that's a legal consequence just as this court held in real love nd the letter also had a legal consequence of denying a safe harbor just as in harks the supreme court's most recent decision i felt if c m s letter i got the other way and agreed with us about the price we were supposed to report that would have been a safe harbor from the same penalties for knowing violations because you can't possibly be guilty of knowingly providing false information if you're dealing with the agency told you you could just be like you're safe harbor argument is just  repackaging you are legal consequences two ways of saying the same thing and that is have a letter because the letter went the way it was we were supposed to some risk of penalties had it gone the other way we wouldn't have tha harbor in hox was more formal the safe harbor here is not as formal but it doesn't matter whether it's formal or not in substance if the agency had agreed with us that we could do what we thought the statute required or permitted us to do that would be a safe harbor from penalties for doing violations how how and how would these are like legally what regulation and what what what doctrine rely on statute your honor that provides for civil penalties against any factures part of this program permits civil penalties for knowing violations the knowing provision of false information and as a matter of general l consequence when the government says that this might well judge will goes with respect i don't think that the government has said that they would never rely on this letter in any legal proceeding and i also don't know how they really even could make such a representation medicaid drug rebate pro it's about the state's not just about c m s so i don't know how the part of justice could stand here and said this letter could never have any legal consequences in any legal proceeding i don't think that's possible and i don't think they purported to say that really any other than fine with that's so we know you are i think it depends on the legal regime i think your daughter's opinion and sound work makes this point very clearly where you have to look at the specifics of the agency program that issue with that statute says what those regulations say and under that regime what consequence does the agency action have or not have and under this statutory regime there happens to be a provision for knowing st civil penalties for knowing violations in others ashtray regimes it doesn't work that way and a letter agency initially for civil penalties and agencies lawyers who would do that your honor i may be missing something but i don't know where the agency ever said in any kind of a binding way that they wouldn't do that they said in the district court they said they had not at least not yet brought any kind of a force action against epson but as hocks and sakit and doesn't this court cases make clear that isn't the standard the point of this record most recent cases here is that you don't have to wait for the agency to drop the hammer you get the agency has given you a definitive into we're patient of the law that as a matter of law exposes you to the risk of the forstmann action then that's a legal consequence that allows you to get into court and again not every agency of letter telling you what the agency thinks the law is is final that could be because the agency has structured its processes in a way that the person writing that letter from the agency doesn't speak for the agency and that isn't the end that isn't the consummation of the agency's decision making process so it makes perfect sense in a case where the agency has set things up in a way so that the staff as unsound water can give you advice that because it's coming from the staff is by definition not the end of the line within the agency because there is a procedure to get a decision above staff from the agency itself  disagreed about whether that was true when the f t c contacts i don't have an opinion about that but if the agency has set itself up in a way so that you can get a decision from someone who doesn't speak for the agency and you have a further opportunity for review with the agency well that of course that is a final you have to pursue that further within the agency and so that action by the agency i get my question in you were st told by not the counsel for the agency but  wendy tuttle that you know n b c must be changed and that this e mail that she sent was not a release of liability that seems to me to be enough of a only penalty you would face then a year later the counsel for the agency drops the language about the m d c as must be changed but still tells you this is not this letter is not a release of liability so you have a nd watered down warning that what you propose is not consistent with the statute then for three years there's no unfortunately just as far as record shows whatsoever my st question is are these surveys being conducted i know they're conducted in  the secretary's discretion but are these surveys being conducted so that if they and you also put them on notice that you are going to continue to do what you've asked of permission to do with they told you you couldn't do so this surveys are the seems to me they want to have a new that they couldn't penalize you for the for false information knowing knowingly supplying false information pointed out yes we've been transparent with the agency about what we're doing and why and they've taken no action to tell you you cannot use the new they will that they haven't taken in for senate action per se but that's because we're here trying to get our name court for the court to decide whether the agency's interpretation is correct and so it makes perfect sense that the agency wouldn't bring in force an action against us based on its interpretation interpretation of the test because we were pursuing reconsideration in front of the agency or pointed out the length of time that passes between may totally year to do it well i mean they took our line they took to make their decision and while they were making their decision about whether our position about what the statute means was right it's perfectly logical that they wouldn't bring it in force and actually i guess that's because they hadn't formulated their final position yet but and however long it took them to come to that decision was not in our control we probably sought reconsideration of this title's later we did so because it wasn't clear whether