to start by talking about some regulations that are involved in this case nearly all federal entitlement money travels through the automated clearing house this includes payments to our soldiers includes benefits paid by the department of veterans affairs includes all security payments includes the paychecks for this court and its staff to protect those funds the united states treasury department it's a voluntary program the banks select to handle this money and by doing so they form a contract with the united states to abide by those regulations now everybody has court rooms aware of tr that are busy so dense that they're obtuse that's not the case and in this lawsuit very simple regulation if you're a bank and you accept problem funds and your customer dies and you know your customer dies you've got to stop taking the money period the regulations go further and make the banks fully liable if they do take any money after they're aware their customer has passed away and finally the banks are also required to pay attention to a document called a d n e death notification  bar whites there what it's designed to do got to go back to world war two and world war two there were some enterprising citizens who were hanging around court houses and they would wait for the u s attorney or the attorney general to file an indictment against a defense contractor they would then take that indictment rip off the st page and put a civil cover page for false claims act case on that indictment that was what's called a in the eight hundred and sixty three false claims act that provided if any government employee any government employee has any knowledge of the fraud the suit can't be brought by a citizen p t s who can't be brought  was called the any government knowledge bar for forty years that was a law in this country any kill every false claims that case ever brought wipe them out because you could always find some government employee who knew something was by the mid eighty's congress realized that this had to change we had to incentivize citizens to bring these suits and finding any government employee that good bargain was not a good idea so the public disclosure bar was inactive it doesn't require the government to have any knowledge at all in fact that was repealed now there has to be substantially the same in allegations in the related his complaint as in the disclosure and this lawsuit therefore is neither parasitic on it nor does it contain substantially similar allegations to any of the six disclosures identified by the district none of the disclosures of the sickness exposures ever reference banks contractual obligations under those regulations to ensure that payments are respect your honor prior to d n e even being in the regulations none of them referenced the gatekeeper role that these regulations require the banks  none of them put the government on the trail of fraud none of the six therefore they can't be public disclosures that bar this lawsuit now this court to perform a day novo review of each of those six documents and what i just said you're going to find in any of those six disclosures or all in combined they're not there so the nd issue that the district george bounced its case on was another provision of the false claims act that was amended in two days before president obama signed the image's that added the provision that we want to talk about and that provision is that if you have an obligation to pay money to the united states and you knowingly avoid paying that money the united states you're liable under this new provision of the false claims that you agree will not be applied because it's a fraud case right yes sir particular already so just one example some particularities of you know who what all those things let's just take one of those time when did the scheme to ignore all these federal regulations and requirements when did that scheme start at wells fargo i don't know that i need to plead when it started it will fargo i think i need to plead when that started any eight when it when it occurred and wells fargo and i do k once wells fargo started this scheme who's that you know whose idea was it when did they start it that's what you typically see is what you typically see your honor you're going on this date this vice president had a meeting and said we're going to do it this way on here's let's says is if you knowingly or improperly avoid or decrease an obligation to pay money fraud is not there you have an obligation to keep phrases obligations well there's not fraud then you're saying rule nine doesn't apply because rule not only applies to fraud that's correct your honor i thought i did i did you have that you argue below are to us that rule nine doesn't even apply i did not argue that before you were on or i did argue before you that the language  b requires no proof of its specific intent to defraud b one b so what does it require requires an obligation which the regulations provide it requires the banks fail to repay money to the government which we provided twenty three dollars specific examples including the identification of the customer who died it be a claim number the dated death the date of last social security payment and the amount of money that the banks wrongfully would help me back up just so i make sure i understand what you're saying i mean your summary of the argument and number two you talk about nine b and you say the related pleadings me to stand so he's going to the lives now and be with applicable but what you claim met the standard so are you saying what are you saying today are you saying none of the isn't applicable because of everything else you say you know you stand a pleadings that you laid out do connect to the fraudulent claim and are specific enough i think i'm saying two things here are i'm thinking that i'm saying that under ninety analysis which we analyze in the brief that you're holding we do satisfy the ninety analysis of the grubs versus kind of guarding case by pleading the scheme but i'm also suggesting in this court as an officer of this court that the statute that you're you're right i know the disk or pays very particular attention to the language of the statute and i didn't want to leave the court without mentioning that fraud is not there there are scores of allegations describing the bank's fraudulent ski much of your brief or twenty nine dollars s are we stand by