thank you your honor like the bridge case this case concerns a government program or distributing a fixed pot of valuable assets according to a mechanical set of allocation every year the pennsylvania general assembly appropriate a limited amount of money for the extraordinary expense program and when that money is insufficient to cover all of the extraordinary expenses of participating hospitals it's distributed on a program basis according to the amount of claims that each hospital submit if you work hard remark that mr barnes well your recitation of the fact is simple lighting at the moment i'm going to interrupt you because my colleagues and i are intimately familiar with the case but that's ok very well you're on an ok so so my my my question to you is you know is in thinking about proximate cause  to be deemed or considered to be an intervening factor breaking the chain of causation not on the facts presented here i think we would have a different case though is  rather than a mechanical rule for allocating funds under the program you know basically rather than having a rule where the money is distributed on a pro rata basis if we had a case where the department had discretion and deciding how much money to allocate to each participating hospital i think that would potentially make make a difference to the proximate cause ition analysis let me ask you all just one follow up before my colleagues jump as would would at the end of the fiscal year any of the money as i understand it you're correct me if i'm wrong each fund was a ve fund total one hundred dollar fiscal years that are at issue in this case the ones that you asian where it wouldn't be right is if you can imagine if all participants in this program in your honour's hypothetical had a total of ninety dollars an extraordinary expenses and the state legislature had allocated one hundred dollars for use by this program in that scenario the state would retain ten dollars after distributing  ninety dollars that program participants were entitled yeah yeah ok i get so you answer the essence of my question which is unless it's owed or subscribed there is oversubscribed ok let me ask a question when was the moment when injured you know i guess i want to distinguish between when st luke suffered injury and when it became aware of the injury so i would say the same weeks was injured when the it received each of the program payments under the e program and it received less from the program than it was you know would have received had the descendants not submitted a bunch of fraudulent claims to the program but that's i think a distinct inquiry from when we became aware of the injury which would have happened you know basically when the auditor general's report came out in revealed the fact that you know this fraud had been perpetrated on you  know the program participants that had submitted you know honest admissions to the program why don't they just follow up on the not on the awareness issue but on the injury why do you say the injury occurred general operation was responsible for submitting these you know these these claims to the program for reimbursement but that's it that's a bit of information that is just you know an exclusive possession of the descendants and we just don't know does it matter whether you know who they are for purposes of your will mine particularly requirements i don't think that it does certainly the defendants have not raised that as an issue in this appeal and in fact i'd say you know if you read the defendant's brief they don't make any reference to will not be at all and i think the reason is because if you look at the complaint we do provide and pretty specific detail that you know the particulars in terms of when the communications that we allege were fraudulent occurred what the communication said why we think they were fraudulent and i think that's and the thing i think the really key point here is that if the court examines the auditor general's report it's clear that lancaster general was just a major major outlier in this program you know  it's one hospital of seventy hospitals that participated in the program it's a pit submitted enough claims to collect thirty five percent of all the money into the program during these years and you know there's obviously a methodological disagreement between the auditor general and the department about exactly how one should go about calculating the appropriate amount of payments each program participated but the key point is that the auditor general use the same methodology across all program participants and what the auditor general found is that seventy five percent of the claim submitted by lancaster general were invalid whereas in contrast ten percent of other program participants claims one ballot and so that with there's the same methodology being applied to all of these hospitals lancaster general jumps out this tremendous outlier and it's an outlier not just in a single quarter or a single year this is something that continued for over five years and i think for that reason as well there's a very strong inference that you know we have defendants who are making invalid submissions over a lengthy period of time and those invalid submissions collectively recounts to lancaster general's benefit to the tune of nearly nine billion dollars and i think you know when you put all of that together there's just a very very strong inference that  defendants knew that the claims they were submitting to this program were in fallon and i think it's also important to think about the chronology here which is basically that the st auditor general report that comes out th critical of lancaster general submissions it comes out in the middle of fiscal year two thousand and twelve and so and then in fiscal year two thousand and thirteen the number of claims that lancaster general submitted to the dropped and so what we see is basically the auditor general coming in and doing something that the department never did which is actually looking at the underlying billing records of lancaster general and saying wait a minute a lot of these claims are valid and it's only at that point with the number of claims that was submitted by lancaster generals that precipitous like iraq and so you know for that reason as well i think there's a very strong inference of fraud you've alluded to one of them the order general's report of a moment ago but in saying that there was a gap in the proximate cause ation the district court looked at these three factors i wonder if you could speak to them and why we should look differently at those factors and come to a