UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, ex rel. 

Harold E. Bondy, M.D.,

Plaintiff-Appellant,

v.

CONSUMER HEALTH FOUNDATION;

HUMANA GROUP HEALTH PLAN,

INCORPORATED; KAISER FOUNDATION

HEALTH PLAN OF THE MID-ATLANTIC

STATES, INCORPORATED,  No. 00-2520

Defendants-Appellees,

and

KAISER PERMANENTE, INCORPORATED,

Defendant,

and

UNITED STATES OF AMERICA,

Party in Interest. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, Chief District Judge.

(CA-00-107-A)

Argued: September 25, 2001

Decided: November 9, 2001

Before WIDENER, NIEMEYER, and MICHAEL, Circuit Judges.

Affirmed by unpublished per curiam opinion. 
COUNSEL

ARGUED: Alan Mark Grayson, GRAYSON & KUBLI, P.C.,

McLean, Virginia, for Appellant. Kathleen Heenan McGuan, REED

SMITH, L.L.P., Washington, D.C., for Appellees. ON BRIEF: Jacqueline E. Bennett, REED SMITH, L.L.P., Washington, D.C.; James

P. Holloway, Megan Tinker, PROSKAUER ROSE, L.L.P., Washington, D.C.; David W. O’Brien, CROWELL & MORING, L.L.P.,

Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

Dr. Harold Bondy commenced this qui tam action on behalf of the

United States against the successors to Group Health Association,1 a

health maintenance organization ("HMO"), for submitting false

claims to the United States in violation of the False Claims Act, 31

U.S.C. §§ 3729-34. He also alleged that Group Health Association

terminated his employment as a doctor in retaliation for his investigating the claim. On cross-motions for summary judgment, the district

court entered judgment in favor of the defendants on the grounds that

(1) Bondy’s evidence failed to establish that Group Health Association submitted any false claims to Medicare, and (2) Bondy’s retaliation claim was barred by res judicata in that Bondy previously sued

Group Health Association unsuccessfully in connection with the same

termination of employment. We affirm. 

1The assets of Group Health Association were transferred through various transactions to Consumer Health Foundation, Humana Group Health

Plan, Inc., and Kaiser Permanente, Inc., all of whom Bondy named as

defendants. 

2 UNITED STATES v. CONSUMER HEALTH FOUNDATION
I

Bondy commenced this action against the successors of Group

Health Association (collectively "GHA") in December 1998, alleging

in two counts that GHA, as an HMO, submitted false claims to Medicare for the years 1988 through 1994 by failing to give Medicare

credits on "cost reports" submitted to Medicare for reimbursement

that GHA received from its patients’ private insurers. He claimed that

by receiving double payment for health care services rendered — one

payment from Medicare and one from the private insurers — GHA

violated regulations requiring that GHA give Medicare credit for private insurance reimbursements and defrauded the United States by

submitting false claims for reimbursement. The complaint alleged in

the third count that GHA terminated Bondy’s employment in retaliation for investigating the claim. The United States declined to take

over the case, and Bondy has pursued it individually. 

At the close of discovery, the district court granted summary judgment in favor of GHA on all three counts. With respect to the false

claim counts, the court concluded that Bondy had "not made out a

case for GHA’s liability under the False Claim Act" because he "ha[d]

no evidence that GHA submitted false claims, nor ha[d] he identified

what those claims are." Specifically, the court found that two methods

of accounting for third-party insurer payments were available and

Bondy could not exclude the possibility that GHA had used one of

those methods properly. With regard to the third count for retaliatory

termination, the court concluded that it was barred by res judicata. 

To treat its Medicare patients, GHA entered into a contractual

arrangement with the Health Care Financing Agency ("HCFA"), the

agency charged with administering Medicare. Under the arrangement,

GHA was paid a fixed monthly fee for each of its Medicare patients.

But at the end of the year, GHA was required to account for its actual

costs incurred in treating the Medicare patients during the year by filing "costs reports." If GHA incurred more expenses than it received

through the payment of fixed fees, HCFA would reimburse GHA that

amount. On the other hand, if GHA incurred less expenses, it would

refund the excess fees to HCFA. 

As part of the cost reports, GHA had to give HCFA credit for sums

received by GHA on behalf of its patients from third-party private

UNITED STATES v. CONSUMER HEALTH FOUNDATION 3
insurers. Bondy contends that in accounting to HCFA, GHA did not

give HCFA credit for approximately $38 million worth of payments

received from private insurers on behalf of GHA’s Medicare patients.

Gary Donner, who was a GHA consultant and who was designated

as GHA’s expert witness, testified that there are two acceptable methods for accounting to HCFA for the third-party payments, and he

stated that "either method is acceptable to Medicare." Both involved

calculation of an "apportionment statistic" which divides costs attributable to Medicare and non-Medicare patients. In this case, Donner

indicated that GHA had employed the second method. 

Bondy contended that neither method was appropriate and that the

accounting for third-party payments must be included on the face of

the cost reports submitted to Medicare and not buried within constituent calculations. 

Because GHA was suffering from financial difficulties in the early

1990s (and unrelated to the present dispute), HCFA initiated an independent audit of GHA’s cost reports for the years 1988 through 1994.

With respect to the reports covering the years 1988 through 1991, the

independent auditor’s report states: 

There are several revenue accounts that [GHA] is not properly offsetting against expenses, as required by the Provider

Reimbursement Regulations. In addition, [GHA] does not

maintain records that detail the sources of these revenue

accounts that would allow them to be directly offset against

the related expenses. These third-party accounts include . . .

Third Party COB [coordination of benefits] Reimbursement.

* * *

We did not propose an adjustment to [GHA’s] expenses for

these offsets because our test indicated that such an adjustment would not significantly alter reimbursable costs. 

