next in case fifteen seven universal health service is versus the united states and massachusetts next row it's goodbye and korea on the strangler thank you mr chief justice and may please the court this entire case turns on four words of the statute false or fraudulent claim caution fraudulent have been unchanged since eight hundred sixty three in the statute claim as defined by statute a come back to those wor three separate state agencies investigated the facts of this case in detail all three agencies produce lengthy reports and propose remedial measures for certain alleged regulatory violations no agency asked for any money back no sanction at all was imposed on the company one individual was fined a thousand dollars and the clinic director was given two years of supervision through the magic of the implied certification theory under the false claims act the very same facts have now been required to arise as fraud on the government the first circuit focused on a single alleged regulatory violation involving a regulation not cited in the complaint not word in williamsburg united states for no thirteen of respondents brief unsuccessfully tries to distinguish williams the solicitor general ignores williams not actually use the word doctor but the circumstances are such that any reasonable person would assume would believe that the parties contracted for medical services provided by a doctor this is an ordinary contract case could not a jury or the judge find that that implicit term of a contract with the services would be provided by a doctor was breached it was a material breach and therefore the implicit statement was false two responses if i may just as private first the whole problem here is the tort of occasion of contract yes that's a good contract case but it's not automatically a good tarkus the second argue with the second section five fifty one two d of the restatement deals with that exact situation vax basic to the transaction so the common law has developed the meaning of fraud th will accommodate cases in which liability makes sense because every reasonable person as you are said would assume something to be true comment j and k and illustrations three four five and six of the restatement rather three four five six seven and eight give one example of facts basic to the transaction and five examples of facts not basing the transaction it is a very very very narrow duty of disclosure we don't find but now let's go st further we have our contract the facts are such that any reasonable person would assume there is an implicit statement that the services will be provided by a doctor you say that could be a breach of contract now it turns out that this company that has that contract is also sold the shares over the f c c and the f c c says you know it's so obvious that that implicit statement in the contract meant that they had a doctor who was a doctor that's so obvious that we think in selling shares in this company where indeed this contract was absolutely critical millions of dollars was at stake without a doctor violating the implicit statement that there was a doctor we think that's fraud under rule ten b five i'm glad your honor brought that up the dark green amicus briefs that cited once and the citation is to the dissent she realises fraud in a statute is very broad but it's broad enough to cover the common law and no more if congress wants to go broader than the common law but what is not i'm talking the common law i know about contracts came from black jack dawson my contract teacher was a great teacher and he taught the common law so i don't know anything else i've well like that far but nonetheless nonetheless i think under common law you could say that that was a material breach of contract what i just talked to and indeed there happened to be a whole set of regulations on the shelf and sat there would spell it all out to which there was an implicit reference in the contract if it's you understand what i'm saying it's common law that i'm saying well the thousands of pages of regulations and the implicit reference in the contract are not what the common law means by fraud they are sadly what the lower courts have been by fraud and the false claims because i don't understand that i mean let me take just aspires hypothetical and make it even simpler let's say that there's a contract and there's an explicit term and it says  i commit to providing a doctor's care yes and then it turns out that the medical care that was provided was not there was by a nurse or it was by somebody with not even that set of qualifications and and then the person who enters into the contract makes a statement demands payment and says the care was provided now some care was provided it is true but medical care a doctor's care was not provided by withholding that fact and by just saying the care was provided have i not committed  the common law no you're right justice kagan that is not and that situation is actually dealt with by restatement section five fifty one to be and by the famous juniors decision written by justice cardozo for the new york court of appeals an affair to make an additional or qualifying mattered to in order to make that statement not fault this is that the justice is hypothetical but justice kennedy if i understood justice kagan hypothetical question correctly it is not fraud within the meaning of five fifty one to be but let's suppose that i'm wrong about that ok but suppose that that is fraud that's still a very far cry from the facts of this case in which the court of appeals had to invoke a regulation that cross referenced another regulation that nobody had cited and said the failure to announce a violation of that violation when submitting a claim is fraud i see that that's to me what's at the heart of this how do you distinguish those regulations breach of which are fraudulent when you breach them an implicit promise not to from those that not there are millions of