discretion by refusing to permit swope and to file an amended complaint would be the fourth amendment right that is correct your honor but this is in the situation where this is the the refute the court's refusal to grant leave to amend happen in context the only time for a complaint or in this case the third amended complain t was attacked by way of motion to dismiss the prior meant to the prior post pleadings or it's important to understand the context of the prior pleadings the original complaint which was filed under seal under the false claims act was against solely against defendants can and did not involve any of the what i call the retrospective review or short term would be auditing fraud claims that are the subject of this appeal so the original complaint did not have anything to do with the type of fraudulent claims that we're talking about here scan and one defendant we then filed a subsequently a second amended complaint with at which added claims against dan and then a third amended complaint was filed which added the retrospective review claims against the other defendants in this case all of those complaints were filed under seal and submitted to the government while the government conducted  lengthy investigation and then sometime after the third amended complaint was filed the government settled part of the case against scam a declined to intervene as to the balance and so then the third amended complaint was then served upon the nonce can defendants which resulted in motion to dismiss during the meeting come for a process  been agreed after doing some research to dismiss some of the claims against the nonce can defendants the pallies here in which had to do with violations of the california false claims act and those claims were dismissed and so that what was the subject of motions to dismiss filed by the nonce can defendants or the pelleas here had to do with the retrospective review claims during the process of preparing the opposition's for to these motions to dismiss weldon's counsel became aware of additional facts which were relevant to the retrospective review claims and decided to then simply to request the court for leave to file a fourth amended complaint based upon these new facts can you explain for me your theory of fraud yes with regard to the retrospective radios because because these organizations don't have to conduct a retrospective that is true so is it that my conducting voluntarily undertaking a retrospective b but yet looking at only one side of the equation versus the others that somehow that rendered those certifications false yes basically retro let me back up a little bit unlike standard commercial h m o's situations where the pay or pays a month we've kept a premium to the h m o in medicare advantage what we have is we have a base rate which is calculated determined by the demographics of the patient the a where they live that type of thing and then that is adjusted according to a formula which is divide devised by c m s which we call the risk adjustment which is determined which is determined by the year the years worth of diagnoses for the patient and that's so during a given year for a particular patient you look at their diagnoses you then put it into a formula which determines which of these diagnoses are chronic conditions like d various types of cancers and like and then that determines a risk factor again which is multiplied the multiplier against the base rate to then prospect of lee determine the or the following year they can retrospect conduct what we call retrospective reviews that is some time after the performance of the services for the given year the h m o s and  contracted health care providers can essentially audit or review the medical records for that prior year to determine what diagnosis codes are supported by properly documented medical charts it is the basis upon which these retrospective reviews were designed and performed in addition with what we are told are you saying then that in the retrospective review process the h m o s or the health care providers can't take a snapshot because they've got i'm assuming procedures in place to basically report the data right and so now voluntarily they're going to say well let me just take a little snapshot to make sure that we're accurately reporting the information to the government and so once you take undertake a retrospective if you you're serious ideas than that you've it go back and look at everything you can't just take a little snapshot a present meekly a review based on one medical record of each patient for example no that is not what we're saying and that is not what we can unless you're saying that they only look for underpaid well under reported right basically the way the retrospective review is supposed to be pretty perform like virtually any other type of audit whether it's a medical record not a financial audit whatever you look at the records you look at the source documents and what should be coming out of a retrospective review are basically three buckets of diagnosis codes the first bucket should be the largest which is  they should be the first bucket of diagnosis codes are those diagnoses which are supported by the reviewed medical records which happen to be also be previously reported to c m s back when the services were that's the largest but there is no problem there the second bucket of diagnosis codes it comes out of a retrospective review are those diagnosing these that are supported by the reviewed medical charts which had not been submitted to c m s those results in what i call and it's now your those are being submitted to c m s to add to the diagnoses and therefore  the the risk adjustment factors which will increase the cap came payments paid to the h m o it's the third bucket of diagnosis codes that norm's the basis of our complaint and is part of the frauds fraudulent scheme where here about today and that is