facilities who have with chronic conditions and need extra here they promise to provide the services and in exchange they receive more money in formal application emits from the state then they stop providing the services didn't tell the government and kept all the money that is textbook overcharging the ark and simple false claims act case when this kind of overcharging is done knowingly it results they had no ability to provide and no plan to provide this is not just a breach of contract case as the defendants have made it out to be the breach of contract is egregious in this case but it is a company but either way you cut it you can't do this the statute makes it a lawful imposes liability so mr saying i just wanted to get one fact clear in my own mind you you mention at one point that the rates are quite different depending on the population so that people get as i recall in excess of two one thousand dollars for people in skilled nursing facilities and the community rate as i recall was under one hundred dollars i don't remember the exact numbers but i wondered how in this in this situation how many different populations were represented if the record shows that and i rates really were so dramatically different yes your honor it isn't a record it's not in the appendix unfortunately that is on the record i believe that there are four d or five different rate cells community one spelled out in the contract and in the millman report it does the math but the difference is if you're thinking about how you know which is the right comparative figure out how much higher the rates were i think we do have the right comparison if you're in the nurse and facility that's when you're likely to get the still nursing business services if you're in the community you're not you're not going to get those services d there may be other d factors but you know i should also add these these rates also are stratified by age as  purposes is one that's effectively not disputed which is that the a male pay is higher if you're provides sniffin services than if you don't the only reason i'm asking is because again as you've conce d simple contract breaches are not the stuff of the false claims act case it's got there are more requirements and if if the rates are different by a couple of orders of magnitude that would be apparent to anybody in the business if the rates were just different by you know ten or fifteen dollars then that could slip by somebody even if it was a breach of contract to charge a different think that the question really goes to so i'll just point out a couple of things st you know that sort of see enter question did they know the type of thing that we've certainly alleged it and it's the type of thing that can be alleged generally  leading stage if they want to say we didn't know we had no idea that this had any effect on our rate you know we thought that we were providing all the services we were supposed to like those are that they can introduce into the record at the appropriate time and we can talk about them but the allegation the complaint quite plainly is that they knew they were obligated to provide the services they stopped providing services and they knew they would have known that this is important to the rates these are services because what you have is you have the same thing and i ask you to be a little more specific at least to the extent you can with the consistent with the record about important and substantial and expensive honor i think the only way to really know it would be to look at an actuarial report that doesn't include the sources and try to compare that information is not in the record ringback now and so how much is we do we know how much for example the defendant was supposed to pay mr pros dr proses company as compared to total receipts for the for the defense yes your honor we do have some of that so there was a for service structure set up in the contract that the defendant had with dr prez's company i believe the number and i don't i don't want to get this wrong i don't have it in from the i believe it was about a one hundred and twenty dollars per visit normally but there were other patient months so that is a question i do not know the answer to are and i'm sorry as i understand it though the obligation was to provide for continuing ongoing care that is to be on site to be seeing the patients regularly d and monitoring them and so it's quite a hands on form of care in terms of the total patient population or per patient per month i imagine it m defend despite actual knowledge that certain requirements were violated that is strong evidence that the requirements were not material here and there are a few reasons why the defendants can't rely know that they had stopped providing the sniffles services and so the premise of the point is not here is not in that beyond that even if you were to accept that it could be strong evidence against materiality pleading stage when there are also facts going in the other direction including that these services are the part of the essence of the bargain that molina struck with the government including that a reasonable payer would want these services to be provided including and just parking to the definition of materiality in the statute the matter is material if it has a natural tendency to influence or is capable of influencing the payment or receipt money or property by the defendant here are allegation is that this cause them to get more money that is clearly material and price impact is almost always been understood  so if they want to put this fact into the mix that the government removed the contents i think what they have to do is they have to show through discovery that the government had actual knowledge and then they have to show why this fact is more important than the calculus then all of the facts that the way but for now at the pleading stage what you have is you have are allegations and you don't have the promise of your plans it may be that you were planning to get to this anyway but at least as i understand this case we have  the question i have is do we have examples of the enrollment forms and what they tell the government about the so called rate cells that seem to be at the core of this case so the way this process works is that it actually involves relatively little input from the defendant what will happen is the state will establish who is eligible and will send what's called an eight hundred and thirty four file which is a list of the patients in the great cells that are are going to be paid out of them but if you can get the refill that's correct ok and that's based on where the population is in the