regulations that's what all the a mike you're worried about but this is my home basic question is a question is it the obvious kind of distinction that would seem possible is a contract based distinction between matters that are material where the whole contract this appears and matters that are sometimes i think called non material i get that you can go off or get the exact word partial where even though the condition is violated you don't destroy the contract but you might get damages for that and that's a distinction that   court that deals with contracts is used to applying bread and butter our normal daily basis why not use that same distinction right here because this is not a contract case the government has you know would say of course it applies where the condition that was lied about was material and there can be implicit lies of course there has to be an implicit lot but it could be an implicit lie that i did not comply you might implicitly imply that you are a fulfilled provision number for three eight seven six b which says paper should be three inches long ok ok there could be an implicit lie but that person in your hospital was a doctor the first you'd say is not material the second is material now that i was asking because i wonder if a distinction like that drawn from contract law would i would not satisfy most of the concerns that are all raised in the a mike is briefs supporting you just prior it would not satisfy most of those concerns for several reasons first and foremost the foss claims act has its own definition of materiality which is greatly watered down from the common law something that is capable of influencing a decision maker is material under the false claims act so materiality doesn't solve the problem but let me say also that materiality is at least arguably a different element when i say at least arguably the statute actually doesn't say under a one a that it has to be material but courts have properly read materiality and but even if would be curiosity is read in it's a different element on top of a false or fraudulent claim and i really want to bring this court back with respect to the four words false or fraudulent claim because for it to be fraudulent there must be as your honor said an implicit lie and the common law of cases like genius restatements like five fifty one to be deal with the implicit why i'm sorry i'm totally confused i always thought that when you asked for payment you're making a promise i did what i agreed to do pay me please that's to me what sort of understood if i hired you to provide me with dr services you asked me for money i'm assuming you provided me with dr services and you know you didn't why isn't that a fraud because it's a contract breach breaking a promise is a contract reach some contract breaches or fraud most are so providing a gun that doesn't shoot to the army is simply a contract breach i don't know just a sort of my or it depends on the facts of the case what more facts do uni government contracted for guns all of a sudden you deliver guns reasonable understanding of the contracting parties and i'm not making these factors up what do you think that any body except yourself would ever think that it wasn't a fraud to provide guns that d redefine materiality as a very very low standard but the point is not use it or don't use it the point is that before you get to materiality you have to have a false or fraudulent claim materiality is not part of the definition of false or fraudulent it is an additional requirement  that that's what i have a hard time understanding it's it seems to me we just can't think about fraud unless we have materiality in some sense and it could be a very strict standard of materiality just otherwise it seems to me fraud doesn't make much sense justice kennedy i agree with you for something to be fraud it must be fraud as defined by the common law and it must be material that's this court's holding in the nader case so yes i agree with you that to think so that's not what i'm saying well let me just give you a few of them justice sotomayor said the government contracts to buy guns the guns don't shoot the government contracts to buy boots this was all within the context of the civil war the boots fell apart after twelve hours the government contracts to buy food the food was rancid and each of those contractors would come in and would demand payment and the entire idea behind this statue is that in that demand of payment is a representation the representation is that i've given you guns to chill and boots that wear and food that can be eaten and when and when that is not true that is a fraudulent cla for a doctor's medical care and a doctor's medical care was not provided and on doctors said i mean like i disagree with that analysis in your question justice kagan you invented the proposition that there are implicit representations in the claims that was not how the false claims act was read from eight hundred sixty three to ninety nine you for the ad tech case decided by the court of federal claims in one thousand nine hundred four was the very first case after one hundred thirty one years in the statute to use the implied certification theory this is this concept it's easy to read back to graft back on to the civil war statute that there was an implied certification is not how people were speaking at the time of the so it is a new concept it's something that has been causing the false claims act to expand dramatically in the last twenty two years but it is not there's nothing at all and nobody relies on the eight hundred sixty three legislative i mean the i'm the one if i understand what if i understand what you're saying you're saying that in representing that you have satisfied the terms of the contract you write well what let me say that it started over in demanding payment for having satisfied the contract you are not represented that you are  you have satisfied the contract that's your