numbs was fully prepared to enter into an agreement a binding settlement agreement on september fourth two thousand and fourteen but it that agreement did not become binding for at least three fundamental reasons and in addition to that we now have a fraud on the court or unjust on clean hands argument the first reason is now insisted upon a release of administrative remedies including exclusion that are at the hands of the office of inspector general at the department of health and human services that release was explicit there is nothing in the record that rebuts nam's insistence on that release and it's perfectly clear that there is no release judge bueller's order didn't give it  and her memory which i think she alludes to in her decision and that's an awkward aspect of this case but that memory can't supplant or replace the plain statements that lead up to it that are on reported in the record on rebutted by posing parties and the statements thereafter so i'd say that about that your honor i'd also say that her construction of the term simply is illogical and it's because there is no such thing as no corporate integrity agreement alone the way a party has a protection from a corporate integrity agreement which can be a very burdensome thing i recognize the parties don't like them they can you have the government up in your business a lot longer than you want to in ways that you wouldn't want to and parties like to avoid that if they can but the way a party gets protection from that is through the release of administrative remedies it goes something like this if there is a release that names explicitly bargained for in the settlement agreement which there is not and that's the one of the key fundamental flaws if it's there and after we settle and the oh i g approaches nouns and says i want you to enter a corporate integrity or no not not not only that i don't want i insist you must enter that agreement at that point a party that has a release of administrative remedies including exclusion all the weapons at the disposal of the oh i g there's no threat of a cia that is how you get protection from a corporate integrity agreement it's through the release and it's crystal clear and undisputed here that the release doesn't exist in that draft agreement the government presented to nam's and judge bueller's order or ultimately in the judgment let me see if i understand what nems is trying to do is stay in business with the government absolutely ana and so the whole idea was that that to get yourself in a position and you treat the discussion as a condition judge didn't see it that way well actually i think if the magistrate judge did and all parties do recognize that the condition was a condition precedent or proceeding in other words everyone agrees that it had to be satisfied in order for term so wait there's everyone agrees on step one which is there is a condition precedent that must be satisfied for the remaining terms to become binding and that's why the the word tentative was used throughout the record can i ask you does are we looking at basically  when it comes down to that you say that that does not in any way limited you say that that does carry with the exclusion remedy they say and the judge ended up saying no it did right only really that's what this whole thing that's the meaning of the contingency is one of the threshold disputes in this case and i think common sense gets to i was i was going to step back a moment say there's a lot of things that get to the definition of a meaning a term in a contract there's meaning there's context there's the conduct of the party there's a lot of surrounding circumstances and i'm only honed in on a couple but context is a big one here now this is a federal grant section three thirty public health service granted it gets a grant from the federal government that grant is the backbone of its whole existence without it it doesn't have special reimbursement rights it doesn't have special rights to participate in risk contracts doesn't get drugs at a discount it doesn't have immunity from malpractise it's the epicenter of what it is and it's a federal grant so that means the grants or if they don't like what you're doing they take away your grand you're out of business even though they've been in business for thirty plus years doing good work it's over what is a entity that has that risk going to insist upon as  insisted upon here and it's clear in the record it's going to insist upon protection against exclusion particularly when this is the second time the government has characterized the same claims these are single piece of paper the same claim twice characterized as fraudulent not all of them there's an overlapping core and where government officials have referred to as frequent fliers meaning this is more than we've seen you more than once well it's asking a lot of this court to get into the substance of this case and i know that's not part of this current argument but i'm sorry i just need clarification on this is it under subpoena that nancy brown does not have the authority to grant you this exclusion to take that off the undisputed that she does not have it no it's i should let mr try to say that's a better way of phrasing but i'm just saying that the judge said when i referenced nancy brown the reason i know that that was not given you this you're going to help me out with the term yes but i understand you want to just be protected from this exclusion remedy that could otherwise be imposed correct the judge says well nancy brown doesn't have the authority to give you that so when i said with nancy brown that means that wasn't part i can see right right and that is incorrect as a