population characteristics of the beneficiaries then there later there's what's called an eight hundred and twenty five dollars which is the actual payment file the sent over to the defendant and what the defendant does is it performs a reconciliation where they examine their own records and they say ok this patient is actually in not enrolled with us oh you missed a few who are coming to us for care you or these ones are in the wrong rate cell and but in the process the defendant is confirming the a pleasurable rates else and we think that by doing that they're doing just as much as the senate you know has the heart to use particular payment codes for certain services they're implying that the patients who are in those rate cells where the patients who are properly enrolled there are getting the  services or at least able to get the services that ringback were promised in the contract and that's really not happening here moreover i would just add that there are a bunch of reporting requirements that are called out in the complaint this includes encounter data reports that includes regular other regular reports that have to be submitted an incidental reports that have to be submitted if for example there is a change to the provider network you have to tell the government promptly and our allegation  complaint is that no such reports were ever submitted in connection with determination of the sniff test program and so it's not just in the claims for the men that you find the falsity it's also in these other disclosure obligations that are designed to make sure the claims for payment are not going off the rails so there is falsity in numerous places here and i think what that adds up to your honor and just to be clear of lots of odd if there was this whole section of the health care system that just didn't have the protection of the false claims that so a multi billion dollar business a huge part of how health care is being provided these days is through capitation payments and so i don't think that the adaptation needs to be too strenuous i think when you look at how these payment systems work there's meant to be a lot of transparency from how do we know that they didn't have a good faith intent to go out there and find somebody else to provide the service we know it's a pretty high standard under ninety just to allege that kind of fraud that that's right you're under rule nine we what we want is we want some specificity about what we're talking about here with state of mind that can be treated generally and so when you ask they didn't have a good faith intent what we're basing that on we have done more than the mobile pretrial investigation we have an entire separate proceeding against them where we have deposition testimony from their insiders telling us that at the time they had no snippets program in place they have talked internally about creating their own snafus program they haven't gone to another provider they have admitted that and they never put it into action and that was testimony taken in equal two thousand and seventeen so you know that at least before that day they could not have said with a straight face we're going to provide snuff the services when this contract starts they had no mechanism to do it not and so if they said they were going to do that had to be false i'm at least a leading stage i think we've more than enough if there are no other shoot the moon here they have to establish each of several elements here and i will walk through them and they have to do so with particularity as as judge lloyd hinted under rule nine and they have to have a plausible service there's not even been an express or implied recognition that the omission of a specific service within this complex capitation system gives rise to a falsity and there's a  capitation payment because of their placement and somebody else in the community who's twenty two years old and fabulous health you know gets a fifty dollars there's there is such a discrepancy and if you're not depend very much on the facts i'm sure you would agree with that and there are of course many many facts that have been alleged here you have your own high burden which is to show that somehow this isn't enough there's always one more fact out there in the horizon your honor i think there are two reasons why back is not a plausible inference there are two things that are happening one what is the nature of the payment system into is a nursing facility the  thinking as a snow mr program or service and i'd like to address both of those your honor but i but i wasn't really worrying about whether a nursing facility was the people the capitation follows the people and the rocky people in a skilled nursing facility consume a very significant amount of medical services writ large i mean nurses orderly use doctors the whole package and so that's why the best player intitled to a higher capitation payment this is a very old model of delivering medical service is essentially the h m o model you know we're going to pay you this much per month and you're going to somehow make it work within that but if you're not providing the complaint it is a complicated risk contract that is quote regardless of the services actually perform oh i understand that what i'm saying though is when you figure out what amount of money will be paid per patient preceding that dollar amount is and is an assessment and estimate across the population of how much are you going to have to do i mean ideally you know zero out you don't want the government to pay and have regularly not as many services consumed you don't want to leave a lot of money on the table for the provider of the services you're trying to figure out across a population what is what and what needs to be provided in order to make this a financially viable arrangement and that's exactly what h m o s do and that's why there are these different cells because some populations consume a great deal of medical service you know if it's mary smith  john doe it doesn't make any difference there but it's a it's a global estimate that's right your honor global estimates a good way of thinking about it and it's interesting even in listening to mr singh's description of how the rate cells are are described there are about the patient demographic that's what he said and there's little input from the defendant's right and from there there's not even really a description of services i we do take issue with the suggestion that a sniff this program which if you look at the contract is only one of several manners of care coordination that that program or even that particular provider we're not in a world where we're missing an  entire