point and demanding payment for satisfaction of the contract you are not making a representation that you have satisfied the contract not that broadly not not every jo can be eaten that a doctor's care is a doctor's care that is what the restatement cursed to as a century ality which is a much much much higher standard than materiality and this is where the problem comes in when essentially ality which does go to the heart of an implicit representation arguably is confused with materiality we have the problems reflected in the light green amicus briefs in this case now the government's in respond its main argument as i see it is really not even a duty and both of those principles got very strongly against the implied certifications due twenty seven years ago this court considered a case of excessive punishment all of the false claims act called united states versus help it was later over ruled in just eight years but it remains instructive the traditional instinct to avoid excessive punishments was so strong that the court let the app only out of f c a civil liability by invoking the double jeopardy clause when the write this the you're in an area where billions of dollars are at issue this is going on a long time i don't want to write something it's going to upset everybody's expectations in the contract area on the other hand the common sense of it and you just said the words you said well if in fact you send in a form which says imply certainly give me money for supplying the guns of the medical care something is implied and you use the word essential to describe that and then i also know that if the agency wants to it could put a little statement at the bottom saying i hereby certify i complied with every regulation and i guess  how does it work what's what's the correct standard in your brought in here here's how it right first means false fraud means fraud is all everybody agrees with that ok fraud means fraud is reflected in the restatement and here's how it writes from a policy dimension just as prior the government holds are the keys here it can change the claim form it can change the contract it can go after people for contract violations using a lot of contracts in a lot of government contracts which is very specialized it can go after people for department it can go after people for money it can go after people for restitution the government holds all the keys and indeed the government frankly should hold all the keys least because i have lots of good arguments and i'm not i'm not i'm asking for advice from you from your point of view what the sentence in the opinion should say that describes the circumstances under which the person who submits a form saying i want a thousand dollars i just supplied the guns of the medical care when that person and by the way there regs say they have to fire and there's a regs that has to be a real doctor when has that person committed fraud or that's what i want what is the sentence you want me to write see restatements you mr chief justice and may it please the court when a claimant asserts a right to government funds without disclosing that it is knowingly violated the government's material payment conditions that claim is both false and fraudulent regard listen whether it can distribute express this stace confuses me to no end i don't know why the lower court relied on  section for twenty three this is the director's qualifications and responsibilities when there's a direct regulation that says that the health service will only pay for services rendered by a staff member who is qualified why did they go off on this indirect method of analyzing this case i think the original sin here five i can express it that way just the sort of my role was by the district court which was so focused on what were conditions of participation used the formulation of conditions of participation versus conditions of payment and once it is that when you're providing mental health care to teenagers and other children it should be supervised and it should be given by people who have the proper license i don't think that it takes any  ality or materiality or intrinsic miss or whatever words the petitioner wants to come up with that's pretty basic and the violation that occurred here was one fat is all over the mass health regulations you can look at it in the supervisor of the clinical director's requirements to maintain overall supervision which is what the first circuit relied on if you looked at the express payment condition which is point four four one eight it expressly links to point four two for which lays out all the qualifications of the nurses and the social workers and the psychologists so is your is your position that every material breach of a contract gives rise to a false claim a claim under the false claim act as false and fraudulent no our position is that there are two other requirements in the act one is that they be the unknowingly and under the the definition of knowing has three features with knowledge deliberate and indifference or reckless disregard so there is a knowledge requirement that has to be done and i would point out justice prior that actually solves personally every problem in the petitioners and miki because they are talking about situations in which they are not focusing on the knowledge requirement of the fraudster who is seeking to so and also i mean we've got another one night and want to keep that in mind but if it's a situation where the alleged material breach is of massachusetts regulation one hundred five z three for a hand or whatever you the claimant would have to show knowledge of that regulation knowledge that when it was breaching it it was going to be material to the government that's the second part of what i think is i guess i mean that so that causes concern of course because there are thousands of pages of regulations under medicaid or medicare programs and i guess your position would precipitate litigation over