united states versus nationwide mutual insurance honors it's been a little over seven months since we found our reply brief in this case and i'd like to briefly call your attention to three decisions that have come down in the interim there were some disagreement in the briefing our letters indicating that you wanted to cite these cases today i have we have we have a twenty eight day practice to do that and we review those matters appeared for your argument but go ahead let me let you see there was some disagreement in the briefing about the way the medicare secondary payer statute works there were two decisions in august from the eleventh circuit neither of the holdings of those cases are particularly relevant here but they do both contain discussions  the secondary payer statute and i think the relevant for your consideration that would be humana medical plan versus western heritage insurance company at eight thirty two a third twelve twenty nine and the discussion begins at page twelve thirty three the other is m s p recovery versus allstate insurance and that's found at eight thirty five f third thirteen fifty one and the discussion begins at page thirteen fifty yes thank you the third case then is a third circuit decision that came down in october it reversed a district court decision that the magistrate judge in this case had relied on that's united states ex real customs fraud investigations versus the taal of the parties have cited that district court decision from the eastern district of pennsylvania in this case the citation is eight thirty nine  third two forty two and we think those cases are worthy of the court's attention this morning i'd like to focus my argument on the magistrate's conclusion that the relator has not adequately or p the existence of defendants obligation to pay money to the government as we've alleged in the complaint dr talk about o has years of experience assisting insurance companies including some of the defendants here in complying with the medicare secondary payers statute in the workers compensation context he built two companies and ran a third with hundreds of the ploys the primary business of which was to help workers comp carriers comply with their medicare secondary peer obligations through that work doctor talk moto learned that his clients didn't perform the compliance work that he and his competitors performed the theory is that because of the numbers involved  insurance with the exception of one accident phone which we've addressed separately as a mere matter of probability the defendants likely incurred a number of obligations any specific and senate a failure to reimburse for paying that's correct we don't and the fact of the matter is that if the defendants were called like saying you know everybody cheats on their taxes now there are six tax payers they must have cheated if it's probable that it's based not more than the fact that they incurred it must be obligations is highly likely given any of that the volume of insurance that they wrote and the number of personal injury claims that they would have pay per year which would be in the thousands so if one in six of the general population is a medicare beneficiary then it's very highly probable that it's highly can get discovery and then maybe you'll find some and then you'll see without those in particular it's as if you are just sit hypothesizing probabilities and saying that's enough to get discovery to look for actual  played that knowledge is based on his years of experience in providing l s d ought to know if of at least one instance where any of these companies failed to meet an obligation and the reason that he can't  and the reason that the defendants themselves if they were called upon to provide those particulars they don't know is because they did not perform the investigation that they would need to have conducted to be a problem but the  seems to contemplate individualized pleading what am i missing there well here the allegations add up to a likelihood that the defendants incurred these obligations simply because they pay that many injury information about who they made payments to tell us a frequently cns makes these conditional payments very frequently on behalf of and we use that in the complaint  medicare make sure that their treatment is paid for right away so that they get the treatment that fit the then conditional nature of the payment is only realized down the road when it becomes apparent that there is another party who  responsible for the medical for the injury may be only realized down the road but it is a necessary precondition of an obligation for it and that is that is of the a probabilistic inference that would be a rescue asking us to rely on a seventeen percent number that that would be a problem but your honor that if that specific point is something that we couldn't dress if we were given leave to replete because that specific point is not a point but the defendants have raised there's no real question that c m s pays medicare pays for its beneficiaries when they get medical treatment they do it right up front especially in cases involving injuries like this where there's you know going to be a dispute about liability coverage c m s doesn't wait to pay medicare beneficiaries claims on those so that's simply not been an issue up to this point and i would request that if that's the problem  it please the court bryce friedman simpson that from bartlett arguing for the defendants i think the court is correct to focus on the lack of an obligation pled in the complaint thirty seven twenty nine a one g b requires plaintiff to prove each defendant had an actual obligation to pay money to the government the court focused and asked my colleague about the statistics the entirety of his complaint and his appeal rests on paragraph sixty nine of the complaint at seventeen percent that is the seventeen percent number correct and what i what we did not cite in our brief and perhaps we should have is this court's decision in burgas vs new york city department of sanitation seven ninety three f third c sixty three from two thousand and fifteen in which the court addresses the us statistics in pleading a complaint and that was an employment discrimination case but what this court said was the statistics have to be statistically significant and make other plausible non discriminating non discriminatory explanations for the conduct unlikely so what do we have here we have seventeen percent of the population of the united states of america are medicare beneficiaries well according to the plaintiff's logic you would assume that seventeen percent of the people in this room then are medicare beneficiaries and obviously they're not you would assume that seventeen percent of the people on the subway train i took this morning are medicare beneficiaries and obviously they're not it is not a plausible inference or even a fair inference for the court to draw on and the court was correct below to not believe that for example seventeen percent of the people with whom my client has business dealings are medicare beneficiaries and then the next sentence of paragraph sixty nine is that is that  in a small fraction of cases not talking about what kind of cases the beneficiary or the primary payer didn't pay c m s there's no allegation that that small fraction applied to my client what that number was or is just it was asking that it's more than a single person there is no information that you can gather about what my particular client did from this information as judge reggie said you could make these allegations against virtually any corporation in america of any size  we can only hypothesize based on the statistics and that the government doesn't care so at least respond to that argument for us and since it is the one that was in a false claims act case you would expect if there was an obligation money that my client owed to the government and mr king's client saw that there was money for