that there are scores of such allegations three elements our obligation which we talked about a fair to repay money which we've given twenty three dollars examples of in these examples range from fourteen months one  years to one hundred and ninety one months omo sixteen years the banks failed in their obligation to repay this money sixteen years so that this is to the knowing part of the element the element of standards that should apply by delivering ignoring facts when you don't return the government's money for over fifteen years that's knowing doesn't have to be played with particular can be played generally which we did are there any of these reverse false claim cases that have cases that have decided whether or not i'm be a ponce is this argument you made been in forgetting the fact it wasn't made until today but has it been addressed by any court your honor there is a one circuit that has referenced it in a concurring opinion i believe it was out  west either th or th i don't have the case with me i can provide it to the court but it was not to answer your question no it was not the principled decision of any court that i'm aware of those are the two reason for why the court dismissed the case there were six documents she thought were parasitic that guy copied or got relied upon that are not substantially the same as what this complaint you'll see that when you when you study the complaint and compare it with those six documents and the reversed course claims activation i understand this is a new ground i wish i had made a better argument to the trial court we argue to independently fatal problems with this complaint and to get relief on appeal hendrickson would have to overcome both of them and he hasn't overcome either now i am not sure how to address an argument that was raised for the st time at at oral argument when says however after citing the correct standard for ninety the district court failed to consider the full scope of the allegations so the at the argument that was made obviously in the briefs is the rule ninety was satisfied what i'm hearing today is something quite different and something that is completely inconsistent with this court's precedence i did not hear counsel to be saying here today that a reverse false claim is unique in not being a fraud claim when i heard him to say was that the false claims act itself the false claims act in total does not require fraud so therefore rule nine b doesn't apply well that would require overruling all of this court's ninety cases in the context of the false claims act including grubbs which explains that this court applies rule nine b with bite and without apology the theory that hendrickson raises here is that fifteen different banks of of the banking industry each knowingly failed to return federal benefits payments that they had an obligation to return meaning benefits payments that were received after notice that the recipient was dead so the critical thing is not only that notice was received it's when that notice was received in relation to the payments themselves but he hasn't described a single instance where that ever happened he hasn't identified a single person for whom a bank actually received a notice of death he hasn't said when that notice was received relative to the payment he hasn't alleged that that conduct was anything other than a regulatory violation and this is where the standard for pleading knowledge really matters the escobar the supreme court said in escobar that the false claims act is not to govern when we're talking about a simple regulatory violation and what you just heard in his opening argument was an explanation of the historical of the scheme and the regulatory scheme and so forth all he's ever argued is that the regulations were violated and i would submit he hasn't even adequately alleged that they were violated because as the as he concedes the critical triggering event to trigger the obligation to return money is the receipt of notice before the payment but this complaint doesn't say when the notice can it doesn't say whether the notice ever can and it includes no factual allegations whatsoever that might suggest knowledge or recklessness or anything with respect to each of the fifteen banks the other important thing here this this total lack of specificity in this complaint is also a problem of the public disclosure part because under jamison we know that the facts in the public disclosures need only be as broad in his details as those in the real here the district court found six instances and we submit there are more where a public source disclosed that a bank received money after receiving actual knowledge of death and did not immediately return  least six at least six disclosures where that is disclose those are the results show that the bank had actual government knowledge from this from this electronic notice though they had something even better they had like someone called the family member a family member said there is the person is dead in one in one of the disclosures the to the bank accounts have been inactive for years which the court concluded was enough to put them out at least constructive knowledge that the person was dead but in the other examples a family member actually called up and said the person is dead that is actually more specific than what this complaint says which seems like it's if that would mean that any fraud in this area would be publicly it's almost like saying you know there's reports every day that medicare is getting ripped off right so you can never bring out false claims act because everyone knows medicare is getting ripped off but that here we just know the government's paying out all this money that they shouldn't be in banks are arm letting it happen it just seems like it would eliminate it would be a public disclosure barring any fraud allegations in this this area so it's a public disclosure to the friday allegations in this complaint and that's the critical thing with this complaint does is it just alleges at most a regulatory violation it takes the so security manual which says the social security supposed to promptly provide notice into it makes an assumption and he conceded in the district court that it was an assumption that the social security administration consistently follows those procedures right away and then he a couple's that with the fact which we know from lots of