whether or not it's the person who said here's our  bill about new under the reckless whatever standard about the particular regulation that the government or the relator is claiming made the submission project the court test mr chief justice is whether the state first thing is that the claimant has to know about it that's correct it has to know about the particular requirement in the regulation that's correct and it has to know that it was important to the government it was a material condition for the government that the government could re payment on this basis it has to know not only about the particular provision but that it was natural and the government wouldn't without that's correct and that's why justice kennedy to go back to your question the  the things he talked about in the response and he says matter is known to him that he knows to be necessary for event his partial or ambiguous statement from being misleading oh boy that's pretty close to what you said and then meat is facts basic to the transaction if you know it's the other prison but to do it under a mistake what's the difference between i mean i know the people who are experts in this will tell me there's huge differences but what's the difference between what you just said and what he said well i think that the difference is that i think there's an easier or a restatement provision that's more directly on point and if i could just quote from our brief it page twenty eight to twenty nine we quote the restatement section five to nine quote a representation stating the truth so far as it goes but which the maker knows were believed to be material mis interiorly misleading because of his failure to state additional or qualifying matter is a fraudulent representation would have made it out to be yes to know about the specific provision in the regulation that's correct that's correct but here mr chief justice i think that it would be odd to suppose that in water twenty eight provisions of the mass health regulations in what is a massive program can valving you know billions of dollars where their business model is predicated on serving indigent people so that they can get access to medicaid reimbursed funds if they would read the regulations and a number of them say it is critical to provide supervision when you're providing mental health care ok so you think it's an easy case to prove in other words because they would have necessarily known them but what they have to know is all of that regulation whatever one of the twenty eight it is and they have to know that the government will regard that as material that's correct but but the key point here mr chief justice is i don't think that that should be a difficult case now the other side spends a lot of time talking about worthless services and they see in their brief it pages thirty seven and thirty eight to say that the standard is only when these goods are so worthless or the services are so worthless that it would be rather obvious and i would point out that if the worthless services are recoverable under the false claims act then it is ok h you have an implied certification theory they've essentially conceded that if the goods are completely worthless it would be ok for the government to bring the false claims act case i would submit that if the goods are personally worthless if those have also to be recoverable because there is no clear way to draw a line between those that are partially worthless and those that are completely worthless let me give you a simple example here under what i understand petitioners theory to be if petitioner had gotten some college interns who were studying psychology and it decided to allow those in turns to practice in their medical facilities and those college interns gave what was called therapy to teenagers under their theory they don't have to tell the government that these are college interns who don't have college degrees or certifications or licenses required by the state and it is a ok to charge the government full freight not only for the service but under point four  there also charging with the representation that they have embedded in a supervision cost i suspect most cases are a little more complicated than that and that's where the difficulty comes in when you have hundreds of thousands of pages of regulations and typically not probably not the government but they didn't in this case they didn't pick up the the false claim that was the relator and the relator comes in and says well you didn't file you violate the provision not that the college in turn is a doctor but that whatever it is you know you have to use this particular syringes or drug company and in fact you didn't and therefore blah blah blah and i guess that's where the problem comes in in that the a little more complicated than that and i just don't know if i can take your abstract hypothetical and transfer it to the reality of government contract well let me let me go with the core of what i think the concern is in your statement and in the position by the unique on the other side and it's that we don't have enough notice we don't know what's really important to the government that's their basic problem right now they don't solve that problem under either of the two theories that they present in their case if notice is the problem the government could solve that by having the check off box i think justice pryor you are the one who mentioned this that says i certify have complied with all the regulations well that doesn't give them any notice and it doesn't give them any notice if attached to the contract it changes the reality they're going to look at that and they're going to say wow every single thing we're going to get in trouble in a false claims act so our bullet is going to be a little bit higher to cover that potential risk these are not good as situations by and large mr chief justice stevens or in the health care area under in title meant programs in