different conclusion parallel to the bridge litigation so you know each hospital submitting extraordinary expense claims for charity services offers offer that's the analog and bridge is the participants in this auction submitting  determines the reimbursement amount for each hospital that's the analog and bridges the auctioneer deciding which of the bitters that submitted you know identical is is going to be the winner of the auction for that particular y and then finally the district court notes that the auditor general in this case you know identifying the invalid claims and you know the analog in bridge is basically the plaintiffs in that case discovering and raising objections about the fraudulent efforts by the defendants in that case to collect more of the tax liens and they were entitled to and so i think each of those factors that the district court identified as potentially intervening factors there's a direct parallel to the bridge litigation and you know obviously that's a that's a supreme court decision but that we think is just on all fo health system university of pennsylvania trustees and john doe one and john doe two i'd like to pick up on the questions that the panel was asking mr barnes and specifically about the district court's opinion  the proximate cause issue here is what the district court found that there was no proximate cause and that was based on the holmes direct harm requirement and the only question let me ask general no well i just want to point out how implausible it is to say that there was fraud here because d h yes but that's not that's not helpful right my hypothetical is there well ok and so you're asking i know what you're getting if your client engaged in that poll want to know i don't think the h s would suffer harm if my client engaged in fraud hypothetically because like you said it obligations one of them is that they oversee the program and there are statutory sections about penalties and and the h s had that power i think the fact that they didn't accept exercising that power proximate combination well it is such a counterfactual hypothetical i almost can't comprehend it if d h had never instituted the clawback then we instead of having well i'm sorry i don't think we would be here if the h s had never implemented the club act process i don't think you know everything kind of springs from that decision to do it and then to discontinue doing it and it was the discontinue doing it which is what caused plaintiffs allege harm it caused them to believe they were harmed it was a policy decision made by the h s that had nothing to do with lancaster general and it was program wide it was it was rose because the h s realized they asked themselves should do we need to continue doing this burdensome audit clawback redistribution process and they love it but that's not the stage that's not the  porter mentioned ninety before and appropriately so but there's no question of of of ninety peculiarity who were not there it's not that they haven't played a good enough case now if if they allege documents that they attached to their complaint namely the ag report and the evidence here shows plainly that the a g reports were fatally flawed and that the decision to discontinue the clawback arose from they realize that there was they realized that there was no authority in the statute for the cough act and that is why the facts here are unique it's because they actually were doing a program for twelve years that was oh so what you're telling us is in the following hypothetical there'd be no relief possible listen for a moment that one kind of fear has engaged in p what i'm saying is even assume that lancaster general submitted intentionally purposefully submitted over inflated claims when they did that in seven plaintiffs weren't harmed they weren't harmed because the clawback process was in place to make sure all payments got redistributed according to whatever the a g said and so there's no harm in seven there's no harm in eight there's no harm in nine is no harm in ten no harm and eleven no harm and twelve no harm in thirteen and then two thousand and fourteen v h s decide that they're not going to do this clawback process anymore and that's when the harm arises so it's not direct supposedly committing fraud in the form of these predicate acts that started in two thousand and seven i was a wonderful answer it did answer my question my question is well when you have a scenario where remedy i'm so i guess i'm not following the question and the reason i'm not following the question is because i don't think it's fair to start from this in print for profit and when i answered before i substituted your work fraud for this concept of intentionally submitting over inflated claims and to me both are really welcome the reason that i thought there is because the he opinion of the district court focuses on proximate cause the nation so we're focused on proximate cause nation program at the operating here there have been more plane than there has been fun to distribute so that mean there's no there's no circumstance where d h  relief possible to those who believe they have been to forty and i really focused on how do the intervening factor i understand your question it ok thank you so if lancaster general had engaged in fraud the fact here would be totally different and what pla been alleged here is any type of concealment on the product part of lancaster general in other words lancaster general books were open to everybody they were open to the auditor they were open to the h s ok and so we had one look at these numbers by the eighty in two thousand and fourteen then we had another look at these numbers by v h s in twenty seven things and there was no finding by the h s of any funny business so to have this crowd or not if you go back but for the moment we're the ones prodding we're trying to figure out the combination is right and so there's the three elements from homes there's directness which we talked about and then there's this idea of whether there's going to be complicated rules for apportioning liability among indirect indirect plaintiffs plaintiffs who are who suffered harm at different levels and judge schnell spoke to this issue and he recognized that there was a dispute between the submitted to the p h c for portal so what you what you have is that you actually recognize well the fact that there was a dispute here and the fact that there was fog in the eighty's report means that a court looking at this in terms of proximate cause is not going to be able to sort out the apportion issues because contrary to what point it says you