good morning everyone and welcome back to the th circuit we have a different cast of characters up here but we're ready to hear the final case of the day judge hawkins just cooked and i welcome counsel just a quick reminder to counsel if you want to save time for rebuttal go ahead and keep track of your time we have the lights to help guide you in the light turns red it starts flashing like i always say it's not like the cross walk where you get to keep walking in the light turn is flashing red that means it's time to stop and with that we'll go ahead and proceed with argument today grant of summary judgment and a false claims act case for a private ambulance company who routinely certified its bills to medicare to be true accurate and complete for purposes of appeal though the evidence demonstrates that eighteen percent of those bills or nearly one out of five were falsely up code it costing taxpayers two billion four hundred and ninety million dollars in government paid over payments what's the proof of deliberate indifference or reckless disregard that your standard is not that's correct your honor numerous warning signs and red flags which the from which the jury can conclude that it failed to make simple or limited inquiries into the truth or falsity of its certifications to the united states that they were true accurate and complete and these warnings are st warnings from the government which rule metric knowledge it knew it had to certify the truth accuracy and completeness of its claims for medicare were meso rural metro also admit it that it knew government payment depended upon compliance with the underlying laws regulations and program instructions including those requiring accurate coding of the medical necessity of the level of ambulance service provided and documented in the medical record those are warnings and now anybody who's dealt with medicare or medicaid and their byzantine requirements for compliance and coding doctors get it wrong pharmacists get are wrong what's the prove that these folks room after books were to either deliberately and different or acting with reckless disregard you have a witness for example that spends that someone went to an official of rural metro and said a very high percentage of these claims that you're submitting without review are code it stopped auditing its formal monthly medicare audits for several months and then when those audits resumed it observes substantial amounts of up code it claims for payment  lexa codes united states united states best represent united states based representative brian pitman however the question of training is hotly disputed we discussed that in our briefs but it avoids the real question at hand because whether rural metro well trained the election code coder's or poorly trained the election code coders it was still required under this court's precedent to make simple or limited inquiries into the truth or the falsity of the claims before they were submitted it to the n i to its states and that was not done additional evidence of warnings and red your honor though the corporate integrity agreement did contain an error rate provision but that was a discrete provision that provides that that applied to just a reporting requirement for discovery sample of claims outside of that limit it requirements the corporate integrity agreement separately required that we're all metro quantify and notify the government of any  overpayments without allowing any offsets for under payments at the district court the united states filed a statement of interest explaining that and explaining that for those reasons the corporate integrity agreement did not indicate rural metro ca enter were metro in its thirty six dollars deposition itself and made it that it knew that if poor coders do a poor job coding any undercoating of one batch of claims does not excuse the fact that another but batch of claims was improperly overcoat it out of the difference between under coding and over coding could speak a great deal to me at least as to what the knowledge intent and understanding of the party was what information is there as to what proportion of the the mis coding is under and what proportion is over you're right here at least one thing th suggested that over seventy percent of the mis codes were your honor the evidence of the record pertaining to the three medicare audits that we say twitter prefer the look back at it the wellness audit and the st quarter of two thousand and sixteen audit all of those three audits show over coding that was higher than under coding the wellness audit include at no under could it claims the look back at it had a positive as would put it financial irrate which would indicate over coding trumped  undercoating and the st quarter two thousand and sixteen audit showed that twelve percent of the claims were over coded or not medically necessary in only three percent were under code it now will metro may cite to some reviews but those reviews were of mixed payer sources and mixed types of claims where is these three audits were medicare audits and additional evidence of the warning signs that grow mature received or that then as part of its effort to increase its profits rule metro outsourced the coding of its claims for payment to these brand new ambulance coders in the philippines while simultaneously were moving all priests a mission quality assurance review of most claims to medicare before the claims were submitted it simultaneously halting its monthly formal medicare audits and reducing the train or the training of its coders thereby burying its head in the sand and the classic false claims act sense the bearing its its head in the sand is premised upon their understanding that they were but there was more over coding than undercoating because if you have errors that made it a water sure if you had errors that undercoating was more prevalent in the companies actually losing money in the end i guess i really am struggling with the same question judge hawkins phrase what tells us that the company knew things that should have alerted it that it wasn't losing money from its own pocket more of a problem than than overcharging the government i want to make sure i understand your correct year question correctly so you want to know what evidence is there at the time that rule metro outsource coders at that time that there wasn't more undercoating versus overkill why should it have thought that this was going to produce the results you allege that it resulted if they didn't anticipate that if this change was made to start with they're under this cia which is a great acronym but i don't remember what it stands for with their under the cia because of what had gone on before so it's not like they had a world beating system that was entirely accurate and so and they have their own reasons for wanting to expedite the claim process because they get paid sooner when they get the claim in sooner what should have told them the danger here was that you were going to produce overcharging of the government if they have an understanding is they have argued that the coders were told earlier on the side of caution so what is the leads us to conclude that the liberal indifference is the explanation