the retrospective review should also identify those those diagnoses they had been previously submitted that were not supported by the medical records that what that should what's supposed to happen in a retrospective review is that those previously submitted diagnosis codes that upon being retrospectively reviewed were not supported by the by the medical records the h m o is supposed to notify c m s and say we withdraw this in other words so the bottom line here your honor is that as with any other type of audit you report the good but you also got a report the bad if you're going to submit the ads you've got it's the to withdraw the  that's what's not going on here now a lot of that is because of the way be designed the retrospective reviews primarily through a process we call blind coding in other words the let me let me go back and make sure you know stan at picking up on your analogy the certification is only at the bucket one right the certification is the reported codes are accurate that ike knows scopes so so what you're saying is that once you amend that by doing an audit to to then supplement that with bucket number two you've then also got a leech bucket number three in order for the service station to be accurate no matter the certifications which are presented by the by the warning almost on a daily basis at the services are given but also includes the risk adjustment data including the diagnosis codes that were submitted as part of the retrospective review right i got it ok to return to the pleading that you describe it in helpful detail here but the issue comes down to the particularities under rule nine as to the who what where when and how or with respect to the various defendants thank you and i don't know how you meet that standard and your proposed fourth amendment amended complaint doesn't get down to the particular your honor i i believe it does under the needed case of course we are not required to circumstances constituting fraud or mistaken clued in the who what when where and how of the mr misconduct and then you must set forth what is false or misleading about a statement and it rejects the notion that you can have a relaxed standard b says they were addressing because template this is a data file format which is good too but it was attached to which defendants all of the all of them and the reason for it your and they all participated in the creation of the ice radar template the ice radar template was supposed to be on by the industry to help too and the uniform affidavit of collecting data particularly as a result of the retrospective reviews and then to be so that they could collect the data and then eventually submit it to  using a c m s particular format the ice radar template was designed to not allow the h m o's to record they all did the same thing and that is the blind coding line coding means that you tell your coders the people are doing the reviews of the medical records does a retrospective review of a medical chart they will only find create one bucket of information essentially which is these are the codes that are supported by these properly documented medical charts that i've reviewed so in other words the codes they come out with are only codes that either come out and back at one which are the ones i've been previously submitted or comes up with the diagnosis codes in bucket two which are these are codes which are supported by the medical records but had not been previously submitted by blind coding the coders can never find the the bucket three because they don't know what was previously sent and therefore cannot tell their sapir years hey we had to withdraw the scope so how do they know that there weren't  cate and which ones are ok we're i'm having trouble following this but what's the next step and that's it well i mean that's the that's that is broadband and all defendants are engaged in the front example that is and then that was knowledge or that's what they were doing yes because they're the ones at their employees were involved in designing the ice radar template which was designed to mix bucket three because it doesn't get the template but what they're the blind coding and the blind coding doesn't allow them to because they're not going beyond the template they're not going to get requested lead to a man at least a man the court at the court below issued an order to show cause and interrupted us to submit declarations that we submitted indicating what additional facts yes  though i'm sorry you can't where you said something about amending further i know where that comes from because i understood that we were looking at and evaluating what you propose  stand is there another document yet to appear no ok this is it so i'm looking for an example where you can say with particularity which of these defendants were engaged but we're going to say all of them because they all conducted the same type of retrospective reviews and there's also commonalities here which is that one of the defendants marina health mona is in its capacity as a health care provider not as an h m o and marina is a contracted provider for each one of the defendant health plans and marina conducted its own retrospective reviews on behalf of its various h m o clients and its mylene molina also just did the blind coding molina also had employees who were involved in the creation of the ice radar template conducted the coder's review ok that's true of the defend the site ok rather the procedures and methods developing news by health care partners and read the audit allegations somehow triggered the public disclosure bar the read the audit results are not were not publicly available and therefore never publicly disclosed and i read the audits only have to do with roughly two hundred medical charts selected by a medicare in chimayo which are to be audited by c m s and what happens as a result of that is to the extent there are failures in