which the government is setting the rate and which the person is saying i'm providing services in compliance with the federal statutes in the regulations and therefore i have a legal entitlement to receive reimbursement so when the that scenario the problem is that what they really want is for the government to pick and choose among the things that are most important and once she do that you're creating a roadmap for fraud because all you're doing every time you omit something that might be material in any particular circumstance but it's not specified in the list of the absolutely most critical things you're just inviting them to say we're not complying with it what has it done what has the government done and when they sort of things they say things like i hear by certified that i complied with all material regulations but it would have to say well that there are some provisions that have certification requirements but i would point out that even if you were  that it's not going to solve most of your group because of grant programs there are federal dollars that are going to third parties in which people are engaging in contracts with third parties and they are being paid by the federal government and in those kinds of situations even your kind of basic certification isn't going to work so the problem here mr chief justice fundamentally is one where the two elements of materiality and knowledge are going to solve the vas problems because if the claimant is acting negligently or at a lower standard simply just missed it that's not going to be a case that will be actionable under the false claims act and furthermore if the claimant is asking for something that the government doesn't deem to be material in which the test would be can the government withhold payment then that isn't going to be actionable under the false claims act either and notably the other side has a lot of amicus briefs but they don't really point to any eighty six and he's charted what they what's happened to them and his can lucian is that not only has there been no spite as a result of the implied certification theory having been adopted but that in fact the  problems they're identified don't actually come to pass because the vast bulk of the cases that are not intervened in by the government in fact are done at a motion to dismiss and so i would submit to you that if you looked at the actual data for the false claims act a lot of what you would conclude on the basis of the other side is hyperbole there is a lot of fear but it comes down to two points one is they would like to have notice so that presumably they don't have to comply with the things that the government doesn't more specifically to caylee in its rules and they want to be able to know if they want to get around that what are the key things that they have to get around i would  war as justice kagan's hypotheticals pointed out there was a problem of implied certification because contractors were selling boots that were made out of cardboard not leather and guns that didn't shoot in mules that were not live in rules and that is exactly the same kind of problem that we're talking about now over one hundred fifty years later with respect to mental health services that are not being provided by licensed and supervised professionals thank you stuart mr chief justice and may it please the court the statute refers to false or fraudulent claims and i think there are two different but complimentary analytic routes that the court could take to conclude that if the facts alleged in respondents complaint are true false or fraudulent claims were submitted one way to look at this is to focus on the fact that in medicaid as another government entitlement programs a person who submits a claim is not simply asking for money he's representing that he has a legal entitlement to be paid and you can say if a person asserts that he is legally entitled to be paid and he knows that he has no such legal entitlement the claim is false and then you would ask under what circumstances would a person know that he had no legal entitlement to be paid and the answer would be if the person knows that he has failed to comply with a material term of the contract or a material regulatory requirement by definition the government will have no obligation to pay and the claim of legal entitlement will be false and i think just as prior you're exactly right in pointing to the law of contracts which draws a distinction between material and non material terms and the purpose of that distinction is to identify the situation in which a breach by one party will excuse the counter parties failure to perform and so a breach if the government rick is obligated to pay money and the contractor makes certain corresponding performances if a non material term is breached the government's obligation to pay remains intact and so a person who knew himself to be in breach of a non material term and requested payment anyway wouldn't be making a false claim he would be claiming a legal entitlement to be paid he would be entitled to be paid because the breach wouldn't excuse the government's payment obligation but if the term that was being breached was material the claim of legal entitlement would be false that the other analytic route that you could take to to get same result in this case a really follows up on justice kagan's hypothetical about the situation in which there is a contract for services to be performed by a doctor and the perp the person who has a range for services to be provided by someone else comes in and says services have been performed pay me and it seems like clear fraud under five twenty nine and five fifty one under the restatement you have made a representation services have been performed explaining that they were performed by a non doctor under the circumstances is essential to make that representation non misleading and what we have here at least if the facts are as alleged is basically the