matter of fact  or whoever sits in her chair has the authority to release the administrative remedies that are at the hands of the government it's in her lap to do that and that's why this notion that numbs walked away from anything is really not true because it was in the government's hands to hand us the release we insisted upon and more than that it was nancy brown's authority so absolutely she both is the person who can say the government wants a corporate integrity agreement here and the only way we're going to give you that releases if you enter one or there's a policy a stated policy of the office of inspector general that was in existence at the time of this case that indicated there will be cases where the nancy brown person will not insist  cia but nonetheless give you the release of administrative remedies including exclusion and thems one we refer to as nuns one was a perfect example of that happening so we had an illustration which the government repeatedly cited as this this case that exact observation was made ok but so just so i understand the magistrate judge found incorrectly as a factual matter you're saying yes that nancy brown does not have the authority to grant relief from exclusion is that that's what the decision says nancy brown's authority is thumbs up or thumbs down on the cia that's what she said the false implication of that is that she nancy brown could not give the release the names insisted upon if you magistrate judge beeler here today i've pretty sure she would concede that nancy brown has that authority as i expect the federal government to concede as well the reason i my our position let's say the reason and sees nancy brown  having taken on the meaning that she's taken on is that in this record if you're trying to force feed a settlement agreement you only have so many facts to work with and one of them is there's no release and the other is there's no cia so if you're trying to insist upon  unforced agreement then you have to misconstrue that contingency to mean no cia was all nans wanted never mind the risk of exclusion never mind all that other stuff all they wanted was no cia they would take their chances with the that's that's what she did i honestly think that there is a there's a one of the troubles here is that we have a magistrate that was rotating back and forth between a facilitator of a settlement and then writing a decision and i think that can be a communication that kind of decision on her part right now you're nothing at all right so who according to i guess the defendant then the magistrate judge who made the decision that  that the entire argument that the contingency was satisfied rests upon and it's a declaration of federal council saying in passive voice without identifying the who what where when and how this was somehow communicated to  it's a mystery that's why i say it's a mystery in a case where the where the contingency reads and then this will resolve it's i'm sorry contingent on resolution of its federal ministry of remedies with nancy brown there's two words in that sentence or phrase that suggest your honor i think in response to a question there has to be something from nancy brown and without it you're never going to clear this up you never clear this hurdle there's nothing with nancy brown there's no communication from nancy brown and there's certainly no resolution which is really the release of our concerns with administrative remedies you know the communication were thrown that the magistrate judge depende upon to find that this contingency without a slight yes your honor and it would be the declaration of melanie proctor who's i believe going to argue next you mean counsel declaration yes and no i didn't mean any offense by the slander read it was that was just a argument i don't think i was sufficient to satisfy the contingency but beyond that the the screaming absence of the releases really what is why the contingency wasn't satisfied if i was going to move on to another point second fundamental reason why there's no enforceable agreement is that the government sought to enforce less than the full agreement this was a single global settlement agreement there's no dispute about that in the record not in judge miller's decision she will say she has said that there were three separate settlement agreements that were clearly placed on the record three separate times all separate that is a myth the record shows otherwise nk the government has never argued otherwise there's been no argument from state or federal government that this was not a single agreement they've never pressed that point in fact it was only the judge who came up with this rationale without even an argument from counsel which is another one of those troubling things when you when i was mentioning the role between magistrate and mediator so the government never presses the point and the first time they really grapple with it is their brief in front of this court and their brief in front of this court says whatever you can say about the fact that there's a there's a missing term here and a missing case you've waived that argument  who've been objecting to the enforceability of this agreement all along have somehow waived that argument because the the party case we've referred to which got carved out marched along came before this court and numbs lost that case and then it lost in front of the supreme court well  that is that that is conduct that is post dates the the events that would have to exist to make the agreement binding or not you can't cite events that happened two years later as your basis for saying there wasn't in a forcible agreement on the day you allegedly entered it bigger point on