Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-18-55020/USCOURTS-ca9-18-55020-0/pdf.json

Parties Involved:
American Health Care Association
Amicus Curiae
Edgardo Binoya
Appellee
California Association of Health Facilities
Amicus Curiae
Gardens Regional Hospital and Medical Center, Inc.
Appellee
Arnold Ling
Appellee
Cynthia Miller-Dobalian
Appellee
National Center for Assisted Living
Amicus Curiae
Bill Nelson
Appellee
Namiko Nerio
Appellee
Prode Pascual
Appellee
Vicki Rollins
Appellee
Rollinsnelson LTC Corp.
Appellee
S&W Health Management Services, Inc.
Appellee
Manuel Sacapano
Appellee
United States of America
Amicus Curiae
Rafaelito Victoria
Appellee
Beryl Weiner
Appellee
Jane Winter
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JANE WINTER, ex rel. United States 

of America,

Plaintiff-Appellant,

v.

GARDENS REGIONAL HOSPITAL AND 

MEDICAL CENTER, INC., DBA TriCity Regional Medical Center, a 

California corporation; 

ROLLINSNELSON LTC CORP., a 

California corporation; VICKI 

ROLLINS; BILL NELSON; S&W

HEALTH MANAGEMENT SERVICES,

INC., a California corporation; 

BERYL WEINER; PRODE PASCUAL,

M.D.; RAFAELITO VICTORIA, M.D.;

ARNOLD LING, M.D.; CYNTHIA 

MILLER-DOBALIAN, M.D.; EDGARDO 

BINOYA, M.D.; NAMIKO NERIO,

M.D.; MANUEL SACAPANO, M.D.,

Defendants-Appellees.

No. 18-55020

D.C. No.

2:14-cv-08850-

JFW-E

OPINION

Appeal from the United States District Court

for the Central District of California

John F. Walter, District Judge, Presiding

Argued and Submitted September 13, 2019 

Pasadena, California

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2 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR.

Filed March 23, 2020

Before: Johnnie B. Rawlinson, John B. Owens,

and Mark J. Bennett, Circuit Judges.

Opinion by Judge Bennett

SUMMARY*

False Claims Act

The panel reversed the district court’s dismissal for 

failure to state a claim and remanded in an action under the 

False Claims Act, alleging that defendants submitted, or 

caused to be submitted, Medicare claims falsely certifying 

that patients’ inpatient hospitalizations were medically 

necessary.

Plaintiff alleged that the admissions were not medically 

necessary and were contraindicated by the patients’ medical 

records and the hospital’s own admissions criteria. The 

district court held that “to prevail on an FCA claim, a 

plaintiff must show that a defendant knowingly made an 

objectively false representation,” and so a statement that 

implicates a doctor’s clinical judgment can never state a 

claim under the FCA because “subjective medical opinions 

. . . cannot be proven to be objectively false.”

* This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 3

The panel held that a plaintiff need not allege falsity 

beyond the requirements adopted by Congress in the FCA, 

which primarily punishes those who submit, conspire to 

submit, or aid in the submission of false or fraudulent claims. 

The panel stated that Congress imposed no requirement of 

objective falsity, and the panel had no authority to rewrite 

the statute to add such a requirement. The panel held that a 

doctor’s clinical opinion must be judged under the same 

standard as any other representation. A doctor, like anyone 

else, can express an opinion that he knows to be false, or that 

he makes in reckless disregard of its truth or falsity. 

Agreeing with other circuits, the panel therefore held that a 

false certification of medical necessity can give rise to FCA 

liability. The panel also held that a false certification of 

medical necessity can be material because medical necessity 

is a statutory prerequisite to Medicare reimbursement.

COUNSEL

Michael J. Khouri (argued), Andrew G. Goodman, and 

Jennifer W. Gatewood, Khouri Law Firm APC, Irvine, 

California, for Plaintiff-Appellant.

Thad A. Davis (argued), Gibson Dunn & Crutcher LLP, San 

Francisco, California; James L. Zelenay Jr., Gibson Dunn & 

Crutcher LLP, Los Angeles, California; for DefendantsAppellees Beryl Weiner and S&W Health Management 

Services, Inc.

Matthew Umhofer (argued) and Elizabeth J. Lee, Spertus 

Landes & Umhofer LLP, Los Angeles, California, for 

Defendants-Appellees RollinsNelson LTC Corp., Vicki 

Rollins, and Bill Nelson.

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4 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR.

Raymond J. McMahon, Doyle Schafer McMahon, Irvine, 

California, for Defendants-Appellees Arnold Ling, M.D.; 

Cynthia Miller-Dobalian, M.D.; and Edgardo Binoya, M.D.

Michael D. Gonzalez and Andrea D. Vazquez, Law Offices 

of Michael D. Gonzalez, Glendale, California; Kenneth R. 

Pedroza and Matthew S. Levinson, Cole Pedroza LLP, for 

Defendant-Appellee Prode Pascual, M.D.

Craig B. Garner, Garner Health Law Corporation, Marina 

Del Rey, California, for Defendant-Appellee Rafaelito 

Victoria, M.D.

No appearance by Defendants-Appellees Gardens Regional 

Hospital and Medical Center, Inc.; Namiko Nerio, M.D.; 

and Manuel Sacapano, M.D.

