pleaded that all policies and personal matters came out of i came out of the texas city office they can't have that the claims in this case can be broken up into two broad categories the first set of claims has to do with submitting bills without meeting conditions precedent  material conditions precedent and those conditions presson are that when you bill medicare you have to abide by certifications for hospice patients which go to eligibility you have to have required face to face encounters you have to have plans of care their individual lives for the palea to the treatment that goes the hospice patients and lastly you actually have to follow those plans of care the second set of claims has to go with submitting claims for reimbursement unnecessary services and these are the claims that the relayed the defendants were billing for continuous care hours continuous care hours is a is a unique subset within this medicare hospice statute it's the highest on four occasions the defendants admitted patients that were already deceased and yet billed medicare for the same now the district court dismissed the first set of claims on the basis of materiality those were the claims that said this is mere bungled paperwork and laziness the district court dismissed the continuous care our claims on the basis that the relator found the problem she solve the problem and lastly the dismissed the district court dismissed the deceased patient claims on the grounds that w hospice is probably obliged to admit a dead person to make sure they're dead and we believe all of us to see reasons were an error all first address materiality which i think is ultimately the essence of the district court opinion in this case how  materiality is applying the false claims act context is governed by the relatively recent supreme court decision in escobar and indeed that was the only district court opinion was the only court opinion cited in the district court's opinion but the district court didn't actually look to the escobar factors how the first factor in looking at whether the failure to meet a requirement is material according to escobar is whether the government has labeled it a condition of payment here it is it is abundantly clear that the government has labeled these conditions at issue as conditions of payment and you don't have to dig into some obscure regulation here buried in paperwork you can look to the very face of the medicare hospice payment statute on the face of the statute it says that conditions of an limitations of payment it says that payment will only be made if this is coming from from congress and it says payment will only be made if the relevant certifications are providing the face to face encounters occur with both good eligibility that you have a plan a care in the plan a care as follow you did in drafting your complaint were you aware of the come pray there in the first grade their decision the at the district court level yes yes you're  the first one yes i was aware of the discharge i'm trying to remember i think i was aware of the district court opinion as a second pray they didn't come out until miti mid two thousand and eighteen if i came out i think couldn't have been where that no that that these four individuals worked in the office they weren't out in the field so that all these people were doing was observing paperwork and not the actual care that was expended is it fair to say i  don't know that's the reason why didn't the alleged otherwise well i think an inference to be drawn into these are really are a registered nurses one was the i think in charge of the whole anybody can read paperwork right i mean you're supposed to recertify every sixty or ninety days anybody can read paperwork ok but what troubles me about your allegations it is said escobar says said just violating certifications alone i pretty clearly said you're supposed to comply with rule nine be right be limited limited dresher first i guess and i think the first reason we know that the government cares that these conditions are met is because it's on the face the statute it's repeated in the regulations as well and the road also the relator is pled that this is something certifications have been an issue and which the oh i g s office has looked into civil and criminal investigations we also pled that the u attorney's office has intervened in cases where hospice cases where certifications were an issue in the case but i think i think your question may go a little deeper than that and why does this matter and why does this go to the essence of the bargain and the reason is because the government was not getting what they're paying for what the government is paying for is services provided to a limited subset of individuals those are those individuals or people that are going to die within six months that's what hospice pays for and it also pays for not just kind of a random treatment drop in and pays on it pays for a specific treatment by a plan and following that plan well and again you have the allegations that the plans  but what is the basis for that allegation well i think that the allegation was based on my clients it inferred from the pleadings my clients were there in the office watching what was happening they saw from an audit of charts we pleaded that so didn't have any plans for one year they're not of chirps they determine that no individual to individual has plans so i think it's a fair inference that people weren't being treated according to an individual as planned but they were being treated in some way yes on they were being treated care auditors and come in and gone to you cannot contradict i don't know whether it's the fact or not but you haven't gone further and said that if medicare auditors should come in they would have gone to mrs smith and found out that she was still alive and going to the grocery store you know the pleadings go that far what they say is that the dentist with these with these what the government's paying for is not happening here in the us material and i think that the most persuasive opinion and so government is paying for end of life care and i you know i understand the importance of certification but it just it seems to me it's a it's top post escobar you have to lead to more than simply the certifications well i think that i think of are certainly the plans of care and having a plan of care is sufficient material the government's paying for something they don't want people just to show up randomly drop by on these patients are supposed the very start they're supposed to be a certification and then ninety days later at the hundred eighty day mark are supposed to be a face to face encounter that was added to the statute that shows how important it is to the government that these people are actually eligible the certification requirements are kind of and this is ultimately when the reasons that the pray the court relied on this is the gatekeeper to make sure that fraud isn't occurring and that people are eligible and so the serve occasions happen at ninety one hundred eighty days and then every sixty days thereafter and that's what congress would term and was the way to make sure i think the timing requirements also show important this is that this wasn't material why not certify these people once a year once every couple