this one the state government admitted and this is an rebutted again in the record admitted to nouns that they could not stand behind the material terms one of the material terms that the judge recited on the record that would have resolved the party case so that the state also conceded we agree with you know that the contemplation was that that term would provide a mechanism to resolve the merits dispute in that case but we were told in this is another one of the mysteries not quite sure why the train left the tracks we can't do that anymore and that's why the state admitted to us from their perspective there was no enforceable deal that point dovetails perfectly into the fraud on the court issue and no one likes to say that i don't like to say it but i am sorry that it fits why is it fraud on the court the state and federal government represented that they had supervisory approval of the settlement agreement everybody knew that one of the explicit contingencies another condition precedent to a binding agreement was supervisory approval of the government everybody knew that you can't not know that in a case like this the state and federal government file the joint motion to enforce that motion falsely represented that the state had supervisory approval the government federal government said they had it too but there's not an issue as to whether they did or didn't own the state why didn't they have supervisory approval because they knew right then and there they were saddled with the burden of admitting there was an enforceable agreement and they had to back away from one of its material terms as was their right to do they have the right as a government to reject a settlement that's called supervisory authority they in effect rejected one of the material terms of a global settlement they didn't stand behind it that's an awfully awkward spot when you're riding shotgun with the federal government on a false claims that case where the federal government wants to enforce its element what do you do you either don't read the brief that says false falsely the state gave supervisory approval or you read it and you look the other way it's either reckless or it's knowing either one is more than adequate from clean hands and i'm sorry i think it's fraud too it's a fraud on the court in that they  this court the lower court as well on a false representation nems got hit with unclean hands in front of this court not too long ago and it's unpleasant and it wasn't a false representation it was arguably taking a position that the state can't keep taking money from it and they did in the court didn't like how it went about doing that you know will have to take a hit for that too because their counsel for them at the time the reason there's a misrepresentation is not accident it's not mistake it's that the state knew there was an agreement but signed a motion that said otherwise and they took five months to come clean after one of the longest sentences in our brief and possibly the court's history live it lists every event that they participated in without disclosing that fact they made a motion to dismiss in front of this court without telling perhaps the best reason for a dismissal the agreement had become binding the order wasn't right that's the best reason not there wasn't a judgment not that there's not sufficient injunctive nature to this order but that there wasn't supervisory approval you're not permitted to hold back material information when you're advocating on behalf of the state or federal government i see i have only two minutes left i want to reserve the extremely skilled mediators here i know you've already used judge peeler and that's where we're caught up in this but i honestly just to telling you i'm not speaking for my colleagues i look at this and i just can't believe that  much time is being wasted on fighting over this when you all wanted to get together and put this case behind everyone so i don't know i'm just drawn that out there are you if you tell me that judge we've this is hopeless we've we've tried and it's not going to work fine but i want to ask you that and i'll ask your opponents that as well although the phrase that comes to mind right off the bat is never say never the other phrase that would come to mind is i think now is has participated in negotiations in good faith and we do bristle at the notion that it's not the case i think the record shows a roll up your sleeves workman like approach to try to address all these issues there are instances where we did that the  magistrate judge buehler ordered us to have a follow on conversation and it didn't take place because the states and federal government's view was that would be pointless why should we respond your position when that's going to be unproductive so that we've had events where both sides criticize the other that we're not  participating in the process process as as we should but we're all grown ups and i think we could have a conversation like this so we do we have to insist on this agreement going let me just ask you more pointed question i guess if you have answered that question first i'd say if the release were provided the agreement provided for a resolution of the party issue the way we negotiated and that's a big deal if there's forty million dollars at least at stake on that issue we didn't give it away for nothing and we dealt with the passage of time and by that i'm saying never should have had to resist this order or this effort this was on its face deficient don't make us do an appeal and work tirelessly to write a brief that painstakingly lays this all out when you didn't give us the relief so fix that too and maybe you can get the dumpty