mr total was somebody who could speak for the agency about this whether her letter was the consummation of the agency decision making process yes your honor pointed out her letter spoke in mandatory terms but she's that would impose a penalty is that right the only monetary penalty is provided for the by the provision that we're talking about that arise for penalties for the knowing provision of false information there are all sorts of other unfortunate authorities that the agency has th they cited in their brief and that they said and the district court they haven't at least not yet sought to pursue all the way up to kicking us out of the medicaid program should be a devastating remedy so there are all sorts of remedies that might be available to only monetary one to ask your our question the prices that we've been reporting it at the end of the day whether that's because the court ruled against us on the merits or because the court said that we didn't have the opportunity to get a decision on the merits then we would have to decide are we going to stick by our interpretation of the statute without the only thing just doesn't realize i'm just asking the question again saying that's not right that's it well with the only monetary result yes there's the possibility of being kicked out of the program which would be even more devastating the civil penalties  which could be triggered by the agency thinking that you know that a company has behaved in an improper way as opposed to taking lesser actions so it's not just the civil penalties but monetary yes it's the civil penalties that is the legal consequence of this if we triggered by this letter just before this letter before the agency told us its definitive view of what the statute requires on our facts we had a good argument that we think we're right about what the stature of wires but even if we turned out to be wrong we at least wouldn't have been knowingly providing false wrong on the merits you still are not liable for these knowing penalties because you have this good faith interpretation of the statute was it also true  provision providing for monetary penalties required willful violations it was for a slightly differently but willful knowing that it's the same point that if you have a an innocent mens rea you can't be held liable for those penalties if you're doing what the agency has told you you can do you can't be liable for those penalties even if later well potentially but again here i don't know that the agency has as promised that it could never take any action against us in any kind optum we have the power to stop well again you're under with respect it isn't a simple a c m s because this program is it involves the states as well and so perhaps c m s could buy it itself but i don't really even know how they could do that indefinitely going forward but that wouldn't really be an answer because there are legal consequences that could flow from this regardless of whether is that there are other considerations and we still wouldn't be liable so you say you have an increased risk but it's a double a risk you have to both lose on the merits and lose on this good faith argument before you would face kind of thing that's no agency's position the letter itself said that your receipt of this letter means that you're on the hook for the mens rea or the agency then backtracked from that and said no it's just a factor to be taken into account a larger analysis in the court didn't resolve whether that was true whether he well if it were true as a matter of law that no legal consequence could flow from this letter then it wouldn't be final under the analysis that's required but again i don't know how that can be true because there's a statute that provides for various forms of force and action to be taken against us and i don't know how this isn't c could bind not only itself going forward but the other actors in this program in a way that really would protect us against well so the states are the beneficiaries of the rebate program the rebates go to them if ultimately the court were to decide that the agency's interpretation of the statute is correct and epson's is incorrect we would have to paint chris rebates to the states so all along we've been hearing in a transparent way in a way that we think is in perfectly good faith to our interpretation until a court tells us with a lot as but if we turn out to be wrong or we can't get a court to tell us what the law is and we have to give up in cave to the agencies interpretation because we don't have a way of indicating or conjure interpretation then the states are the beneficiaries of the increase rebates that they should have gotten all along and there's all sorts of states and all sorts of remedies and all sorts of regimes that could and not withstand his contrary position its appeal right so that we did not say there except that it's only a fact are we in fact said the regulation has a reading of the scandal on trigger is there anything in regulations how much of it can't be any modicum of an inch surely you would agree that any modicum of an increased risk would not be enough there must be some substantiality to the increase in the risk and that's what i'm trying to figure out because this is you have a sophisticated client here  our interpretation of the statute is correct answer not only are we not liable for knowing violation penalties reliable at all because we were right in the agency was wrong about the statute means but a stack of a lot of lots of other cases may clear that possibility isn't an answer the question is is there a risk of a legal consequence if you're wrong i don't have to go it's really it was much more concrete than it seems to be here is what i'm concerned about and concerned that this seems like it's going to be final for the agency but it's not final for you you get to keep payin been paying all on what you know you're right i think the way that i would put it is where the agency is this court has said over and over again where the agency has taken a definitive position about what the law requires and there is no further opportunity for review within would be clear about that i also don't think we have been focusing on a very a lot of because i think it's the court's most analogous case but there's also harks which is the supreme court's most recent case and harks seems to say that the exposure to enforcement action is itself as a matter of what knowing means we couldn't