years though again the idea of terminal care is so not supposed to live longer than six months but seems to me here plaintiffs could have easily found out some of the doctors who were giving some you know some kind of certification called the doctor and said if you have you authorize a mission that the medical director of the austin office acknowledge that there are problems with the certifications and put stated i'm worried about the company there was a individuals hired to audit chirps in the austin office  this complaint to the u s attorneys through this process well as judge she's mentioned there been a litany of medicare medicaid fraud cases what about this business about unnecessary services in the continuous care  area because it seemed to me that mr lemon i suppose did get them to change their practices she did and what the play state is that she she heard about this fraudulent scheme at training in texas a and i'll touch on not us to particularities and second when she arrived in the austin office she found that there were unnecessary continuous care hours and she stopped that she trained people and she did fix the problem that's correct but that doesn't absolve the defendants of liability for the problems she found when she got there and she put have been going on for a long time and doesn't absolve the defendant for liability and all the other offices in the general scheme coming out of the texas city office in regards to  particularities which you asked before i'll touch on that briefly you know we believe this first of all we believe the district court ultimately didn't reach the issue if this court reaches that we believe we've put enough but this court need not do that and on several occasions t ninety challenge the district court in the first instance including the really want to do that i did hear on her one the bonder shipyards case it was a judge davis opinion the court said back to ninety challenge the weren't just whistleblowers they were the people who were in charge of the documents so presumably they know what the documents contained i mean so discovery would just prove what they claim they already know right i think you know where i see discovery would be too if it's if the district judge has a problem with the particularities of the defendants all acting together that's something that could be solved for instance i think in our corporate repetition and that was what he had an issue with that first or who was technically their employer to me that's not material to standard under estimate insight nine bay but i guess we have to read the tea leaves well i understand that he didn't cite nine b but again this is a fraud case when you're talking about materiality i don't think you can talk about materiality without talking about the heightened pleading standard under rule nine b in the escobar opinion the justice thomas was very clear that the materiality standard is rigorous it's demanding it suggests a heightened pleading standard work in denying be talking about the  missing mentioned earlier that's specifically what the dissent said materiality is not something that can be generally alleged it must be alleged with specificity these pleadings are inadequate in a number of ways not just with regard to materiality but to the specifics and that's what judge hughes mentioned several times during the bench conference in sightings motion that the specifics are missing here we don't know how all of this was supposed to work the back door that the related you're using in this case is the grub's standard which says that you complete a despotic the details of a general scheme with reliable and disha that bills were actually submitted and they don't meet that standard every case that's looked at the grub standard says this is not a back door around particulary we're specificity here pleading you still have to tell us how it worked they haven't done that they've alleged generally a scheme involving eight different defendants six companies which gives me a seven companies and one individual all in different areas these are separate distinct legal entities and then they give these specific examples there is an example one thirty seven one thirty nine of the record on appeal the specific example the same every time that a hospice patient talking about an internal policy part providing continuous care hours is what they're talking about that that doesn't lead that's not reliable and do dishes leading to a strong inference that bills were actually submitted providing continuous care hours and actually billing the government for them are separate items so in this instance and this report as it was made that determination in the not only opinion that general allegations of pattern practices bad internal policies are not sufficient to properly allege fraud continuous care hours again none of the relator is a medical professionals they are some of them are nurses other than others are administrators and book keepers and the like well that's i mean that's that's who does this work i'm maintaining the files but  there is no allegation that people did not receive care and as far as i mean there's no allegation you know usually in these things you say bills were submitted to the government and if they were defrauded by a million dollars but all all you have here tied to any bills actually be submitted being submitted to the government we're talking about these general scheme ideas you have to let the this the lower court in this court know how does it work so with regard to submitting bills whose who is the person recording making the false record who is the person that is sending these bills to the texas city office how does the billing system work in the grub's case there were it was rife with examples of the actors involved the dates and the times that the actual fraud was taking place details of the billing system including the billing codes that were used to be submitted to man again here they're alleging at page twenty defendants receive payment for thought services from medicare despite not meeting conditions precedent to  claims offer is suppose is in place to operate as a bar against cases reaching discovery when they haven't met the burden of adequately pretty pleading for all and they have not met the burden here of adequately pretty pleading fraud the hope that they're go all i believe in the greater the deprived their decision was wrongly decided i agree that since this is sent stated that the materiality should be a heightened pleading standard nevertheless the decision involved i believe actual false records there was also sped actual cites to oh i g information about materiality of these times certifications in contrast in this case there are i think a specific outcomes of those cases gives us no facts leading us to understand that this is how the government behaves with regard to these certification issues so one of the things that the case does tell us is that even if you have conditions of payment that's just one factor that's the only factor that was adequately played at the pleading stage in this case was the condition of pain and they cited the statute now we've rebutted that with the c m s medicare integrity manual and the regulations calling some of those things conditions of participation in showing that medicare