back together but i think it's i i plan to use about ten minutes of the twenty minutes allotted to the plant parties to answer questions the court may have for the federal government your honour's this appeal is about preserving the finality and enforceability of settlements entered into in open court with sophisticated opposing counsel and experience litigant and with the assent of nems chief executive officer i would like to address the question you just posed to opposing counsel your honour's attention to page two fifty two of the excerpts of record when i'm sent a draft settlement agreement to the magistrate judge this was on december fourth two thousand and fourteen that settlement agreement explicitly took out the fact this is a settlement under the false claims act it sought to characterize the settlement in restitution form this is a settlement under the false claims  it's the second time has been charged with fraudulent conduct in its billing of medic house services and that was an important factor for the united states and for the state of california i would also like to address some issues we just heard rates first with respect to the exclusion contingency a corporate integrity agreement is the consideration for not pursuing exclusion there are two kinds of exclusion there is permissive exclusion and there is statutory exclusion miss brown the office of the inspector general for h h s does pursuant to h h s the self disclosure procedures and the self disclosure procedures encourage companies medical providers to come forward when they realize that there's been billing there's been some kind of fraud and the reward for doing so is that exclusion is released this is not a soft slows our case this case was hotly contested in litigated all the way through numerous rounds of settlement talks with judge miller so in this case permissive exclusion cannot be released because it is not a self disclosure settlement well life has you know the prior  in fact you know that the e mail that your colleague from the u s attorney's office that says that only that you brown can take care of this d o j is not involved you know talk to nancy brown right yes your honor there were settlement talks is no difference she is the she was the person who was in the room talking with everybody and what is her recollection with respect to exclusion on the record her her recollection is on the record before us is recorded in her decision where she explained that it was all about the corporate integrity agreement which is the consideration for not pursuing it is yours and if you thought if it's in the decision then  i don't recall it being you specifically in her decision but i would also note your honor that this issue of the interview saying that reflects off the record discussions you think if you meant to address exclusions you think something about it your honor it also didn't come up from the ems until much later in the process so from the beginning after we entered this settlement agreement on the record on september fifth two thousand and fourteen as soon as we began negotiating reducing those terms into terms that were entered into the record number thought the better of what it had agreed to do and is now as such well can put it grasping at straws to undo it if we can get away from the discussions off the record and get to the discussions on the record to suddenly his appeal it seems to me there's a strong case it can be made that a condition preceding to the agreement between the government now was that there would be an approval by ms brown it's stated in there now whether she has the power whether she can do what you can do that's not stated in there is just that she has to give approval and it looks like to me from just looking at the whole record and it's so big i could be mistaken but it looks like a condition preceding to the subtle moment that that has to occur and that made sense to me as i read it over they're not giving eight million dollars into the pot not getting something back what they want to get back they want more contracts that's how they make money and if that's true if that is a conceded condition preced antidote nancy brown gets gives an approval if she can there's no deal now i understand there's records and piles and i've tried to go through them but it just strikes me was the intent of the parties the objective intent of the parties is what is binding here on on the parties and that was no cia and nancy brown and the government the united states itself before the court that that would not happen if nems participated in the state audit process nancy h h s so i ga wanted to make sure that the state audit process would be sufficient and once that was that was done that the contours of the audit process were flushed out h h s or g e was comforted and said we won't require a cia it would be duplicative this is a state billing process and it's up to the states to map out how bills are to be submitted how these now but the parties agreement was as a condition preceding that she would give signed off and it 's clear that the sign off had to be so they can do business and it just makes sense to me that you don't put up that kind of money otherwise if that is a condition preceding and and it hasn't been fulfilled magistrate judge was simply wrong and her interpretation of a contract and it ought to be sent back to start over and i know that's the worst thing in the world that any lawyer wants to hear after trying a long lawsuit but i have some doubts about whether or not the magistrate judge was fair and i cood in this case to have she may have had too much to do but the it seems to me without consideration preceding she went through