be liable for knowing violations of the no one provision of false information if we did if we did what the agency told us we can do just as in that is in substance a safe harbor even if there should i think we should be trying to focus on here because you know the government starts its brief by saying here are the issues that the finale the purpose of the failure card is supposed to get out of what avoiding disruption to agency process he's allowing the agency t exercise its expertise before it's challenged in court avoiding piecemeal review none of those purposes is implicated here the agency has finished its process there is no more agency process is he has had the opportunity to apply its expertise and there's no danger that's a good question i reviewed closer case because i think that it would be harder to tell what they should seize failure to answer meant in the context of the program at issue and as i was saying before it was this court said southward california communities were recently you have to look at the specific regulatory regime at issue to of anything formal within the agency it's not like there is an adjudication regime within the agency where you have a right to a decision there is no such process in a regime where you had a right to a decision and the agencies as a part of that really literary zeem the agency that set it processes up in a way that the agencies failure to respond had a legal meaning which could be the case in some regimes yes that would be very different here here i just want to be clear here there is no such process within the agency so here is the agency simply the client to answer in any way i don't think that could be night of a safe harbor that has legal consequences that's simply agency in action and that's also it would be impossible to say that that agency failure to respond in any way was final in the normal sense of the word under the st prong because you wouldn't know so i think i said the issue of the twenty six dollars addresses which is what happens when one company buys a drug from another company doesn't change anything about the drug simply buys the drug from another company so the label or code label or part of the code changes because there's a new  selling the drug but the drug hasn't changed anyway if somebody had disagreed with the agency's position on those facts that drug doesn't change there for the same drug then maybe they could have brought action to challenge for least twenty six he said that was finally agency action could be an and there's no process for further review within the agency right i think it would be final agency action the differences between your honour's hypo in this case are in the agency issues a general pronouncement like like one of these releases it may be unclear whether or how that general pronouncement because of its generality applies to a particular set of facts here we know exactly what the agency thinks the statute requires on our set of facts because the agency told us directly on our set of facts so there's no question about whether the agency's pronouncement applies to us or what consequence it has for us the pronouncement is sufficiently general that it isn't clear whether it applies to a given fact situation then it's probably not the consummation of the agency's decision making process on that back situation and for related reasons it may not have legal consequences for that situation because i've been out of lot of that situation defer judicial review of the only thing that's left is for the agency to choose when and how to exercise its in st with discretion what sort of an action to break against us and the supreme court has said as emphatically as you could as you can imagine in its most recent cases on this we would be liable on the merits of a false claims act cases because i don't think we're going to be wrong but potentially yes represent the a police this court has emphasized that you apply a pragmatic and flexible approach to the determination of final agency action the district court did just that here finding that this case the application and not the new drug code and again we were applying it here you know i think is what you're saying it's not a whole lot of daylight between what you did here and what you would do an agency does an adjudication they take their position on the law interpretation of the law and they apply it to facts that are given to them and come to an individual eyes determination as to whether a position is lawful in compliance with us down to you or not and that's their facts and as to that there's nothing informal or tentative this is your official final cut the other type of final conclusive consummation of the agencies use on what they are doing ok so i'm just going to get back again so that's not a claim that you are we decide on this is that i will take as a given that you are not making any final decisions on claims for courts so when you said this isn't a final decision on a claim what claim s telling them please change this so part of what happens here is in the software printing machine gibson reports information including the base state of the drug the average me a fracture price in the quarter after that the average median fracture price in the current quarter and a lot of other information that goes in what's called the d d r that is the medicaid drug database reporting system that they give that information to c m s through this system c m s then calculates what the per unit rebate would be for each dosage form an we continually give them back that calculation no no no we use the date that they provided i guess that's what i was getting to we haven't walked them out of that system or pulled them the date you placed in that system that they continue to report i think it's quarter locked them out of the system we have i mean to lock them out of the system you can prevent you can my understanding and the simple or complicated but it's an issue in another case where you can tell them we believe what you're reporting is inaccurate and that's one of the points i think the question or somewhat raising is that with my friend they've continued to report that quarter four point one five and they haven't made any changes we haven't taken any action and this letter didn't instruct them please go back and change how would you have to give another red notice before you could bring an abortion action or could you just bring one no i think we could if if the secretary of