does not deny payment on those issues but even so you must also show with regard to the escobar factors that there is a payment history that the government denies these types of claims and that there is a test that this goes to the essence of the bargain none of that was adequately play none of that put no no notice pleading that was even given the the the opposite is true in fact in page seven of the reply brief the relator is it that the record silent with regard to payment history of the government there is no pleading on file that suggests that these defendants knew that these missing certifications were material to the government's decision brilliant no it seems to me that the diff i mean they might have they might have a stronger case of for instance they were saying not only were there no records and they didn't care about the records but in fact all these patients were in hospice care for two years or more know which would have meant that some physicians were apparently certifying people with green latitude about picking out their medical condition even in that instance your honor they would still be obligated to tell us who is providing the service and who is billing for the service and that's a major i understand that i mean but i'm saying that there's there's not even that level of question about being in the actual provision of services i think typically what we've seen a nice criminal cases says hey they've gone out and they've been soliciting patients from their friends and relatives and they had one doctor sort of on the take who is paid to solicit certification sorry but they they have been so ignoring the research that cation process on each of these are in medicare and  in many cases don't lead to the bills are being submitted at all with regard to the continuous care hours just as an example they say that there was a and again pattern in practice allegations are not sufficient but a legit there was a pattern and practice of providing continuous care hours without ever saying that ok we also submit bills to the government for those except generally without saying who actually provides the hours who is actually creating the records or or putting together the records who's actually transmitting the court that looked at the grove standard applying it said that just a scheme the scheme is not a backdoor into fraud scheme a show not just general pattern in practice internal policy problems but actual reliable in dishes leading to a strong inference that bills were actually submitted this certification idea is that the the way that they're trying to connect this by saying every time you submitted a c m s form fourteen fifty that you have committed fraud if you're missing a certification and that's precisely what escobar rejected escobar says nope not every time that you submit a bill or a general of vermont to the government in submitting a bill is fraught with regard to the  idea that judge hughes did not consider probably consider fraud or the pleading standard when he was issuing his opinion we just disagree we're talking about fraud he says in his the last line of his opinion none of these allegations rise to the level of fraud and that's two parts that's the materiality standard and the rule not to be standard when you're talking about fraud i think that necessarily includes both what do you say about the allegations about the related companies  these are later is consumed on behalf of what they claim is all related companies the all related companies is i've seen that they've said we can just sue everybody and allege the same thing but they have an ellipse the same thing when you say hey we're we're admitting patients in austin through an austin op as they've identified two hospice companies in austin they don't explain and it's not a reasonable inference from the pleading that a company in corpus christi is failing to provide certifications in austin so but its very nature they have not a land alleged the same activity by each defendant especially when only their service all of their specific examples only include the austin office to say generally speaking that this was a scheme and that all these people involved doesn't satisfy the group standard the group standard is that you must identify particularly each person's role in that scheme you can't just say generally speaking all these people were involved in the scheme to defraud medicare and that's it addressing a few points and one of the points this court brought up the judge jones you asked about whether or comment that what was the industry that some of these patients for the serf occasion patients example should have been there in the first place i believe that the record at one thirty seven it's pitt paragraph forty three in the complaint aircraft forty three yes your honor and i think a reasonable inference from this is why you have the certification requirements is this is someone that was supposed to have died within six months and  i'm glad that i'm glad the personnel out lived where they were supposed to but this raises serious concerns this is why we have the certifications this is why there material to ensure eligibility and that the government isn't paying hospice services for people who shouldn't be there bills are no longer necessary to to meet the nine b standard om i don't think my reading of the grub's case i don't think there was details of exactly who was submitting the bill is another wasn't details of who the actual patients were or did the records show and the continuous care hours would make no sense to be in a for profit business to have people there on a twenty four hour basis unless you were billing for that it would make no sense for example these hospice patients that were there for a year or longer  bills we play the bills go out monthly for profit hospices not can be treating patients for an excess of a year if they're not going that care for the same so i think here it's it's it would be logic dictates that bills were sent for all these patients suppose a person was in hospice for as i understand it hospice has a widely varying quantity of services that are provided to each patient a fraud on medicare that they get a bath once a week i didn't figure there's not a certification and not a face to face i think my opinion it is a fraud because the fraud is so i don't want to know you're ok let me let me going to give a basic forth in your honor this is the bills we put is that the bills are sent on a form called you before you be zero four c m s fourteen fifty and there is a certification in writing on that that says certifications are on file and so when these companies in your example when they submit a bill for this one person they have told the government that certification is arm fall and i believe it's material because the government here that the it from failure to satisfy documentation to fraud on medicare me it's because these are meaty requirements these go to the essence of the bargain they're on the face of the medicare hospice  on the medicare hospice payment statute itself and i believe they're on the face of that because congress wanted to ensure that only eligible patients were treated i think it's a necessary gatekeeper to prevent the kind of fraud that's being pleaded here and i believe that's you know circuit case as well