same thing that the complaint recites that in requesting payment universal health services submitted various invoices and that used billing coach five digit numbers that were determined but i don't know if i'd buy mass health as the code you use for particular types of services one of them corresponded to individual therapy one to group therapy one to family therapy now obviously the claims would have been false if no services had been provided at all and i assume everyone would agree that if mass hell i'm sorry if universal health services had billed or services provided in a group setting but had used the code that national that identified for individual therapy that would have been a false claim because mass health is entitled to treat the use of that code as a representation that the services were performed individually and really it's no it's not a large leap to say when you use the code for individual therapy you are representing by that the services were performed the treatment was performed by a person who was legally authorized to provide mental health there a baby under massachusetts law now unlike the contract hypothetical that justice kagan identified in determining what implicit representations are being made we wouldn't look to the previous promise that the person that paid because there's no contract we would look at the mass health regs that identify who would what kind of credentials do you have to have to perform particular types of mental health services and why do you tell mr st has at least under mr fredericks view you have to have knowledge that the government wouldn't pay i assume the government wouldn't pay even for non material provisions i mean if you're supposed to pay you know for one hundred thousand dollars you're going to provide these services and  you don't provide a small service you still pay but you wouldn't pay for that i mean i don't understand that how some things are material it doesn't go to pay at all or or carve out a particular provision w when is the government when it's going to be not performance of a contract in the government's going to pay for that anyway well i think if we got a bill for particular services and the services had been essential and performed as they were expected to be the government's policy objectives were adequately advanced but some technical requirement had not been complied with that if it's a non material term then by definition it wouldn't excuse the government's duty to perform so they contract is to provide all these health services and by the way you've got to buy you know staplers made in the united states not not abroad and they do everything but they don't buy staplers made in the united states i would say the government if they're really you know rigorous contracting officers would say ok you get you know the nine hundred ninety nine thousand whatever but we're going to penalize you because you didn't use staplers we put that in there for a reason you didn't do it so we're going to withhold one hundred dollars but what we would certainly agree that in government contracting that sometimes the case that the government's trying to sort of ancillary policy objectives such as buy america etc and so if under the terms of the agreement and though the law of contracts the government would be legally entitled to withhold payment or a portion of the pavement in that your more expansive conception of material terms is correct and that there would be some circumstances that i had envisioned in which the government could lawfully withhold payment even though the violations seem fairly tangential to the claim if that's the case all it means is that whatever sample insight it just all it means is all it means is that there would be more expensive false claims act liability but not because we would be punishing people who didn't cheat the government if knowledge of the particular breach of issue could have led responsible government contracting officers to withhold payment wholly or in part and the person knows that he is in breach he should be made only or in part i just copied out of the one book the basic difference between a material breach and a partial or non material breach of contract a material breach of contract has a contract it'll a breach  allows one party to repudiation the contract and not material breach is a breach that gives rise to damages but cannot serve as the basis for repudiation now until this last interchange i thought that was the distinction you were that if the piece of paper says nothing but pay me and there is a violation of a reagan if the violation of that reagan is such to be material meaning it would be a basis for repudiation then it is an implied then it is an implied statement it was complied with and it's fraud but if it's just staples you may have to pay damage for staples but that certainly doesn't it to say the contrary there would make the contractor responsible for having complied with every one of forty thousand regulations of size of the room size of the table that there is a distinction between situations in which one contracting party could sue for damages and situations in which one contracting party could refuse to perform yet its own obligations under the contract including payment but i think the second thing is that the c into requirement really is crucial here it applies both to knowledge of the breach and knowledge that it is material to the government the only other thing i wanted to clarify in response to your question is we would say the test is whether the person knew that the government could lawfully withhold pay but not necessarily payment but not repudiate the contract with whole payment on the particular claim because there would certainly be plenty of situations in which if somebody billed for services that were not reimbursable under the terms of the particular program if there were if they don't if they put the wrong billing code down and you know you shouldn't