health and human services decided to bring a civil monetary penalty they could bring that they could have brought that without this letter right even be used as a reference to litigation seeking to prove i'm doing violation no the letter might be evidence and then adjudication and in that sense i think this is similar to national home builders association versus norton if i can   nd describe their e p a had issued a guidance on how you should avoid taking a certain type of butterfly that was in southern california and the guide said to avoid having your construction actions cause this you should do all these things national association of home saying when you seek to enjoin people from building because they're threatening to take this endangered species you're going to point and say look you didn't follow the guidelines therefore you engage in a take and this court said that's not final agency action related to the eneral pronouncement specifying pin point like building in this area they've now told us we should engage them or they've advised us to engage in the public that this is their view of the law that they haven't told any individual entity based on particularized facts given to them that here's letter and their good faith argument but it's really knowing what your position to have a position on whether they're good faith interpretation of the law after you have told them what the agency's view of the law is in no uncertain terms and in conclusive terms it's good faith defense i'm not sure i'm going to be able to answer that directly but i'll tell you the agency's position is that we could if we could have engaged in a enforcement no standards about what is a good faith legal interpretation and what isn't and so i think that's part of what distinguishes this from real land is in religion at least the regulations stated that when you receive this type of letter that sufficient for willfulness and the agency had stated view on that and that made it sufficient and if you look at sackett it's another one where the supreme court emphasised that the order itself was imposing additional penalties on the sax because they wouldn't just be violating the statute if they continue to we keep saying that it would be evidence i'm trying to figure out how whether that evidence your interpretation of the sound here is enough to show knowing you know they have a good faith basis or would you agree that they're good faith the wrong way for me to read that yeah that's not how we intended it and i thought we say to her we described elsewhere in our brief that the letter might be used as evidence in education what we understood the district court to be saying there is that unlike in rail an unlike in some other situations where the agencies pronouncement would create additional penalties i think sakit is the other example because should you order there are additional penalties and it creates additional type of liability here the letter doesn't create any additional paper on liability the question but they knew something different after your letter and so you say well we think that before or after doesn't help me here so after their state of mind they're not there modern knowledge in their heads changed after that letter doesn't live long they knew the agencies agencies position in the letter and maybe they didn't meet this is clearly but was that it stated its view of the rules that were put in one other beforehand you know we've discussed how it then said here's the evidence you provided us none of that evidence shows there was a new the that is yes but again it's not clear what the increased risk would be because the letter at least attempts to say we think that these were you know apparent use of the law beforehand i understand they hit us that the manufacturer released wasn't clear about this sort of so you think that the only way that a mother like us can increase risks is if it says something different than what the agency agency action so i don't want to get crosswise with bolero but in this self reporting regime you need to have flexible contacts with the agency and c m s thought it was doing very well c m s the middle we could have done less it could have said please look at you know th textual if was asking my friend about you know how much does the increase need to be and that would be a line drawing thing but for final agency action you know it's a flexible impregnate approach and look at how little c m s did in the letter here and what more could have done that say didn't instruct them to do anything it laid out our view of the law and how that might apply here you know you think about might how it how how your position on how it does definitively apply to these  facts aren't exactly what's going on no i'm saying that they didn't so the s and d a simplified a lot of information what they did with their s a t s that made these drugs different and we just took that and you know look at the information they provided we didn't would matter if you look at ray alina once they had the letter the regulations said you know any action after that would be known by listen if the letter here concluded by saying now that we've told you our interpretation which we thought was clear but now that we've told you we will consider any future reporting to be willful or sorry not willful that was the standard railing no that's not the theatre to be knowing but we don't consider past actions to be known that would be putting them on notice that we view the sea enter is now in effect and it was not  stating its view that a known violation is one made after we've informed you and was not one made before we formed you which is with the regulation issue and raelyn it did said for the agency's purpose a known violations one after you received  letter and not before the now the agency did come to court in rail and it's have to sort of walk that back to the courts that you have a regulation on the books that draws that line and so once you sent this letter you know the world knows when they receive this letter they're on the deals you of knowing versus to prove a knowing only yes you know digital cation but as could you know e mails or interactions they had before as would mean a factual release twenty six which stated the new drug application not the new drug code is how you determine the base date it would just be a piece of evidence in the education i'm well over it's really just seems to me i'm sorry the so you don't have a