for example like even a specific service if you look at either their agenda med kind of gen that contract if you look at the contract with the government the snippets program is one of several manners of either primarily care or issue here or not in the in a world where you're missing for example entire i surgeons right now that makes it is already difficult to discern aggregate value in a person per month but understand the allegation to be so is that there isn't fact in entire packages of services that your molina has said that it's providing to people in it facilities that it is in fact not providing not through sniff it's not through any other business method and you're thus overcharging the government that's how i read the allegations but for example we don't know that everything for example within the alleged packet that gen net was providing once and we know for example that appellant concedes that several examinations right that were part of the snippets services that were supposed to be provided there's actually a confession asked you the same question of the follow up here that i asked mr singh can you quantify how important the skilled nursing facility specialist program was in terms of the overall means i don't think in this system it's easy to do that and i actually think that the milliman actuarial court for example when it talks about nursing facilities and those rates sells it doesn't even mention snippets as a particular provider my over problem the problem i have is than i understand there's a complaint uses the term important an important part of the overall services available that that would be easy to prove but your honor even at the pleading stage that's not our burden to prove i mean you do have the the testimony from your chief operating officers suggesting pretty clearly that you simply were not in a position to provide this over a two year period and we've got a pleading that tells us this is very important your honor under the materiality cases including important is this promise to service it is not material to this fee for service contract it just ends and that's because we're talking about a complex and c e o here and i think over the what if it's thirty percent of the monthly expenses on average i you know i don't think we really get in some government action it's even well short of the false claims act here the government had numerous lesser unless we had an indication that the government had done something let's take the ned said case for the nets a case was northern district of illinois case it also was a capitation case and actually there there was a little bit more hint of materiality under nets because in nets we actually saw the government perform an audit or kind of there were some citations well short of intervening in a false claims act and even there the court concluded that this is not material because of the nature of the capitation payment it is not for her service and so that or decision ernest it is a district court decision your honor yes but i think if you hold if you hold the t the various kind of capitation cases next to each other here's how i think it sorts out i want to be clear your honor we're not suggesting that under these complex computation systems that it is we're talking about an immunization of these that's not the land that we're in we know at least a true buckets of false claims that can be articulated in a capitation system but we're not in that bucket where here fundamentally on  appellant is trying to cram a fee for service claim into a world where that the capitation payment is not the st service but you know to direct it to look at the economic reality of what you've done i've read them is largely going under the implied sole certification notion that the supreme court has now said overruling this court by the way i expressed citation and disapproval of our earlier law that happens and i think if you're certifying that you're providing certain packages services to everybody in the covered population but you are in fact only providing you know eighty percent of those services and i don't see why that doesn't amount to an overcharge it's not so different from an over billing case i think that gets to materiality your honor we don't have seen everything at st it gets to what did you promise you were doing and were falsely representing that you were doing  we don't agree that we were making a representation about all services we actually know that from the role of the sniffing stronger it's not the case that again that that it's not this it's you only provider of services in that nursing facility and the other thing i will say you say that anybody else was providing these kinds of services either with their research the remark the judge hamilton referred to a minute ago i mean they started out providing one package and then it got significantly reduced and that that goes both to what are you certifying you're doing it probably also in a way goes to materiality sign but  when you say you're doing something that you're only doing eighty percent of it you in your view that's ok no but your honor i'm not saying that we did only eighty percent of it i guess what i'm saying is the record does not show contract the sniff this this kind of focused person at the nursing facility is one of several people listed on that team towards the end frankly so there is you know there is that testimony that a program a program that's been delegated to gen med have not been replaced some of the services within that program for example these comprehensive exams there's no dispute that those were provided right here so we're not some just feud about what the exams were like i thought you were arguing from remembering that they were not if it's services anyway and they were arguing that the people who did these examinations were not qualified to serve the population same way they were just something else going on i don't think for example there might be a dispute about the quality of service that have been provided drawn or but there's not a dispute that the exam didn't happen or that fundamentally there weren't license people that actually leads me your honor to the nd bucket of recognised cases under the capitation world that's actually escobar and the martino fleming case i think what we're struggling with and i struggle with this too is what level do we hit materiality right like is it ten percent twenty percent or whatever what the martino flemming and the escobar cases tell us is sure if you're providing primarily one thing in both of those cases mental health services such that there's such a resoundingly central fundamental problem in those cases there