other words the documents don't support the diagnoses then but what happens is that c m s fails those particular diagnoses that were submitted and those are those are then withdrawn by c m s however there is no public disclosure even though the read the audit rates are not publicly available this does not trigger the public disclosure bar as it pertains to re retrospective review or audit fraud claims because it's apples and oranges what we're talking at the raben audit do not do not disclose this agreed that i would represent all of them but i would like to start with proposition judge fish you noted which is a real concern all the pollies have with lumping the proposed complaint in the proposed and then the complaint of course does exactly what judge fisher noted was absolutely and it's important to focus on what the question for the court is today because back to the procedural history here the question for the court is whether the district court abused its discretion in denying leave this is not an appeal from the dismissal of the thirty minute complaint it is an appeal focused specifically on the question of whether the district court abused its discretion in denying leave to men which in turn focuses as judge fisher's indicated on these two additional facts that mr slogan sought to include in filing this proposed fourth amended complaint much of the discussion that has happened so far with counsel has related to the underlying merits into a deconstruction of the question of how these audits occurred and i'm happy to get into that because i want to try and resolve some of the problems with his description of what happened here but in order to understand the procedural history as the court noted what happened here is the district court had initially issued an order to show cause based upon what happened in the failure to meet and confer mr slocum came forward with two additional facts first was the question of this ice radar template the second was the question of these rad the audits that had been done these prior audit the c m s is indicated and published previously it is those two facts and those two facts alone there really before the court that is true and that's what makes this case will be different in the sense that by virtue of the fact that the court issued the o s c effectively became like a second version a second evaluation because it was the first challenge that we made rather than oppose it he asked for leave to men by virtue of now submitting the second one he had the benefit of our of our briefing the court gave them an opportunity effectively to amend through this with the process so in essence to your question it really amounted to a second evaluation because the court at that juncture was evaluating what it was that mr slow been sought to add so if we're going to do a count probably two is is a fair assessment of that and in many respects this is the quintessential futility case as the court looks back and it's jurisprudence it's it is a quintessential futility case layered on top of it with the end to delay that went kind of analysis that this court has always said and the supreme court set forth in solomon which is is there with respect to the new facts alleged will it change the analysis and we respectfully submit that the district court in it ten page single spaced ruling undertook that analysis and concluded and it was not an abuse of discretion for the district court to conclude as a factual matter that these two additional facts would not change the inquiry and would not cure the defects in this complaint the defects fundamentally being the defects judge fisher you've already noted and that is the failure to flee plead fraud with particularities required under nine b the failure to identify even a single instance of a false upheld these false the sort of fine that the medical records that have been submitted up the food chain were false in this in this context i want to just answer what judge when was asking the process that's employed here is that physician will generate these codes the codes move upstream judgment as you noted they get passed along to the h m o's ultimately are passed along to c m s the aggregate total all of those codes get put together into the hopper to create this risk for the mr honig i was referring to why does that become important it's unfortunate because the notion of trying to allege which is not that any particular medical record or any particular encounter quote unquote should have been removed begs the ultimate question of how the entirety of the medical record is received and used at c m s fundamentally as judge when asked before blind coding is not inappropriate it is not improper there's no statute there's no rule there's nothing about that that suggests a quote unquote scheme to defraud it is simply a mechanism by which h m o's are properly entitled to go back review once single encounter have other coders come in and see what they see in that process what's most important here is mr slogan is not alleging that any of the designed a process that specifically told people don't look at other records that's not what this retrospective review was this wasn't the case and still is not the case for mr slogans alleging that any of the pallies had any knowledge of any false or unsupported claims or unsupported medical diagnoses that have made their way up the food chain and it's that there are unsupported codes then you'd have to aggregator gather up all of the patients records to figure that out without the the process that's exactly right in order to make a determination as to whether any code is unsupported you would have to have every single medical record pertaining to that beneficiary you'd have to go through an exercise of looking at every one of those and all of the codes attached to all of the encounters of the beneficiary has been to the hospital ten times and seen twenty physicians you've