Benjamin M. Shultz (argued), Michael S. Raab, and Charles 

W. Scarborough, Appellate Staff; Nicola T. Hanna, United 

States Attorney; Civil Division, United States Department of 

Justice, Washington, D.C.; for Amicus Curiae United States 

of America.

James F. Segroves, Kelly H. Hibbert, and Nancy B. 

Halstead, Reed Smith LLP, Washington, D.C.; Mark E. 

Reagan, Hooper Lundy & Bookman PC, San Francisco, 

California; for Amici Curiae American Health Care 

Association, National Center for Assisted Living, and 

California Association of Health Facilities.

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 5

OPINION

BENNETT, Circuit Judge:

Appellant-Relator Jane Winter (“Winter”), the former 

Director of Care Management at Gardens Regional Hospital 

(“Gardens Regional”), brought this qui tam action under the 

False Claims Act (“FCA”), 31 U.S.C. §§ 3729–33. Winter 

alleges Defendants1 submitted, or caused to be submitted, 

Medicare claims falsely certifying that patients’ inpatient 

hospitalizations were medically necessary. Winter alleges 

that the admissions were not medically necessary and were 

contraindicated by the patients’ medical records and the 

hospital’s own admissions criteria. The district court 

dismissed Winter’s second amended complaint (“the 

complaint”) for failure to state a claim. The district court 

held that “to prevail on an FCA claim, a plaintiff must show 

that a defendant knowingly made an objectively false 

representation,” so a statement that implicates a doctor’s 

clinical judgment can never state a claim under the FCA 

because “subjective medical opinions . . . cannot be proven 

to be objectively false.”

We have jurisdiction under 28 U.S.C. § 1291. We hold 

that a plaintiff need not allege falsity beyond the 

requirements adopted by Congress in the FCA, which 

primarily punishes those who submit, conspire to submit, or 

aid in the submission of false or fraudulent claims. Congress 

imposed no requirement of proving “objective falsity,” and 

we have no authority to rewrite the statute to add such a 

1 The Defendants include Gardens Regional Hospital, the hospital 

management company (S&W Health Management Services) and its 

owners (RollinsNelson, Rollins, Nelson, and Weiner), and individual 

physicians who diagnosed and admitted patients.

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requirement. A doctor’s clinical opinion must be judged 

under the same standard as any other representation. A 

doctor, like anyone else, can express an opinion that he 

knows to be false, or that he makes in reckless disregard of 

its truth or falsity. See 31 U.S.C. § 3729(b)(1). We therefore 

hold that a false certification of medical necessity can give 

rise to FCA liability.2 We also hold that a false certification 

of medical necessity can be material because medical 

necessity is a statutory prerequisite to Medicare 

reimbursement. Accordingly, we reverse and remand.

BACKGROUND

A. The “Medical Necessity” Requirement

The Medicare program provides basic health insurance 

for individuals who are 65 or older, disabled, or have endstage renal disease. 42 U.S.C. § 1395c. “[N]o payment may 

be made . . . for any expenses incurred for items or services 

. . . [that] are not reasonable and necessary for the diagnosis 

or treatment of illness or injury or to improve the functioning 

of a malformed body member[.]” 42 U.S.C. 

§ 1395y(a)(1)(A). Medicare reimburses providers for 

inpatient hospitalization only if “a physician certifies that 

such services are required to be given on an inpatient basis 

for such individual’s medical treatment, or that inpatient 

diagnostic study is medically required and such services are 

necessary for such purpose[.]” 42 U.S.C. § 1395f(a)(3).

The Department of Health and Human Services, Centers 

for Medicare & Medicaid Services (“CMS”), administers the 

2 The FCA covers claims that are “false or fraudulent.” 31 U.S.C. 

§ 3729(a)(1). For convenience, we will generally use “false” to mean 

“false or fraudulent.”

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 7

Medicare program and issues guidance governing 

reimbursement. CMS defines a “reasonable and necessary” 

service as one that “meets, but does not exceed, the patient’s

medical need,” and is furnished “in accordance with 

accepted standards of medical practice for the diagnosis or 

treatment of the patient’s condition . . . in a setting 

appropriate to the patient’s medical needs and condition[.]” 

CMS, Medicare Program Integrity Manual § 13.5.4 (2019). 

The Medicare program tells patients that “medically 

necessary” means health care services that are “needed to 

diagnose or treat an illness, injury, condition, disease, or its 

symptoms and that meet accepted standards of medicine.” 

CMS, Medicare & You 2020: The Official U.S. Government 

Medicare Handbook 114 (2019).

Admitting a patient to the hospital for inpatient—as 

opposed to outpatient—treatment requires a formal 

admission order from a doctor “who is knowledgeable about 

the patient’s hospital course, medical plan of care, and 

current condition.” 42 C.F.R. § 412.3(b). Inpatient 

admission “is generally appropriate for payment under 

Medicare Part A when the admitting physician expects the 

patient to require hospital care that crosses two midnights,” 

but inpatient admission can also be appropriate under other 

circumstances if “supported by the medical record.” Id.

§ 412.3(d)(1), (3).