was a quote systemic loss of life i'm sure right if that were the allegation here i think would be a little closer b and a material falsity but here even in the description of the affirmative claims whether it's the enrollment data or something like that you would have to for example be missing something closer to the nursing facility you just don't have a nursing facility at all but the allegation here is much more surgical appellant is not claiming that were missing fundamental nursing facilities or that people weren't getting actual health services th ey were missing an important care coordinator that is the extent of the allegation and under even the structure of the government contract right we are not making we're not making affirmative statements expressed or implied about that level of service or provider again even in the description that rate sells there's not a discussion that we are making a false claim about specific providers or specific services required to be provided and it says that molina wasn't providing them i mean i don't know what else at the pleading stage anybody could possibly say your honor we don't dispute that they were term under the contract and you know your st skill and for a company in the business you know these are not you know trivial aspects of the care that is expected when somebody goes to a skilled nursing facility at least so they allege they say this is what the skilled nursing facilities are all about your the level the complaint actually attaches both the government contracts where you can see the kind of relatively minor role that particular program goes goes to it attaches the milliman report which explains that it might have taken fee for service data it doesn't specifically mention as judge hamilton the kind of points out it when we're trying to desegregate it it doesn't actually say what a sniff is provider is words under that system but what we know is that what milliman spit out at the end is not this kind of this aggregate amount and so i think the the contra that kind of you know the well the well worded complaint has to be held against the actual contract themselves and has to be held against the middle of an actuarial report in those undermining the inference that this was a very very it was basically the only to make it seem like it's almost the only thing that was happening out in or some facility and that is not suggested by any of the attached documents so again we go back to the bird in question and i'd like to pick up on something that judge would kind of started with in the earlier section there's kind of this catch twenty two here if this was so important as you pointed out judge wood and it was such a  material thing to the government it's not hard to find alina there are there are allegations that molina you know we're not talking about an individual service provider that did one thing and the government's not checking in on them there is if you read the whole of the complaint clearly the government is reengaging up several levels with molina right including a two thousand and eighteen renewal that was after the filing of  dr proses complaint with the governor i understand that the renewal in that you placed almost conclusive weight on it i think that's a little heavy and what concerns me is that the whole point of the false claims act in the keep him actions is  the government itself doesn't have the resources either to bring all of these cases or when they're called to the government's attention to pursue them and if the government thinks that the relator is doing a good job i don't think we are to take  adverse inference and say well this is really one that's not that important because the government isn't devoting its own resources the government only has so many prosecutors so many lawyers so many resources to use so i i think that's a neutral factor i mean there's a statute there's that relate or i don't i don't think we should rest on it i don't think that's the dispositive factor but i'd also point out again here there are many lesser remedies that could have been planted not a single one be pleaded with particularly i think knowledge does not have to be pleaded with particularly i think in with materiality there has to be something there has to be some put to a week for both of those is it is not enough to simply say the basic elements of it right and so we don't think that anything above the sure recitation of the legal standard has happened to you all right thank you very much for your time it's exciting thinking you had a little time left sure i'd like to start just if i can be helpful in pointing up some record sites that might be relevant to questions that came up during the st fifteen minutes  service payment of one hundred and twenty eight dollars eight cents per visit plus some additional fees if additional medical and surgical services are provided and there's a little spiritual help those go but it's not peanuts and it's real money you'll find  example for someone to nursing facility was three thousand one hundred and eighty dollars for people about the age of sixty five dollars the next closest rate cell is the other way for a plus rate which was two one thousand four hundred and sixty one dollars and of course community rate is much much much lower but even if you're looking at the top end of it you're talking about a disparity of the seven hundred dollars s so again real money mr gao mentioned and the there are that you know maybe this wasn't the same monitoring a patient is there in the skilled nursing facilities to make sure they're not take resting in the acuity of their condition and they're receiving the traditional medical and surgical services that they otherwise would have to go to austin for and then he says our staff did not have the from the actual contract so they say quite unequivocally that molina is going to provide a sniff this program paragraph thirty nine of the st amended complaint is when they responded to the r f p the request for proposal they said we're going to do a great job with this we want to have people built twenty four hours a day seven days a week these were important obligations that they promised to provide stop providing and then what makes the supposed claim is they kept taking all d that money you know they had ways out of liability they could have come clean they could have not taken all the money and they could have worked this out with the government but the complaint alleges they didn't and that's what makes this case past the pleading stage thank you very much all right thank you very much i thinks to both counsel will take the key center advisement and the court will