not just a follow up or negligence certainly on or before the transition to the lecture code coders rural metro knew that there were an accuracy problems with the election code coder's their senior vice president and made it that he had been warned by related areas and the vice president of compliance that their war and accuracy problems were later spawn had reviewed fifty claims to medicare simple inquiries into the truth or falsity of the claims to make sure that they are accurate before they are submitted and so when it outsourced the coding it removed its process for doing that prior to the outsourcing which was to have the experience billing managers and supervisors were view most of the claims to medicare to make sure that the claims were by and large accurate and so good morning your honor is the court's offer to reserve time for security for the record absolutely my name is now on fishman i'm here with jennifer axel for world metro corporation in rural metro operating company and i'm just inquiring if they offer to which automatically you submitted claims to medicare without being vetted correct your honor no that's not correct the auto submit functional me why it's not correct because the auto submit function was in functional the time of the transition it was problems with locks the code didn't the whoa at the time your honor we have to get out of respect to whether it's deliberate indifference or reckless disregard for they were aware officials of your client's company were aware there were problems with coding at the various points in time your other have to take a look at when we are temp orally so in june two thousand and fourteen when the trans when the beta testing time period st started there was a report that there were problems with lex a code for a specific coding level specifically the s c t coding level which is not at issue before this court before this court is only one specific a l s e coding level that's the emerging whatever the coding level was after receipt of knowledge of that they continued to submit claims to medicare without review claims with respect to s c t claims those claims are helped back your so your position is it's ok if someone alerts you that there is a claim over here that you don't have to that it's not the alert to look for other  in yours well they did look for other coding errors and they did more than submitting them for payment to not be or not before submitting your honor but they did go back and take a look there was a look back audit which covers the time period issue and found a error rate that was below five percent any overcoat it claims were refund indrawn or there's evidence in the record that we refunded over eight hundred and eighty thousand dollars in claims for the time period issue so the idea that we just let these claims go and never went back to look for them and figure out if any of them were problematic i would disagree with your honor in fact we did go back we did look and we did refund overcoat it claims is the it's an element of both your honor i think reckless disregard requires recklessness recklessness on an object of level something that is beyond what a reasonably prudent person would do because of course that would be a negligent standard so objective reckless and then i think subjective intent does matter when you take a look at what the conduct was here so here specifically are are we had a situation where we transition to alexa code outsourced billing system and we can talk about like what lex the code was at the time and whether or not that transition was reasonable and then beyond that beat lots of code were experienced coders and one of the nation's largest outsourced coding solutions they were they hired only ambulance certified coding supervisors which is something that rural metro itself did not have your honor at the time right so they required that their supervisors be coby certified and ambulance coding then they trained them with the same training program required by the office of inspector general the oh i g as part of our corporate integrity agreement we trained lexa code with the training same training materials that we trained our own folks they were more qualified to do this job than our own folks and the individual coders that they hired had advanced degrees in some sort of health sciences oftentimes they were nursing graduates were all metro for itself most of its coders barely had a high school education so we hired a qualified coding company that itself was mandated under the contract to hire qualified supervisors and qualified coders and then we remained involved often i think that reason was can be a fact question but if there's no facts at play there's no facts in the case for much of a reasonable juror could find they say you're korea was aware recoding yours notwithstanding that submitted unreviewed corns to medicare and you say that's not true we acted reasonably under the circumstances isn't that a fact question in this case your honor i don't think it is and here's why it was a question of law well i think it's application of facts that are undisputed to law it's the inferences that can be fairly drawn from the facts in this case considering that all of their evidence every cent of evidence that exists in this case after the transition august one two thousand and fourteen emanates from our efforts to police ourselves it's our audience it's our internal compliance reviews it's our compliance with the corporate integrity agreement it's the independent review organization which we hired pursuant to the corporate integrity agreement that created a rd party record of our compliance efforts and this i r o v independent review organization found in three consecutive years that we had zero percent errors zero percent errors and i think one year there were fewer than two percent errors clearly within the confines of what was required on the corporate integrity agreement against that backdrop against a backdrop that shows clear efforts to comply and in addition a financial error rate which your honor alluded to i'm opposing counsel's argument that was for months and months and months under zero was a negative financial suggesting that we were under code in more far more than we were over coding in fact the frustrations that again our own chief compliance officer expressed that are in the record our frustrations that they couldn't code the claims correctly they were under code it far too many claims for a company like world metro whose real margins are razor thin that's a problem because we risk going out of business in this case the your honor has before the and twenty not it is a compendium of all of the audience that took place in two thousand and fifteen up through i believe it's either october or november two thousand and fifteen for all the different jurisdictions you'll see from february onward it's a negative financial error rate every month and in every jurisdiction a negative financial rate or sometimes it's called net impact which functionally in a document is the same thing as a financial  other piece of evidence that they point to to suggest that we did something wrong that we put our head in the sand is the notion that we suspended our our audit and system