public sources that money is up in the accounts of dead people that's that's all this complaint allege but let's say it was more specific i get your point if it was and it says a corporate vice president one of these banks had a meeting and said you know we're going to ignore no one look at these social security notices you'd still be saying it's probably all the specifics you needed you'd still be saying it's probably just there's a public disclosure because people knew banks were letting this money keep coming in after people died i would i wouldn't necessarily or honor because that's grubbs what you've just described is grabs right where there was a there was a meeting and the time and place and manner of the meeting and people confess that they were engaging in medicare fraud the question is whether the public disclosures disclose the scheme as alleged in the complaint here all the complaint does is alleged at most a regulatory violation so yes i would say that none of those six examples the e it the d n a didn't exist but that the core of their regulatory as you describe it a regulatory bile but the d n a that says the treasury regulations are being violated because you are receiving money and you're holding it in account rather than i return and that is the gist of the claim that is the claim that is the core of the theory and he says it all over his brief on appeal what is the specifics what are the specifics of the scheme keeping money after the not that's the specifics of the scheme and that was described in there in the banking circular as well as in all of the other public disclosures there's just to speak to the knowledge issue under this theory under under a one hundred since theory the knowledge has to be knowledge of an obligation to return the money right so it's not just that he has to plead that notice came before that the payment came he also has to plead that the obligation happened in there was a knowing violation of the regulation and he has a plea to that either end and knowledge does have to be pleaded elease to positively that because it does at least require factual allegations consistent with says something different in another place it says that the bank doesn't have to wait for a reclamation process but can immediately return also a subsequent post as payments and the social security is a ministration guidance says the bank has the option of waiting for a reclamation before returning the funds to the eighty so it's not even clear if you if you even if we knew that for a particular person notice was received and then a payment was received and the money wasn't immediately returned and the complaint doesn't leave even that much even if it did all we would have is potentially a disagreement about what the regulations and we know from this court's cases that a false claims act claim requires more than just a decision a regulatory violation a disagreement about what the regulations mean it's not clear if you look at this regulation which was does not say immediately return the immediately return comes from the green book which is self contradictory so what you see in all these examples in fact that the complaint cites many of those examples there was a noticeable reclamation issued and that notice  proclamation was complied with money was returned but he doesn't plate how much the government asked for and the notice of regulation he doesn't plead how much should have been returned he doesn't plead whether they did or did not limit their liability before returning the money there's simply no basis even from those examples to conclude that there was a regulatory my lation much less a knowing regulatory violation which is what you would need at least to have a false claims act claim here now counsel mentioned a couple of times that this is all at the pleading stage and certainly that's true one thing i do want to point out just in case just because we're in the realm of departing from briefs and i just want to make sure i check this out there  the plaintiff conceded below he has no more specifics to provide he didn't present an amended complaint in the district court he has not argued in his brief for leave to amend here is not argued that the dismissal should have been without prejudice to leave  i want to start with counsel's new argument about regulations and escobar and point out that if you look at the false claims x definitions this is like poker all take your new allegation i'll take your new argument r the definition of obligation is contained in three thousand seven hundred and twenty nine b three b three in a specifically provides that obligation means a duty arising from a regulation that's what we're talking about here is regulation two thousand ten it's specifically covered by a false claims act because it is a regulation that provides an obligation to repay money to the united states that these banks took and held on to in some cases for over a decade secondly i never said in this court or before any court that the false claims  does not require nine b i made that argument twenty five years ago unsuccessfully i have made it in twenty five years and we do not make it in this case is as a judge chief judge stuart pointed out from from the br ninety does apply to false claims that cases what i suggested is when you sit down to analyze the language of this statute you may have some trouble finding  ninety applies at all to this case that was all i was suggesting counsel told you that there's fifteen banks here that and it's a swath of the banking industry not really sure what that means but not a decision that was made by the court below i don't think it'll be a decision that you make in your day novo review when you look at that regulation very clear that this money has to be returned immediately the green book is part of the deny their obligation here this is what they say in their brief the regulation shift the burden of the debt beneficiary problem to dob banks making the banks liable for the total amount of all benefit payments after the death of a beneficiary as page eight of the brief with the banks of fifteen banks big knowledge what these regs say they've knowledge with their obligation is they just  not lived up to abiding by that and as a result veterans admitted the veterans affairs department has lost a ton of revenue that could be employed in other fashions that's a perfect session a perfect