and direction now tell me where i'm wrong well your honor it might be helpful for you to understand the role of the different government attorneys in the u s department of justice is charged with representing the executive agencies in court and it was u s department of justice attorneys both from washington c and the u s attorney's office that appeared in court and said no cia if they participate in the state audit process agency counsel don't appear in court on the record and make statements like that so th magistrate judge was perfectly within her discretion to find that this contingency had been satisfied contingent the condition preceding it had been satisfied had been satisfied by the fact that attorneys for the united states appeared in court and said there will be no cia if they participate in the state audit process though it isn't from nancy pro but it's from the attorneys representing the department of health and human services it's it's the united states department of justice that is charged to appear in court and make statements on behalf of extension and they could have said talk about other and it was it was striking to me to have a person be named that way as i read the agreement but once they do it the government doesn't get to play king's x by having a lawyer show up and say this is what happens they have to bring in nancy b she was and said nothing about the you know the cruzan well your honor if the issue of exclusion being a concern arose much later in the process what still the concerns by the time she made  in the in the room at the same time it's a long time ago i can't remember if they were in the room i believe that was stated on the record when we were when we were arguing and though they were in the room and they made no objection ems and informing them so that it should have that discussion with mr brown explicitly because h h s entity with authority over administrative process right so the department of justice is district court not involved in the administrative process so right so no you really can't you know if you don't have the authority do you tell the magistrate judge that well all the most true conditions have you put that on the record and the name of those about that you knew about that during the course of these negotiations we put that on the record through my dock oration and through discussions with or maybe please the court david song going to have the state of california along with doris stanton who represents the department of health care services she's only involved in the case that was dismissed as a part of the overall settlement so i'll be making against them if they can so be korvin it was a case much like this one where there was an ambiguous or arguably ambiguous term of the contract or settlement agreement and it left things still to be september to january and let me explain that in detail you don't have a claim that in the field what you didn't have the authority to sign off at the end of the process  false claims that case which is what was which is what this case is the attorney general which is an independently elected official in california has under federal statutes the the that sets up the sole authority that the matters that you it's a matter of the gree elected attorney general to provide the authority it's a matter of contract only only to the extent your honor that it clears up if we hope for is is because the department health care services it was contemplated as part of the contract that there was going to be an auditor to order to discussion in order to process the department which is a separate entity as the reason i explained that attorney general or the part of health care services had to get control agency approval or supervisory sign off a formality to to sign off the contract the problem in this case and again i've represented we did there were there was no fraud or misstatement from entering the contract and all the way up to making representations that the state and false claims that case had full settlement authority but because the terms had not been reduced to a writing the sister agency of the department of health care services did not seek their formal signed off because there was the the terms were unclear at that point in time because  this is a so the bottom line is that's where the confusion comes about i don't think that it in that sense it's a condition precedent to the contract meaning that they could have always pulled out and that we didn't have a contract in that instance if before final approval from the department health care services was obtained because it was bargained for disclosed upfront it's a one sided option that's an available are present in every government contract that there's going to be the ability to pull out of a contract if in fact the supervisors if you don't give final approval knew about that there was never it was disclosed upfront and it was never an issue well except it was made a condition preceding to the final approval of the agreement right but i disagree with calling that a condition precedent your honor because again it was disclosed and bargained for a front the end elegy have used is is there used to be car manufacturers that would say hey buy our car if you don't like it bring it back in seventy two hours and give your money back that's a bargain for that's that's not saying that there isn't a car deal there when somebody drives it off the lot but it's a one sided address because it was brought up about it it's a confusing concept especially because there's too you've got to state agencies that are working alongside in this case to say somehow that this was a fraudulent misrepresentation on the court there's