old for the government and we stuck our head in the sand with respect to the government he would identify it let's is the grubs case out of the fifth circuit in which ninety was applied and my rule nine b was a part five and later come into court and say apply a relaxed standard well guess what happened in that case there was a dinner that the relator was invited to and they said this is how we are going to commit fraud at this hospital these are the forms you have to fill out these are the codes you have to change and the next day he went to work at the hospital he was handed the piece of paper and asked to engage in the fraud that's how he would know that there are ignorance so they've developed this are created the structure pursuant to which they they cannot know about any obligation but that of course you have a compliance for of course but that assumes that there was a medicare beneficiary in the first place who got a conditional deal with the replating issue on page fifty one of his reply brief he says he cannot identify the complication even if given a chance to reply he can't do it so that should be the end of the replete story as far as the sequence here in terms of the fairness of the opportunity he's had with mr king came in this case all the defendant's consented to give him an opportunity to reply he told the district court that he was going to reduce the number of defendants to cases in which he knew about obligations that went on paid he added  defendants then the magistrate issued a report a recommendation it took six months for the district court to accept that recommendation there was no application to repleat here we are in this court the relator has seen or arguments there is no indication how he would replete affixes complain to identify a single obligation that went reply we was that he would reply i think the district court was correct to dismiss the claim with prejudice given the opportunities that the plaintiff has had to replace his claim already and has failed to do so knowing all the arguments and the decision and i think that it would be perfectly appropriate to affirm the dismissal with prejudice the one other thing i would like to mention is this court's review and i think it's important that this court state that rule nine be unequivocally applies to false claims that cases even false claims act cases brought alleging knowing and improper of void ince of an obligation it does not  say absolutely i think the issue before the court you have to you should indicate what standard you're applying to review and i think it fails under eight or nine b but i think it would be appropriate to do so and i would add that the customs fraud case in which mr king raised to this co reversed one of the cases cited in our brief was a third circuit decision from a few months ago and it absolutely applied rule nine two thirty seven twenty nine a one claim just like the one in this case the olson decision that we did write a twenty eight b and if you think about it is perfectly appropriate to apply in this case common law fraud arises when somebody has a duty to speak they do not speak the other party relies on it of the oversimplification of the medicare secondary payer scheme that has been presented by dr talk about his appeal the whole premise of his case is that on the sixty first day after medicare makes a conditional payment assuming medicare did make a conditional payment to somebody who one of my client has a relationship is that we have a duty then to pay the government on the sixty first day that could not be further from the case under the regulatory under the regulatory s it's evidence by the facts section one eleven which colloquially known as section one eleven reference to page fifty three and fifty four of the complaint only require the defendants to report to the government once a quarter the settlement payments they've made if we have to report to once once a quarter of the settlement claimants we made it makes absolutely no sense to suggest that on the sixty first day for some reason we had to cut a check and as a practical matter there's plenty of things in the record which show essentially that we have no potential duties to pay until we receive a recovery demand letter and that's how he would plea to claim if he knew it if we had a letter in our files that said we paid one hundred dollars for item or service medicare did and you paid one hundred dollars for that item of service you must reimburse us there's no there's not even attempt to plead that such a thing exists and that's the way the scheme the regulatory scheme works in real life and the recovery letters total seventeen percent a total of ninety five percent that that the end of the story you want at least be making some of the arguments you need to use i couldn't read it with that as a matter of pleading because that doesn't tell me that my client ninety five percent of the customers although they're not there is some cliff over which you might agree that at least with respect to paragraph sixty nine of the complaint that might  suffice to make the requisite problem probably i always hate to be asked how my adversary should complain that works but i will tell you there is a potential complaint out there in the world that works the government brings beneficiary in settling a claim like this is a complaint against my client not against the world not against the fact that there may be unpaid medicare secondary payments out there it's about my clients and there's literally nothing about my clients or their business in this thank you your honor the allegation that seventeen percent of the population are medicare beneficiaries does not mean that any of this number of people that seventeen percent of the people here are medicare beneficiaries for a number of reasons but one of which is simply that number behind me the number of claims that the defendant pay each year is in the thousands that is a much different inference to be drawn in that situation and they're not people that the my counsel of my colleagues clients do business with in the sense that they take out insurance from and they are random people who have been injured and make tort claims for which his clients because a we know that they've been injured and therefore needed some sort of a that the claimant who they have paid right has been injured and they had medical treatment what's what is your basis for saying that they're not making the defendant wasn't making the reimbursement see that's the problem they didn't have compliance per procedure programs in place which makes it impossible when you're paying thousands of claims you have to be able to identify which claims involved medicare beneficiaries on whose behalf medicare has made payment is it necessary they necessarily must have at some level given the seventy percent and given the lack of a compliance program they don't know but seventy percent tells us that they must have an obligation that's right or that there's a high likelihood of an obligation that's right the fact that the government brings medicare secondary pay or claims is is different than in this case and this kind of a case that the government doesn't know of the existence of the primary payer unless somebody tells the government that the payment a payment has been made these one of a part of the job is to try to get the government interested in supporting you yes and that didn't happen here that did not happen  here and there was a there was an effort to solicit the government and to get it back it was support well you're required to file the case under seal and the government does an investigation and makes a determination whether or not to intervene was in two thousand and twelve on that they are not complying with their reimbursement obligations the fact that they don't have a compliance program in place to do it given the numbers of the claims that are involved you've got to have a compliance program in place doesn't have