The Medicare program trusts doctors to use their clinical 

judgment based on “complex medical factors,” but does not 

give them unfettered discretion to decide whether inpatient 

admission is medically necessary: “The factors that lead to a 

particular clinical expectation must be documented in the 

medical record in order to be granted consideration.” Id.

§ 412.3(d)(1)(i) (emphasis added). And the regulations 

consider medical necessity a question of fact: “No 

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presumptive weight shall be assigned to the physician’s 

order under § 412.3 or the physician’s certification . . . in 

determining the medical necessity of inpatient hospital 

services . . . . A physician’s order or certification will be 

evaluated in the context of the evidence in the medical 

record.” Id. § 412.46(b).

B. The False Claims Act

The FCA imposes significant civil liability on any person 

who, inter alia, (A) “knowingly presents, or causes to be 

presented, a false or fraudulent claim for payment or 

approval,” (B) “knowingly makes, uses, or causes to be 

made or used, a false record or statement material to a false 

or fraudulent claim,” or (C) “conspires to commit a violation 

of subparagraph (A), [or] (B)[.]” 31 U.S.C. § 3729(a)(1). 

The Act allows private plaintiffs to enforce its provisions by 

bringing a qui tam suit on behalf of the United States. Id.

§ 3730(b).

A plaintiff must allege: “(1) a false statement or 

fraudulent course of conduct, (2) made with the scienter, 

(3) that was material, causing, (4) the government to pay out 

money or forfeit moneys due.” United States ex rel. Campie 

v. Gilead Scis., Inc., 862 F.3d 890, 899 (9th Cir. 2017). 

Winter’s allegations fall under a “false certification” theory 

of FCA liability.3 See Universal Health Servs., Inc. v. 

United States ex rel. Escobar, 136 S. Ct. 1989, 2001 (2016). 

Because medical necessity is a condition of payment, every 

Medicare claim includes an express or implied certification 

that treatment was medically necessary. Claims for 

unnecessary treatment are false claims. Defendants act with 

the required scienter if they know the treatment was not 

3 The complaint alleges both express and implied false certification.

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 9

medically necessary, or act in deliberate ignorance or 

reckless disregard of whether the treatment was medically 

necessary. See 31 U.S.C. § 3729(b)(1).

C. The Allegations in Winter’s Complaint4

Winter, a registered nurse, became the Director of Care 

Management and Emergency Room at Gardens Regional in 

August 2014, and came to the job with thirteen years of 

experience as a director of case management at hospitals in 

Southern California and Utah.

Winter reviewed hospital admissions using the 

admissions criteria adopted by Gardens Regional—the 

InterQual Level of Care Criteria 2014 (“the InterQual 

criteria”). The InterQual criteria, promulgated by McKesson 

Health Solutions LLC and updated annually, “are reviewed 

and validated by a national panel of clinicians and medical 

experts,” and represent “a synthesis of evidence-based 

standards of care, current practices, and consensus from 

licensed specialists and/or primary care physicians.” 

Medicare uses the criteria to evaluate claims for payment. 

And, as the criteria require a secondary review of all care 

decisions, Winter’s job included reviewing Garden Regional 

patients’ medical records and applying the criteria to 

evaluate the medical necessity of hospital admissions.

In mid-July 2014, Defendant RollinsNelson—which 

owned and operated nursing facilities in the Los Angeles 

area—acquired a 50% ownership interest in Defendant 

S&W, the management company that oversaw operations at 

4 All facts are taken from Winter’s second amended complaint. “We 

accept all factual allegations in the complaint as true and construe the 

pleadings in the light most favorable to the nonmoving party.” Outdoor 

Media Grp., Inc. v. City of Beaumont, 506 F.3d 895, 900 (9th Cir. 2007).

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Gardens Regional. RollinsNelson then began jointly 

managing the hospital with S&W. When Winter started 

work, she noticed that the emergency room saw an unusually 

high number of patients transported from RollinsNelson 

nursing homes, including from a facility sixty miles away. 

The RollinsNelson patients were not just treated on an 

outpatient basis or held overnight for observation—most 

were admitted for inpatient hospitalization. In August 2014, 

83.5% of the patients transported from RollinsNelson 

nursing homes were admitted to Gardens Regional for 

inpatient treatment—an unusually high admissions rate 

based on Winter’s experience and judgment.

Winter was concerned about this pattern and scrutinized 

Gardens Regional’s admissions statistics, comparing July 

and August 2014 to prior months. She realized that the spike 

in admissions from RollinsNelson nursing homes 

corresponded with RollinsNelson’s acquisition of S&W. 

Not only did the number of admissions increase, the number 

of Medicare beneficiaries admitted rose as well. The number 

of Medicare beneficiaries admitted in August 2014, for 

example, surpassed that of any month before RollinsNelson 

began managing the hospital. Winter alleges that 

RollinsNelson and S&W—including the individual owners 

of both entities—“exerted direct pressure on physicians to 

admit patients to [Gardens Regional] and cause false claims 

to be submitted based on false certifications of medical 

necessity.”