have to pay them but i don't know that means you can say ok you're fired as our medicare provider in the state of massachusetts which is what i understand materiality in the contract concept b but what you're saying is it's a false claim if it's and it you know you said you were providing x rays and you didn't ok but and that's material i would think in the sense that you have to pay for it and you shouldn't pay them for it but i don't know if it's material in the sense that you can get out of the hole and then i would say material in the sense of allowing the government to decline to comply with its corresponding obligation to pay for that particular shipment or those particular services because we certainly as you say but that doesn't answer the question there's a mis that's intentional and knowing there's a miscoded that's negligence exactly so if it's a mistake you could with cocaine but you can't sue under the false claims act correct exactly and there is a mental state that the a contemplates between negligence and actual knowledge because it defines the term knowingly to include recklessness and just do it i'm saying that could you just at what are in material terms for the government i mean give me some examples what would count as not material i mean i don't know if there were any terms that are wholly immaterial because if there were presumably they wouldn't be in the agreement or the regulations but there are certainly terms that would be immaterial to particular claims so for example if the government had a rule that said at all times a hospital that is receiving medicaid reimbursement has to have the following equipment in its operating  might well be the case that a violation of that required but would descend title the claimant to payment for better for surgical services performed but would not dissin title the claimant to payment for services that had nothing to do with use of the operating room and so to follow up on what i was saying before i think what we have here is really a fairly close variant on the hypothetical that you floated the case in which they represent that they performed individual therapy they don't say that the person who performed it was not legally authorized to render billable services under the mass health program that would seem to be a classic case of implied misrepresentation fraudulent omission etc when you started and you said that there are two ways in which this could be argued and do you have a preference as to which one of those two ways makes most sense  cases with a diversion we should be aware of that i think that's probably the one that would be most helpful to the government is the first one that if you assert a claim of legal entitlement to be paid and you know that you are not legally entitled to be paid or reckless as to that fact the claim is the claim is false and it's knowingly false that would be the one that's most helpful to the government just because there are so there's such variations in the nature of the documentation that is provided by claimants under various government programs that general rule would be of the greatest health help the second i offer really because in a sense it's an easier way to decide this case if the government was not going to try if the court not ready yet to decide whether the the broader proposition was correct you could still say in this case there was not simply a claim for a particular dollar amount that was at least a little bit of detail as to what were the nature of the services to be performed and giving that detail without giving the offsetting fact if it is a fact that the services were performed by non credentialed unsupervised people would render the statement that was made misleading that the last two things fight if i could just say them very briefly mr inglis referred to the newness of implied certification that the term implied sort of a k it is new i don't believe it was used until the last twenty five years or so but the concept that a person can be held liable for fraud even though he says nothing explicitly false but labors to create a false impression that's been around for ages that the second thing is mr inglis said that the current f c a adopts a watered down version of the materiality essential a verbatim from this court's description of what material terri ality had traditionally been and i'm in law mr dooley both the united states and massachusetts did not intervene in this case is that right that's correct why is that i we don't i don't know the answer and we don't typically give public explanations of why we don't intervene sometimes it's because the dollar amount to small sometimes it's because the we think that the relate to his hand he capable of handling the case himself or the latest counsel sometimes we do decline to intervene because we are skeptical of the merits of the case but even in those situations it could be that we agree with the relator styria and simply don't know whether the facts could be proved that it comes in all variations is obviously the best evidence of what we believe the correct legal rule to be the only thought of thing i would say is that our decisions about whether to intervene in particular cases would be skewed if we believe that courts would draw from our failure to intervene in an adverse inference as to our views on the legal theory if we felt that we would be made the same skeptical of the implied sort of occasion by not intervening we'd feel pressured to do it kennedy charles fried the test as stated by my friends on the other side is the core test is whether the state could reject the claim for reimbursement that is a contract standard that is not a tort cite many real world horrible cases that will be the tip of the iceberg if this court steps there theory it has been suggested that everyone knows that it's common sense in that it's obvious that people who provide counseling services to teenagers must be licensed apparently