can't just take the a g report and that's going to be the solution for how you're going to reallocate this money a court would have it's not the end not the point the point that all you do all they're going to do is come in and plant the a g s report on the table and that'll be the case  so you know the notion that the too complex and you know that's not a fun one of the homes requirement but i think it's not particularly persuasive well i just want to i want to point out that what shell said what church mouse said about this apportionment issue and recognising well i'm sorry did you have another question we left off on yes or and so there's there's a pretty element in holmes directness this apportionment issue and then this rd issue which is what the court seems to be interested in and this is whether there is a better plaintiffs who can who can vindicate the alleged harm and the supreme court's jurisprudence around rico that proximate patient have to be a flexible standard not all of these elements are going to be relevant to every question and to me you ask did the plaintiffs get a remedy yes the plaintiffs got a remedy here and that is in the form of the d this issue they looked at the issue they gave st lukes a remedy in the form of looking at the issue and when they came out on that issue they found that lancaster general had not been overpaid in fact they had been underpaid and so we're left with this methodological disagreement that mr barnes alluded to between d h s s and the agency and mr barnes the only possible explanation for that is massive fr on the part of lancaster general but i would submit that those disagreements can be explained by the fact that they disagreed about eligibility criteria for these reimbursement claims and so it's it's not a reasonable inference to infer that this can be explained by fraud it's much more plausible this element of wrongdoing that plaintiff and st is not supported by the reports that are rules operated connect well st of all direct bridge involved direct current as soon as the defendants in that case violated the single simultaneous bidder rule plaintiffs were necessarily harmed and it was immedi here bridge is not on all fours because the predicate acts occurred in two thousand and seven and the harm didn't occur until two thousand and fourteen there was an intervening act here that didn't exist in bridge and pla makes this analogy to say that the h s decision to call back money is akin to the prosecutor's decision in bridge not to prosecute and i would submit to you that there that analogy is not a but the h s decision to discontinue the clawback with nothing like a prosecutor's decision not to prosecute st of all this argument wasn't great raised in the district court below nd of all it comes from looking at the th circuit not the supreme court decision but even in view of that it's not correct because you just look at the eight to it with the general decision applied to all seventy hospitals by contrast the prosecutor's decision in bridge applied to one person they were faced with wrongdoing now plaintiff injects this idea that the reports in two thousand and fourteen blowing the whistle on lancaster general and that they were akin to people complaining that lancaster general is committing fraud but if you look at the age you report they don't say anything like that at all and if you look at the h s report they don't think anything like that at all so that decision surrounding the call back was about eligibility criteria and a dispute about how the program should run it wasn't in order for plaintiff analogy to be  accurate that decision would have to be infected with some cloud of wrongdoing around micah for general at the time it was being made and that's not supported by the records themselves i thank you very much  what it did in connection with this program to appendix page one hundred and sixty five where the auditor general describes what what his office did what the court will see is that the auditor general and only the auditor general reviewed the underlying billing records of lancaster general and so the h s really was not in a position to a pint on whether or not a large number of the submissions of lancaster general made to this program were invalid  we talked a bit about the bridge case but i'd like to try to situate this case more more broadly in the context of the supreme court's other proximate cause they should precedents in one overarching theme that we see in homes and all three of the cases where the supreme court has rejected rico claims on proximate causation ground is that there in every one of those cases there's always a more direct victims of the supreme court says it's better situated to sue and  think in the in the red briefs in this case and i think i heard again today that the defendants effectively concede that the department is not a more direct victim because it's in exactly the same position whether it pays the money to lancaster general as a result of my tester general having submitted these invalid claims or instead pays the money to the plaintiffs in the plan of class and so i think it's clear that  rico and for that reason that it wouldn't be a viable plan is another point that i think you know it comes through very clearly and in homes in the supreme court other precedents in this area is that there are certain types of causation inquiries that the court is reluctant to have courts get into where basically that the inquiry turns on a lot of very speculative factual questions so in homes there were a lot of speculative questions around well why exactly did the broker dealers in that case fail and you know how much of that was attributable to the fraud and how much of it was attributable to bad business practices or the sister two of other things happening in the markets and there's nothing like that in our case as i think the court alluded to a moment ago the facts here are a lot more straightforward than the kinds of facts in which other rico plaintiff had been allowed to go forward and i would commend in particular to the court's attention its decision and in re avandia marketing case that's that's the leading proximate cause case of the rd circuit and the fact there were a lot more complicated than they are here and on those facts this court allowed a rico claim to go forward and rejected a proximate cause defense so for all of those reasons we would just urge the court to reverse the district court  thank you counsel counsel we appreciate your argument and we will take the matter under advisement and we wish the best to you and your family in the time of national