Winter’s complaint details sixty-five separate patient 

admissions—identified by the admitting physician, patient’s 

initials, chief complaint, diagnosis, length of admission, the 

Medicare billing code, and the amount billed to Medicare—

that Winter alleges did not meet Gardens Regional’s 

admissions criteria and were unsupported by the patients’ 

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 11

medical records. She alleges that none of the admissions 

were medically necessary. Winter observed several trends: 

i) admitting patients for urinary tract infections (“UTIs”) 

ordinarily treated on an outpatient basis with oral antibiotics; 

ii) admitting patients for septicemia with no evidence of 

sepsis in their records; and iii) admitting patients for 

pneumonia or bronchitis with no evidence of such diseases 

in their medical records. Winter estimates that in less than 

two months—between July 14 and September 9, 2014—

Gardens Regional submitted $1,287,701.62 in false claims 

to the Medicare program.

Winter repeatedly tried to bring her concerns to the 

attention of hospital management, with no success. In her 

first week, she reported the high number of unnecessary 

admissions to the hospital’s Chief Operating Officer. After 

receiving no response, she reached out to the hospital’s Chief 

Executive Officer. When she still received no response, she 

tried confronting Dr. Sacapano directly. He told her: “You 

know who I’m getting pressure from.” Winter understood 

Dr. Sacapano to mean the hospital management.

At the beginning of September 2014, Defendants 

Rollins, Nelson and Weiner—the owners of S&W and 

RollinsNelson—“called an urgent impromptu meeting,” and 

“instructed case management not to question the admissions 

to [Gardens Regional.]” When Winter tried to speak up, 

Rollins cut her off, using profanity. Shortly after the 

meeting, Rollins instructed one of the hospital’s case 

managers to “coach” physicians, explaining in an email that 

“[t]hese Mds will most likely increase their admits because 

their documentation will be ‘assisted.’”

In November 2014, Gardens Regional fired Winter and 

replaced her with an employee who had never questioned 

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any inpatient admissions. Winter filed her complaint a week 

later.

D. Procedural History

In November 2017, after the Government had declined 

to intervene and Winter had filed the second amended 

complaint, Defendants RollinsNelson, Rollins, Nelson, 

S&W, Weiner and Dr. Pascual filed motions to dismiss the 

complaint for failure to state a claim.5 The district court 

granted the motions, dismissing Winter’s three FCA claims 

against all Defendants for the same reasons: (1) because a 

determination of “medical necessity” is a “subjective 

medical opinion[] that cannot be proven to be objectively 

false,” and (2) because the alleged false statements, which 

the district court characterized as the “failure to meet 

InterQual criteria,” were not material.6

STANDARD OF REVIEW

We review the grant of a motion to dismiss de novo. 

Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 

1030 (9th Cir. 2008). “In reviewing the dismissal of a 

complaint, we inquire whether the complaint’s factual 

5 At oral argument, Winter’s counsel acknowledged that Dr. 

Sacapano and Dr. Nerio had not yet been served with the second 

amended complaint when the district court, in granting the moving 

Defendants’ motions to dismiss, sua sponte dismissed the complaint 

against them as well. Oral Argument at 10:58, Winter v. Gardens 

Regional Hosp., et al., No. 18-55020 (9th Cir. Sept. 13, 2019), 

https://www.ca9.uscourts.gov/media/view_video.php?pk_vid=0000016

196.

6 The district court did not dismiss Winter’s retaliation claim against 

Gardens Regional. Winter voluntarily dismissed that claim without 

prejudice to allow for an appeal.

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allegations, together with all reasonable inferences, state a 

plausible claim for relief.” Cafasso, United States ex rel. v. 

Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 (9th Cir. 

2011). As with all fraud allegations, a plaintiff must plead 

FCA claims “with particularity” under Federal Rule of Civil 

Procedure 9(b). Id.

DISCUSSION

A. Winter properly alleges false or fraudulent 

statements

We interpret the FCA broadly, in keeping with the 

Congress’s intention “to reach all types of fraud, without 

qualification, that might result in financial loss to the 

Government.” United States v. Neifert-White Co., 390 U.S. 

228, 232 (1968). For that reason, the Supreme Court “has 

consistently refused to accept a rigid, restrictive reading” of 

the FCA, id., and has cautioned courts against “adopting a 

circumscribed view of what it means for a claim to be false 

or fraudulent,” Escobar, 136 S. Ct. at 2002 (quoting United 

States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1270 

(D.C. Cir. 2010)).

“[W]e start, as always, with the language of the statute.” 

Id. at 1999 (quoting Allison Engine Co. v. United States ex 

rel. Sanders, 553 U.S. 662, 668 (2008)). The plain language 

of the FCA imposes liability for presenting, or causing to be 

presented, a “false or fraudulent claim for payment or 

approval,” making “a false record or statement material to a 

false or fraudulent claim,” or conspiring to do either. 

31 U.S.C. § 3729(1)(A)–(C). Because Congress did not 

define “false or fraudulent,” we presume it incorporated the 

common-law definitions, including the rule that a statement 

need not contain an “express falsehood” to be actionable. 

Escobar, 136 S. Ct. at 1999 (“[I]t is a settled principle of 

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14 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR.

interpretation that, absent other indication, Congress intends 

to incorporate the well-settled meaning of the common-law 

terms it uses.” (quoting Sekhar v. United States, 570 U.S. 