the commonwealth of massachusetts doesn't find it obvious section four twenty nine point four two forty one quoted on page eight of our opening brief states the standards in which quote counselors and unlicensed staff may provide counseling services if it's so obvious why did the first circuit have to rely on a regulation that applies only to satellite facilities when the first circuit found a regulation that no one had cited in all of this litigation it didn't say when it applies to every facility it cited one that applies only to satellite facilities and yet we're told it's so obvious that my client should have known that and that there is materiality  fix contains seven complaints to state agencies for reports by state agencies to consent decrees and for other documents they cite many many many many regulations this  morass of regulations bluntly is worse than the internal revenue code it's full of cross references it's full of contradictions as the first circuit itself acknowledged in footnote fifteen the way the first circuit result of the contradiction was to defer to the non agency so it's chevron on steroids these things are not obvious these regulations are not obvious now mr frederick and mr stewart matricular mr frederick may seem to have scored a blow when he put fraudster shouldn't get to pick and choose which regulations they comply with what you assume fraud if you put the rabbit in that you can take the rabbit out of people should pick and choose which regulations to comply with why because there are so many and so confusing and who holds the keys to telling them which regulations to comply with the regulating agency or the contracting agency if the contracting agency or the regulating agency says please focus on this regulation because it really matters guess what people will focus on regulation because they know it really matters if we're later is coming after the fact not the commonwealth of massachusetts not the united states relator is coming after the fact and say this was so critical that you should have known and you acted it was immaterial it was essential and you acted with santer and they got trouble damages attorney's fees fifty five hundred dollars or more fifty five hundred dollars minimum per claim civil penalties and the opprobrium of calling someone  that's not the system in which the regulators have control that is not the administrative state we know that is a game of gotcha after the fact how does it differ to what you just said from this thing in the restatement where you say it would be fraud facts basic to the transaction or matters known that he knows to prevent his statement from being misleading the statement is implicitly i did the work and this kind of problem is it only is it not basic to the transaction that the doctor be certified is the kind of thing that i think you and other lawyers argue very well on opposite sides as you just did but the standard you advocate is according to the restatement misleading statement about a fact basic to the transaction misleading truth i did so i'm saying your standard gives rise to the same problem doesn't it no why does the common law has worked through these problems just as part of the common law of torts not the common law contracts  look at illustrations three through eight of the of the restatement but if that doesn't do it for you think about the dog that didn't bark and look for common law fraud cases that state there are three you won't find them you won't find them they don't exist this is a theory made up by the pla bar in the last twenty two years and it has run amok there's a parade of horribles in the light green amicus briefs there's a parade of horribles women in the room in the dark arena because their parade of horribles is that it will be a ok to do these things it's not ok ok to do these things there are calibrated remedies administered by the government for breach of contract for violating regulations the massachusetts authorities had calibrated remedies in this case two years of suspension and one thousand dollars fine they didn't ask for any money back they didn't ask for any money back they didn't say this is the kind of thing that is so basic that you should give us our money back they said we need some corrective measures these are services let's not forget something money came from the federal government maybe a system in this cooperative program that's flawed but massachusetts health has no incentive to seek the money back because they're not paying it the people with the incentive are the federal government and that's why we have the false claims act because the federal government can't enforce all seeking of money back in these cooperative programs ok but has to be a false or fraudulent claim which returns arrive from the common law construed in this court's cases elaborated through the common law i have a very hard time accepting that if you provide if you claim money for a service that you don't whinge or not a qualified individual unsupervised by a qualified individual which is a requirement specifically in the regulations i'm having a hard time understanding how you have not committed to for your honor although you knew what you were doing all that was submitted was a request for payment the government controls what it will require in a request for payment there is no allegation of a false statement in the request for pay the only allegation is that every jot and tittle of every mass health regulation is incorporated as long as operative complaint in this case amended many times why is not the regulation the first circuit relied on even cited why is the regulation mr frederick says he would have used if he had been litigating this case in the district court even cited it proves my point your honor that this is morass and for one to think after the fact this is basic and central on this is fraud is a plaintiff's lawyers again thank you thank you counsel the case is submitted