got thirty different medical records you would have to deconstruct in order to make a determination that a particular diagnosis code was unsupported that's not what mr slogan is alleging that's not what occurred here and in fact what he's alleging is so far afield from that process to be woefully deficient under nine b blind coded all that is true but they don't give rise to a inference of fraud they don't give rise to the specificity needed under nine b of indicating that there was in fact a false claim that derived from the specific process and other here's the theory which i think does parse out of the complaint is as he described it which is that they designed the retrospective review to purposely ignore over porting and only were looking to add on to previously submitted certifications and therefore they skewed the design knowing that all of the would be correcting as far as seeing it as concern was that they'd been under reimbursed even though they knew that there would also be cases of could be but they designed it to exclude is not required to allege all facts supporting each and every instance of billing but it has to be some level of specificity to give notice to  particular defendants about particular misconduct and then must also supply reasonable indicia the false claims were actually submitted and i take it that what he's trying to do by these read what is there is to say with this construct in mind it's reasonable it's a reasonable indicator there were false claims even due respect honor wouldn't amount wholly to speculation because mr swollen has never looked at any of the medical records he can't identify a single instance of a medical record or a beneficiary for whom there band and know what it is that they're being accused of no i would say agree that he hasn't tired of the dependence to the s with respect to the bedrock of the outcome in a bed while it had the splitting standard that you've just identified a bad makes clear that the relator must still supply reasonable in dishes that false claims are actually submitted and in that case the court the ninth circuit and the discourse on the second man a complaint did neither and here the district court looked at the proposed amended complaint through these additional facts made a determination that it did not blind reviews of blind coding rideau he talks of about the the program the ice program and we have skewed he says that sure but what we're talking about is a tool and just because he calls it skewed which takes the word cherry picking the sports make quite clear you can look beyond those sort of loaded language terms it's a tool it's an exile spreadsheet it's a whatever it is designed to exclude category of certification documentation it's it's not designed to exclude it's instead and designed to include and i don't mean that to sound semantics this goes back to the notion of blind coding by virtue of the blind coding review you won't have an underlying review of all the medical records which would allow you to make a determination as to whether there is something to be excluded if the allegation was that in creating selected by the ice template know the the them over by times i want to answer your question all that happens is the initial coding results there that is not part of that review ok then what what does what do the parties submit it to c m s for  complaint it's all based on speculation that there are over that overclaim that's all right that that is pure speculation and that's why that in this case what the district court found was an abuse of discretion he still has not come up with a single instance of quote unquote false claims you're saying there's nothing in the design of the tools that would a clue the up coding or up reporting whatever because it's a it's a neutral exercise it's blind if in fact the been the other way if the allegation here was that these people went in and did multiple review style and explicitly deconstructed all medical records knew full well that there were multiple codes that were not supported and then deliberately chose not to include them we'd have a different case but that's not the case and we respect the smith the district court did not abuse its discretion in concluding that these two new facts did not change inquiry that this complaint did not satisf give you two minutes thank you thank you your honor i'll try to be free first of all i would like to point out that i misspoke when i mentioned the health care provider molina i was wrong it's actually health care partners  i wanted to go further on the issue of the rad the audit issue the reason to correct my confusion about the link between your eyes in the blind coding is it true that there's nothing in the boring coding that has any relation to the i r s now they're connected this is connected in the sense that this is part of a fraudulent scheme to not notify  of the withdraws or the deletes they go hand in hand and how do the how does that happen mechanically the ice radar template was designed to all and we allow them to  allow the coders to end but that there's no way in which to put delete the way that the template is used as it's used to collect the data by h m o or by number it would typically inc and it would also include the diagnosis code or die for their patient the date of service those types of things but the problem is that it was never designed to have a field be added no it's just this is what's going to be added that's it your honor or let me clarify not add it but that piece of the codes reflected in this medical been submitted fine these are new codes ok and then here the codes that we previously submitted that are not supported by the medical records those codes have to be deleted from c m s that's why that's why the blind coding was designed to not have to accumulate the third bucket also when we look at the way that the template was designed there's no way to delete