729, 732 (2013))). And, in at least one respect, Congress 

intended for the FCA to be broader than the common law: 

Under the FCA, “‘knowingly’ . . . require[s] no proof of 

specific intent to defraud.” 31 U.S.C. § 3729(b)(1)(B).

“[O]pinions are not, and have never been, completely 

insulated from scrutiny.” United States v. Paulus, 894 F.3d 

267, 275–76 (6th Cir. 2018) (upholding conviction for 

Medicare fraud where physician justified unnecessary 

procedures by exaggerating his interpretation of medical 

tests); see also Hooper v. Lockheed Martin Corp., 688 F.3d 

1037, 1049 (9th Cir. 2012) (holding that false estimates “can 

be a source of liability under the FCA”). Under the common 

law, a subjective opinion is fraudulent if it implies the 

existence of facts that do not exist, or if it is not honestly 

held. Restatement (Second) of Torts § 525; id. § 539. As 

the Supreme Court recognized, “the expression of an opinion 

may carry with it an implied assertion, not only that the 

speaker knows no facts which would preclude such an 

opinion, but that he does know facts which justify it.” 

Omnicare, Inc. v. Laborers Dist. Council Const. Indus. 

Pension Fund, 575 U.S. 175, 191 (2015) (quoting W. Page 

Keeton et al., Prosser and Keeton on the Law of Torts § 109, 

at 760 (5th ed. 1984)).

Defendants and amici curiae American Health Care 

Association, National Center for Assisted Living, and 

California Association of Health Facilities urge this court to 

hold the FCA requires a plaintiff to plead an “objective 

falsehood.” But “[n]othing in the text of the False Claims 

Act supports [Defendants’] proposed restriction.” Escobar, 

136 S. Ct. at 2001. Under the plain language of the statute, 

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WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 15

the FCA imposes liability for all “false or fraudulent 

claims”—it does not distinguish between “objective” and 

“subjective” falsity or carve out an exception for clinical 

judgments and opinions.

Defendants are correct that if clinical judgments can be 

fraudulent under the FCA, doctors will be exposed to 

liability they would not face under Defendants’ view of the 

law. “But policy arguments cannot supersede the clear 

statutory text.” Id. at 2002. Our role is “to apply, not amend, 

the work of the People’s representatives.” Henson v. 

Santander Consumer USA Inc., 137 S. Ct. 1718, 1726 

(2017). And the Supreme Court has already addressed 

Defendants’ concern: “Instead of adopting a circumscribed 

view of what it means for a claim to be false or fraudulent, 

concerns about fair notice and open-ended liability can be 

effectively addressed through strict enforcement of the Act’s 

materiality and scienter requirements.” Escobar, 136 S. Ct. 

at 2002 (quotation marks, alterations, and citation omitted).

We have similarly explained that the FCA requires “the 

‘knowing presentation of what is known to be false’” and 

that “[t]he phrase ‘known to be false’. . . does not mean 

‘scientifically untrue’; it means ‘a lie.’ The Act is concerned 

with ferreting out ‘wrongdoing,’ not scientific errors.” 

Wang v. FMC Corp., 975 F.2d 1412, 1421 (9th Cir. 1992) 

(citations omitted), overruled on other grounds by United 

States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 

1121 (9th Cir. 2015) (en banc). This does not mean, as the 

district court understood it, that only “objectively false” 

statements can give rise to FCA liability. It means that 

falsity is a necessary, but not sufficient, requirement for FCA 

liability—after alleging a false statement, a plaintiff must 

still establish scienter. Id. (“What is false as a matter of 

science is not, by that very fact, wrong as a matter of 

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morals.”). To be clear, a “scientifically untrue” statement is 

“false”—even if it may not be actionable because it was not 

made with the requisite intent. And an opinion with no basis 

in fact can be fraudulent if expressed with scienter.

We are not alone in concluding that a false certification 

of medical necessity can give rise to FCA liability. In United 

States ex rel. Riley v. St. Luke’s Episcopal Hospital, the Fifth 

Circuit recognized that “claims for medically unnecessary 

treatment are actionable under the FCA.” 355 F.3d 370, 376 

(5th Cir. 2004). The plaintiff alleged the defendants filed 

false claims “for services that were . . . medically 

unnecessary,” id. at 373, and the Fifth Circuit reversed the 

district court’s dismissal for failure to state a claim, 

explaining that because the complaint alleged that the 

defendants ordered medical services “knowing they were 

unnecessary,” the statements were lies, not simply errors. Id.

at 376.

Likewise, in United States ex rel. Polukoff v. St. Mark’s 

Hospital, the Tenth Circuit recognized “[i]t is possible for a 

medical judgment to be ‘false or fraudulent’ as proscribed 

by the FCA[.]” 895 F.3d 730, 742 (10th Cir. 2018). The 

court looked to CMS’s definition of “medically necessary,” 

and held, “a doctor’s certification to the government that a 

procedure is ‘reasonable and necessary’ is ‘false’ under the 

FCA if the procedure was not reasonable and necessary 

under the government’s definition of the phrase.” Id. at 743. 