our compliance system between august two thousand and fourteen and the end of two thousand and fourteen the record actually reflects that although we technically suspended our system we actually engaged in a far more robust review of alexa kokoda claims than our system called for let me give your honor example under their corporate compliance program we were required to pool a randomized sample of fifty claims medicare claims and fifty medicaid claims every month in total we were reviewing about one hundred claims a month for compliance under these facts after the transition to lexa code the undisputed evidence is in october two thousand and fourteen and we just pulled a couple of months to give give the court an example of any perna who is one of our chief auditor's review over five hundred claims in that month alone to confirm compliance in december two ten thousand one hundred and forty two months later mr pena pulled over eight hundred claims many many multiples of what actually was required their compliance program and they suspended the compliance program because it wasn't enough they wanted to do more to make sure that the transition to lexa code was as smooth as possible wasn't perfect absolutely not no it was not perfect but perfection is not the standard under the false claims act certainly not perfection what was your client's response in july two thousand and fourteen to the backlog of claims backlog meaning the career that in july of two thousand and fourteen there was a backlog of claims in colorado there was zero and that the company's response to that was to submit to medicare unreviewed claims what those claims were reviewed or honor but they weren't were really reviewed so there wasn't a supervisor level review of those claims they were reviewed and they were coded and the only indication that we had that there was any problem with those claims were reports about these s p t claims that i talked about earlier in my argument your honor there were problems with the s c t claims and they were withheld they were not built the realtors koin him the as a result of the colorado situation you sent him four thousand coins and at least three hundred of them were for services issue in this case is that right your honor of the claims that were submitted generally around that time period not colorado we submitted three hundred and eight claims for ls one he medicare submissions around the date that they say claims were submitted now they allege in their complaint that there were thousands upon thousands of claims that were submitted we went back and took a look at all of our submissions for the week that they claim that this happened at no time during that week where thousands and thousands of claims submitted on one particular two day period around the time they alleged we submitted about four hundred and let's say roughly four hundred and fifty claims of which three hundred in sick three hundred and eight of those claims were medicare ls one he claims again not colorado your honor that's not a medicare state it was for other parts of the countr arizona i think ah and those claims were subject to review and they were also subject to the look back on it posed a question to plan his counsel with regard to the comparison between under coding and over coding and i'll put the same question to you where would i look in the record to find what evidence there is on the subject as to what it is the dollars is is something that we've called colloquially in the papers the lex a coach tracker and there are a lot of individual xico trackers that reflects the the daily review that vonnie parnell was doing of alexa codes work to try to find real time if there were any issues when a rural metro in december of two thousand and fourteen hired an outside consulting company deloitte to help solve the revenue cycle problems lexa code and not just lots of code it was broader than l has an issue and so it formalized the process that the body part i had been engaging in since august two thousand and fourteen it changed the training program slightly still the training program was tied to the corporate integrity agreement that your honor reference clearly through the transition period and then alexa co tractor then goes month after month after month there after and what you see is continuous improvement you see that in the early months there was a financial error rate that was positive still under five percent thresholds up by the corporate integrity agreement however as the months progressed the training programs were if anything were all natural was livid leaving a very significant amount of money on the table with the government this i had missed the the five hundred and twenty nine dollars does that speak to the over and under coding distinction it does there is a column there your honor that is either called financial error rate or net impact and those columns will  you'll see you have to expand them it's a very large spreadsheet but you'll see the principle of talking about entirely successful ro metro continue to submit the opcode it claims for payment despite its knowledge of lecture code coding problems and it never at any point disclosed to the united states that it was having problems with those selection code coders to address a few of his points the corporate integrity agreement training that mr fishman referred to in metro's witnesses conceded that that program did not adequately train coders how to code and that it focused on issues like and i came back statute training  the eight hundred and eighty thousand dollars worth of claims that rule metro paid back was just a fraction of the total over charges to the united states compared to the two million four  thousand dollars in damages which our experts calculate it that are just too to the overcoat it portion of the claim itself and wow the evidence presented by mr fishman and summary judgment on where this it one hundred and eighty thousand dollars and recruitments and refunds comes from is vague what we do know is that it does not represent a concerted attempt or effort to make the united states whole and new help alerted to those coding errors nonetheless submitted to the united states government coins that were on review as to that specific  following fill in the morning type of coding or something must be done about it and notwithstanding that the officials decided to submit claims that were on reviewed for that purpose required to point to that quantum of evidence the closest we have to the situation you're referring to is the incident in july of two thousand and fourteen where our clients and the compliance vice president warned  code claims and certainly roll metro as vice president said it was four thousand in his letter to our clients but whatever number it was it is not disputed that despite the warnings of these employees that were metro still chose to submit those on reviewed claims anyway and then immediately outsourced all the coding to lex a code and slash its quality honor and that is because the false claims that puts an affirmative obligation on government contractors to turn square corners and to make simple inquiries to make sure that their certification that a claim matter is submitted thank you