no evidence of that this was fully disclosed by us the magistrate that that we had obtained her department health care services had obtained control agency approval so it doesn't make sense that we are somehow keeping this under wraps that we didn't have authority the confusion came about because simply we did have we he's i've read corvet before i came here and i've just gone back to check to make sure and i think you're wrong corvette was not a condition precision case corvet was a case in which there was a statement a settlement before or i would only disagree with the core concept of that i don't think every term that is put on the record where there is something to be done at a future date necessarily means it's a condition precedent and i think in this case as i read the facts of the core event case i just to me looks almost exactly like the case we have a bar i thought there's a clear there's no condition preceded unless you divine that the settlement discussion in open court becomes a condition i don't know any basis doing that and law that i see your argument ok thanks very much  we will hear from you you have some time left two minutes ok that's number one i'd say corvette stands for the unremarkable proposition that if the parties intend to enter a binding contract and one of the terms is not completely spelled out but nonetheless clear that you can have a binding contract that's it there's nothing beyond that core event has nothing to do with this case on this proctors statement that exclusion never came up before the september for agreement i'd prefer the court to excerpts of record two zero eight as well as excerpts of record two hundred ninety nine three three zero nine two zero eight in particular is an e mail that i wrote to judge beeler after we had a discussion on august twenty eighth for only one case came up and this is a critical factual error in judge billers decision which obscures the consideration when you shift from one case to all three it's flat out wrong and it's i don't understand how it's persisted to this point only one case was talked about in aug twenty eighth when that case was talked about it was a restitution concept was used meritorious or not it was used when miss dyce federal council on september third the day before the transcript september for putative deal basically change the terms from august twenty eighth added to a new term at least two new terms including two cases but we didn't just agree on an eight million dollar settlement and then have two more cases thrown in for nothing and so that precipitated major changes to the deal and it's those changes that are at the core of the flaws in this and the order below in judgment below but let me go back really quickly to two two zero eight that's my email explicitly reference the benefit of restitution concept is it's a mistake and there's no implication of wrong in this proctors words were charged with fraud you don't have that in restitution it's groups give you money back to fighting it properly and the benefit of that was you don't need a corporate integrity agreement or protection from exclusion because no one's saying you're fraudster when you shift as mist ice did on september third and raise the false claims act specter we necessarily shifted and said well if that's what we're going to do we need protection from exclusion and we don't think the corporate integrity agreement is clear all that pre dates of time or for the record so i'm not familiar with the difference between permissive and statutory exclusion is yes did you hear something from i think that's no one can release the mandatory actions if you commit a certain type of act there are certain mandatory exclusion rules or not and there's no dispute about that the dispute is as to program exclusion and if you don't trigger one of the mandatory exclusion and you're only into the second tier permissive that's precisely where you get a release of that authority that's you know we could or could not exclude you we're not so sure you know what we think there wasn't malice or intent here there's a new regime in place and all that sort of stuff those are reasons why you could reach that conclusion that's precisely what judge buehler said in this record by the way and it's in the record judge beeler comments that this case wasn't what the o i g thought it was and this is a case where corporate integrity agreement wouldn't make any sense so just i'm clear so miss brown nancy brown has the authority to grant relief from this permissiveness yes and i don't i think you didn't get a clear answer i don't know i kind of wish i should be if it's not a table of contents i'm blaming david but it but it should be there and it's clear as a matter of law what are permissive in what are mandatory and you'll see that this one falls into the permissive category that's precisely what nancy brown has the authority to release if you're over but you have said i want to i want i want only one point for the state's piece and on that i wanted to say i think that's hairsplitting two in the september fourth transcript state counsel telegraphed the concern about supervisor approval the judge said counsel do you have supervisor approval for the terms we're going to enter and stay counsel said well as to the false claims that case but as to what we call the prospect of component of this deal which was a carefully constructed term unique to this case ironically unique to this case but we negotiated governing standards and that was the piece that the state said i'm not sure we can bind the state to that because we're we could make basically making law and the governor might veto and so that was said right there lo and