The Third Circuit reached a similar conclusion in United 

States ex rel. Druding v. Care Alternatives, No. 18-3298, 

2020 WL 1038083 (3d Cir. Mar. 4, 2020), rejecting the 

“bright-line rule that a doctor’s clinical judgment cannot be 

‘false.’” Id. at *7 (holding that, in the context of certifying 

terminal illness, “for purposes of FCA falsity, a claim may 

be ‘false’ under a theory of legal falsity, where it fails to 

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comply with statutory and regulatory requirements,” and that 

“a physician’s judgment may be scrutinized and considered 

‘false,’” id. at *9).

The Eleventh Circuit’s recent decision in United States 

v. AseraCare, Inc., 938 F.3d 1278 (11th Cir. 2019), is not 

directly to the contrary. In AseraCare, the Eleventh Circuit 

held that “a clinical judgment of terminal illness warranting 

hospice benefits under Medicare cannot be deemed false, for 

purposes of the False Claims Act, when there is only a 

reasonable disagreement between medical experts as to the 

accuracy of that conclusion, with no other evidence to prove

the falsity of the assessment.” Id. at 1281 (emphases added). 

We recognize that the court also said “a claim that certifies 

that a patient is terminally ill . . . cannot be ‘false’—and thus 

cannot trigger FCA liability—if the underlying clinical 

judgment does not reflect an objective falsehood.” Id. at 

1296–97. But we conclude that our decision today does not 

conflict with AseraCare for two reasons.

First, the Eleventh Circuit was not asked whether a 

medical opinion could ever be false or fraudulent, but 

whether a reasonable disagreement between physicians, 

without more, was sufficient to prove falsity at summary 

judgment. Id. at 1297–98. Notwithstanding the Eleventh 

Circuit’s language about “objective falsehoods,” the court 

clearly did not consider all subjective statements—including 

medical opinions—to be incapable of falsity, and identified 

circumstances in which a medical opinion would be false.7

7 For example, “if the [doctor] does not actually hold that opinion” 

or simply “rubber-stamp[s] whatever file was put in front of him,” if the 

opinion is “based on information that the physician knew, or had reason 

to know, was incorrect,” or if “no reasonable physician” would agree 

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18 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR.

Second, the Eleventh Circuit recognized that its 

“objective falsehood” requirement did not necessarily apply 

to a physician’s certification of medical necessity—

explicitly distinguishing Polukoff. Id. at 1300 n.15. Rather, 

the court explained that the “hospice-benefit provision at 

issue” purposefully defers to “whether a physician has based 

a recommendation for hospice treatment on a genuinely-held 

clinical opinion” whether a patient was terminally ill.8 Id.; 

see also id. at 1295. In fact, after holding that physicians’ 

hospice-eligibility determinations are entitled to deference, 

the Eleventh Circuit explained that the less-deferential 

medical necessity requirement remained an important 

safeguard: “The Government’s argument that our reading of 

the eligibility framework would ‘tie CMS’s hands’ and 

‘require improper reimbursements’ is contrary to the plain 

design of the law” because “CMS is statutorily prohibited 

from reimbursing providers for services ‘which are not 

reasonable and necessary[.]’” Id. at 1295 (alteration and 

citation omitted). Thus, for the same reason the Eleventh 

Circuit recognized AseraCare did not conflict with Polukoff, 

we believe our decision does not conflict with AseraCare. 

And to the extent that AseraCare can be read to graft any 

type of “objective falsity” requirement onto the FCA, we 

with the doctor’s opinion, “based on the evidence[.]” AseraCare, 

938 F.3d at 1302.

8 A patient must have less than six months to live to be eligible for 

hospice care. AseraCare, 938 F.3d at 1282. But, as the Eleventh Circuit 

explained, CMS “repeatedly emphasized that ‘[p]redicting life 

expectancy is not an exact science,’ [and that] ‘certifying physicians 

have the best clinical experience, competence and judgment to make the 

determination that an individual is terminally ill.’” Id. at 1295 (quoting 

75 Fed. Reg. 70372, 70448 (Nov. 17, 2010) and 78 Fed. Reg. 48234, 

48247 (Aug. 7, 2013)). By contrast, a certification of medical necessity 

is not entitled to deference. 42 C.F.R. § 412.46(b).

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reject that proposition. See Druding, 2020 WL 1038083, 

at *8.

In sum, we hold that the FCA does not require a plaintiff 

to plead an “objective falsehood.” A physician’s 

certification that inpatient hospitalization was “medically 

necessary” can be false or fraudulent for the same reasons 

any opinion can be false or fraudulent. These reasons 

include if the opinion is not honestly held, or if it implies the 

existence of facts—namely, that inpatient hospitalization is 

needed to diagnose or treat a medical condition, in 

accordance with accepted standards of medical practice—

that do not exist. See Polukoff, 895 F.3d at 742–43.

We now turn to Winter’s complaint. We accept all facts 

alleged as true and draw all inferences in Winter’s favor, and 

conclude that her complaint plausibly alleges false 

certifications of medical necessity.

First, the complaint “alleges a ‘scheme’ connoting 

knowing misconduct.” Riley, 355 F.3d at 376. 

RollinsNelson and S&W—and their individual owners 

Rollins, Nelson and Weiner—had a motive to falsify 

Medicare claims and pressure doctors to increase 

admissions. Gardens Regional relied on Medicare for a 

“significant portion” of its revenue, and the spike in 

admissions corresponded with an increased number of 

Medicare beneficiaries in its care. Moreover, the increased 

admissions of RollinsNelson patients began when 

RollinsNelson started managing Gardens Regional.