regulation like  annoying they can't even say it's good faith we told them what the law is and we're in the agency and we get chevron deference and so then they're in trouble and then the next company comes along gets exact same  again this letter doesn't say please voluntarily comply or please voluntarily comply by this date it just says here's our interpretation of the statue as applied to the facts given the court decision in other cases that you don't that because someone else being enforced against doesn't mean you have finite c x so let's say it's ten times down the road when you come here every time said it's not final he could change your mind in ten times you do the exact same is there some point when this actually becomes your agency here is that we don't have any rulings on what the no one standard is in this statute this just isn't something that's going to i don't understand why that has affects finality or not it's seems it seems a bit unfair to them to say well it might be fine with the suit we have we're not we have in the us come to a public record conclusion as to what how much this letter moves the needle on now in violations i guess i was trying to get to if you had a court's interpretation that said knowing in this statute means that to significant way issues here is really the additional rebate which is how much of what is in these other cases have you taken a position on what knowing means and what the role of agency letters even if it's not this exact program it's the same penalt whether you've taken a position on the role of agency communications in the knowing calculus in another scenario under the same spell to profession doesn't sound like we legal issue but that this embodied abstract legal conclusion doesn't have the legal consequences lessen until it's incorporated into an agency decision as part of the process that congress has as laid out through permit application or whatever the context may be in that situation it makes perfect sense to say the abstract legal conclusion isn't final just a legal conclusion and you'll have a chance to get review of the agency's application of that legal conclusion in the process that congress is called out for the agency to go through here there is no process says appreciable legal consequences my right it is only for me this is actually a lot of money but am i sure it is here company a one hundred thousand dollars a quarter or is it more than monthly now i'm not sure yes because the this actually makes clear that there's a three hundred thousand dollars a quarter and when it does rather pale in comparison to maybe it doesn't matter at the end of the day that doesn't have a pale in comparison to the types of penalties that we're faced that for a big corporation is three hundred thousand dollars a quarter a client is not so big that that's less than substantial three hundred thousand dollars a quarter for several years we've been trying to get review of this issue for several years so three thousand dollars a quarter of it out up to an awful lot of money and there isn't any case that i'm aware of from this court whether the way let's say you're saving by going forward with your own interpretation of the statute i don't know exactly what that number is that this is an important issue that going forward would apply not just to this drives whatever the calculus is and the difference in price the difference to rebates for this drug is also an important issue that would apply to other products going forward where the client really needs to know what the law is on this so i was it is just there isn't any case that i know of from this court or the supreme court or for that matter any other court that says the consequence the adverse consequence standard has to be criminal as opposed to civil i'm not aware of any case that says that there's lots of cases from a supreme court in this case that involves civil consequences that are monetary that are held to be the kinds of legal consequences that qualify and here i just i know i'm over my time so just in conclusion this is a case where it's either we get review now of the agency's definitive interpretation in this letter able to get review i record to do its job of seeing with allies where the agency has given us definitive interpretation and there's no more review with an agency of the agencies view as legal consequences exactly how substantial those have to be might be harder issue in another case three my friend say to your honor's in response to your specific questions with follow up questions to try to get a clear answer on this i just heard my friend say that the letter would be evidence on the mens rea element in the force of an action of course that he didn't promise that the agency wo enforcement action but we know from his friend court that isn't choir and we know because my friend just sent it to your honor's that the agency's view is under the penalty authority in the statute that the fact that the asians you sent us this letter in told us definitively what it thinks the law is and how that law applies specifically to these facts that that puts us on notice in a way that effects the knowing standard so we now know that that's the agency's view the only difference between this and realign it in that sense is that the agency's letter here didn't spell that out but whether the agency chose to say so in the letter or today or not it's clear that we're the agency tells you what it thinks you have to do you then know that's the agency's position and then you intentionally don't do that because you think these and she's wrong that you're a greater risk than you were before the agency told you that the statement that the question is would we be liable in a civil penalty action because the underlying merits question here is what we're trying to get the court to decide we think we're right about the underlying merits question of course if we are then we're not liable for civil penalties or any other kind of consequence because we've been right all along the agency has been wrong but that isn't the standard we don't mean point is to try to get the court to answer that question so we can't be it can't be that a legal consequence exists only if we're subject and i don't i don't know how likely it is or not because i just heard my friend say that the agency would treat this letter as evidence showing the mens rea of the statute requires i would be happy to be able to make the argument if it comes to