Second, not only does Winter identify suspect trends in 

inpatient admissions—for example, hospitalizing patients 

for UTIs—she also alleges statistics showing an overall 

increase in hospitalizations once RollinsNelson started 

managing the hospital. For example, the daily occupancy 

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rate jumped by almost 10%, the number of Medicare 

beneficiaries became the highest it had ever been by a 

significant margin, and the admissions rate from 

RollinsNelson nursing homes was over 80%. Plus, the large 

number of admissions that did not meet the criteria, and the 

fact that the vast majority of admissions came from a single 

doctor—Dr. Pascual, who had contractually agreed to use 

the InterQual criteria—decreases the likelihood that any 

given admission was an outlier.

Third, Winter’s detailed allegations as to each Medicare 

claim support an inference of falsity. This is not a complaint 

that “identifies a general sort of fraudulent conduct but 

specifies no particular circumstances of any discrete 

fraudulent statement[.]” Cafasso, 637 F.3d at 1057. The 

complaint identifies sixty-five allegedly false claims in great 

detail, listing the date of admission, the admitting physician, 

the patient’s chief complaint and diagnosis, and the amount 

billed to Medicare. The complaint alleges that each 

admission failed to satisfy the hospital’s own admissions 

criteria—the InterQual criteria that Gardens Regional and 

Dr. Pascual had contractually agreed to use and that Winter’s 

job as Director of Care Management required her to apply. 

And, as the district court recognized, the InterQual criteria 

represent the “consensus of medical professionals’ 

opinions,” so a failure to satisfy the criteria also means that 

the admission went against the medical consensus.

Finally, we note that many of the allegations supporting 

an inference of scienter also support an inference of falsity. 

Cf. AseraCare, 938 F.3d at 1304–05 (remanding for district 

court to consider evidence related to scienter in determining 

falsity on summary judgment). For example, when 

confronted, Dr. Sacapano corroborated Winter’s suspicions, 

telling her that hospital management pressured him into 

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recommending patients for medically unnecessary inpatient 

admission. And following Winter’s numerous attempts to 

bring her concerns to the attention of hospital management, 

Defendants Rollins, Nelson, and Weiner held a meeting 

where they instructed Winter and other staff not to question 

the admissions.

Defendants argue that “Winter has alleged nothing more 

than her competing opinion with the treating physicians who 

actually saw the patients at issue.” The district court 

similarly dismissed the complaint because Winter’s 

“contention that the medical provider’s certifications were 

false is based on her own after-the-fact review of [Gardens 

Regional’s] admission records.” To begin with, an opinion 

can establish falsity. See Paulus, 894 F.3d at 270, 277 

(affirming doctor’s conviction for healthcare fraud by 

performing medically unnecessary procedures and holding 

that experts’ “opinions, having been accepted into evidence, 

are sufficient to carry the government’s burden of proof”); 

cf. AseraCare, 938 F.3d at 1300 (distinguishing Paulus

because in AseraCare “the Government’s expert witness 

declined to conclude that [the clinical judgments of] 

AseraCare’s physicians . . . were unreasonable or wrong”). 

Winter alleges more than just a reasonable difference of 

opinion. In addition to the allegations discussed above, she 

alleges that a number of the hospital admissions were for 

diagnoses that had been disproven by laboratory tests, and 

that several admissions were for psychiatric treatment, even 

though Gardens Regional was not a psychiatric hospital—

and one of those patients never even saw a psychiatrist.

Even if we were to discount Winter’s evaluation of the 

medical records, as the district court did, the other facts she 

alleges would be sufficient to make her allegations of fraud 

plausible.

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But more importantly, assessing medical necessity based 

on an “after-the-fact review” of patients’ medical records 

was Winter’s job. At the motion to dismiss stage, her 

assessment is “entitled to the presumption of truth[.]” Starr 

v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). “The standard 

at this stage of the litigation is not that plaintiff’s explanation 

must be true or even probable. The factual allegations of the 

complaint need only ‘plausibly suggest an entitlement to 

relief.’” Id. at 1216–17 (quoting Ashcroft v. Iqbal, 556 U.S. 

662, 681 (2009)). Winter’s complaint satisfies that 

standard.9

B. Winter properly alleges material false or 

fraudulent statements

The district court also held that Winter failed to allege 

any material false statements. We disagree.

“[T]he term ‘material’ means having a natural tendency 

to influence, or be capable of influencing, the payment or 

receipt of money or property.” 31 U.S.C. § 3729(b)(4). 

“Under any understanding of the concept, materiality ‘looks 

to the effect on the likely or actual behavior of the recipient 

of the alleged misrepresentation.’” Escobar, 136 S. Ct. 

at 2002 (quoting 26 Samuel Williston & Richard A. Lord, 

9 FCA claims must also be pleaded with particularity under Federal 

Rule of Civil Procedure 9(b). Cafasso, 637 F.3d at 1054. While a 

plaintiff need not “allege ‘all facts supporting each and every instance’ 

of billing submitted,” she must “provide enough detail ‘to give 

[defendants] notice of the particular misconduct which is alleged to 

constitute the fraud charged so that [they] can defend against the charge 

and not just deny that [they have] done anything wrong.’” Ebeid ex rel. 

United States v. Lungwitz, 616 F.3d 993, 999 (9th Cir. 2010) (quoting 

United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 

1051–52 (9th Cir. 2001)). Winter’s detailed allegations clearly suffice 

to put Defendants on notice of their alleged false statements.

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Williston on Contracts § 69:12 (4th ed. 2003)) (alteration 

omitted). No “single fact or occurrence” determines 

materiality—“the Government’s decision to expressly 

identify a provision as a condition of payment is relevant, 

but not automatically dispositive.” Id. at 2001, 2003 

(citation omitted). For a false statement to be material, a 

plaintiff must plausibly allege that the statutory violations 

are “so central” to the claims that the government “would 

not have paid these claims had it known of these violations.” 

Id. at 2004; see also id. at 2003 (“[P]roof of materiality can 

include . . . evidence that the defendant knows that the 

Government consistently refuses to pay claims in the mine 

run of cases based on noncompliance with the particular 

statutory, regulatory, or contractual requirement.”).

The district court analyzed whether failure to meet the 

InterQual criteria was material and concluded that it was not 

because “[t]here is no mention of the InterQual criteria in 

any of the relevant statutes or regulations.” This misreads 

the complaint. Winter does not allege that failure to satisfy 

the InterQual criteria made Defendants’ Medicare claims per 

se false—although, as discussed above, she claims that the 

InterQual criteria support her allegations because they 

reflect a medical consensus. Rather, she alleges that 

“[Defendants’] claims for payment . . . were false in that the 

services claimed for (inpatient hospital admissions) were not 

medically necessary and economical,” and that Defendants 

submitted “false certifications of . . . medical necessity.”

We conclude that a false certification of medical 

necessity can be material. The medical necessity 

requirement is not an “insignificant regulatory or contractual 

violation[.]” Escobar, 136 S. Ct. at 2004. Congress 

prohibited payment for treatment “not reasonable and 

necessary for the diagnosis or treatment of illness or injury 

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24 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR.

or to improve the functioning of a malformed body 

member[.]” 42 U.S.C. § 1395y(a)(1)(A). And Medicare 

pays for inpatient hospitalization “only if . . . such services 

are required to be given on an inpatient basis for such 

individual’s medical treatment[.]” Id. § 1395f(a)(3) 

(emphasis added). In fact, Medicare regulations require all 

doctors to sign an acknowledgment that states,

Medicare payment to hospitals is based in 

part on each patient’s principal and 

secondary diagnoses and the major 

procedures performed on the patient, as 

attested to by the patient’s attending 

physician by virtue of his or her signature in 

the medical record. Anyone who 

misrepresents, falsifies, or conceals essential 

information required for payment of Federal 

funds, may be subject to fine, imprisonment, 

or civil penalty under applicable Federal 

laws.

42 C.F.R. § 412.46(a)(2). In addition to highlighting the 

above Medicare statutes and regulations, Winter’s complaint 

alleges that the government “would not” have “paid” 

Defendants’ false claims “if the true facts were known.” In 

sum, Winter alleges that Defendants’ false certification of 

the medical necessity requirement is “so central” to the 

Medicare program that the government “would not have paid 

these claims had it known” that the inpatient hospitalizations 

were, in fact, unnecessary. Escobar, 136 S. Ct. at 2004. 

Thus, Winter has “sufficiently ple[d] materiality at this stage 

of the case.” Campie, 862 F.3d at 907.

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C. Scienter

Defendants urge us to determine whether Winter 

adequately alleged scienter. The district court did not reach 

this issue but expressed doubt that Winter had. Although we 

may consider alternate grounds for upholding the district 

court’s decision, see Islamic Republic of Iran v. Boeing Co., 

771 F.2d 1279, 1288 (9th Cir. 1985), we decline to do so 

here.

We remind the district court, however, that under Rule 

9(b), scienter need not be pleaded with particularity, but may 

be alleged generally. Fed. R. Civ. P. 9(b). A complaint 

needs only to allege facts supporting a plausible inference of 

scienter. United States ex rel. Lee v. Corinthian Colls., 

655 F.3d 984, 997 (9th Cir. 2011). And unlike in common 

law fraud claims, a plaintiff need not prove a “specific intent 

to defraud” under the FCA—the Act imposes liability on any 

person acting “knowingly,” which includes acting with 

“actual knowledge,” as well as acting “in deliberate 

ignorance,” or “in reckless disregard of the truth or falsity of 

the information[.]” 31 U.S.C. § 3729(b)(1). As the Supreme 

Court noted in another Medicare case, “[p]rotection of the 

public fisc requires that those who seek public funds act with 

scrupulous regard for the requirements of law[.]” Heckler v.

Cmty. Health Servs. of Crawford Cty., Inc., 467 U.S. 51, 63 

(1984).

CONCLUSION

We hold that a plaintiff need not plead an “objective 

falsehood” to state a claim under the FCA, and that a false 

certification of medical necessity can be material. 

Accordingly, we reverse the district court’s dismissal of 

Winter’s complaint and remand for further proceedings 

consistent with this opinion.

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