Thus, the auditor found some problems with GHA’s accounting methods but did not believe those problems warranted any formal adjust4 UNITED STATES v. CONSUMER HEALTH FOUNDATION
ment. As a result of the independent audits, HCFA and GHA signed

a settlement agreement based on the final reimbursement figures for

those years. 

Bondy was a staff physician at GHA from 1975 until 1992, and in

1991 he was named GHA’s physician of the year. In addition to his

employment with GHA, Bondy maintained a medical practice on the

side, which GHA permitted within certain limitations. In September

1992, Bondy received a memorandum from GHA directing that

Bondy send GHA a payment that Bondy had received from Blue

Cross/Blue Shield for treating a patient who Bondy contended was

part of his private practice. As a result of this memorandum and subsequent discussions with GHA, Bondy began to suspect that GHA

was double billing HCFA for work done by its physicians. GHA, on

the other hand, suspected that Bondy was diverting patients to his private practice, in violation of his arrangement with GHA. Based on

this violation, GHA terminated Bondy’s employment on December

29, 1992. 

Bondy filed an action against GHA for wrongful termination in

violation of the Age Discrimination in Employment Act, 29 U.S.C.

§§ 621-34. Because of his failure to respond to a motion for summary

judgment, however, judgment was entered against Bondy in that

action. 

Despite his termination, Bondy continued his investigation into

GHA’s billing practices for seven years, talking with several former

GHA employees and requesting documents from the United States

under the Freedom of Information Act, 5 U.S.C. § 552. The district

court considered all of the testimony, documents, and other information collected by Bondy in ruling on cross-motions for summary judgment filed by the parties. In connection with Bondy’s claims under

the False Claims Act, the court concluded that Bondy had failed to

advance facts sufficient to establish that GHA had made false claims

to Medicare. And in connection with Bondy’s claim that his employment was terminated in retaliation for his investigation, the court concluded that Bondy’s prior suit for age discrimination barred his filing

another action for wrongful termination. This appeal followed. 

UNITED STATES v. CONSUMER HEALTH FOUNDATION 5
II

Bondy contends first that the district court erred in entering summary judgment against him on his claims under the False Claims Act

because he advanced sufficient facts, which, if resolved in his favor

at trial, would entitle him to relief under the False Claims Act.2 Our

examination of the record, however, leads us to the same conclusion

reached by the district court. 

First, neither of Bondy’s two expert witnesses — Phil Hefner and

Dave Cotton — was able to advance Bondy’s case because neither

was able to testify that GHA had actually submitted false claims to

Medicare. Hefner testified in his deposition that he had never filed a

Medicare cost report on behalf of an HMO, audited a cost report, or

reviewed the audit of a cost report. He also conceded that he is not

an expert in cost reporting or in how third-party reimbursements

impact cost reporting. Finally, he admitted that, without reviewing

more of GHA’s claims, he could not state that GHA’s Medicare

reporting was false or illegal. Cotton was similarly unhelpful to

Bondy’s case. Cotton’s expert report stated that he only reviewed

HCFA regulations and Bondy’s amended complaint (with attachments) in drawing his conclusions. Thus, he was working with a limited understanding of how GHA prepared its cost reports. He testified

during his deposition that it was unclear from GHA’s cost reports

whether or not it had offset third party revenue properly, but he did

not testify that GHA had not done so. Furthermore, Cotton testified

that he could not determine from his examination of the cost reports

whether there was any double billing and that he could not offer an

opinion as to whether GHA had actually engaged in double billing.

2GHA challenges our jurisdiction to consider Bondy’s claims under the

False Claims Act, arguing that (1) the claims are based on "public disclosures," and (2) Bondy was not the "original source" of the information.

31 U.S.C. § 3730(e)(4). It argues that information that Bondy obtained

through FOIA amounts to "public disclosures." FOIA information, however, is not among the items listed in § 3730(3)(4)(A) as "public disclosures" and therefore does not operate as a jurisdictional bar. See United

States ex rel. Eberhardt v. Integrated Design & Constr., Inc., 167 F.3d

861, 870 (4th Cir. 1999) (holding that the list of sources in § 3730(c)(4)

is "exclusive"). 

6 UNITED STATES v. CONSUMER HEALTH FOUNDATION
Second, Bondy’s three main fact witnesses were similarly unable

to testify that GHA had submitted false claims to HCFA because none

of them were involved with, nor had any concrete knowledge of, the

preparation of GHA’s final submissions to HCFA. Cynthia Wilson

was the former assistant supervisor in GHA’s coordination of benefits

unit. She testified at her deposition that GHA would receive refund

checks "two to three" times a week from third-party insurers and

rather than sending them to the "Medicare section" that handled Medicare third-party reimbursement, the checks were deposited into

GHA’s general account. When Wilson raised a question about this

with her supervisor, Ted Weinberger, Weinberger told her, "Do as

you are told. I am your boss." Although unexplained, the deposit of

third-party checks in the general account does not suggest they were

not accounted for, and this evidence does not advance Bondy’s

claims. His claims depend on the truthfulness of GHA’s accounting

to HCFA and Wilson’s testimony does not go to that issue. 

Bondy relies heavily upon the statements of Margaret Gary who

was also a former GHA supervisor in its coordination of benefits unit.

Sometime during 1996 or 1997, Bondy telephoned Gary at home,

secretly tape-recording the conversation.3 During the conversation,

Gary stated that GHA received payments from Medicare as well as

from fee-for-service third-party insurers but did not inform Medicare

that GHA had received the second payment, believing this to be a

"double charge." She also stated that she had raised this issue with

Weinberger. At her deposition, however, Gary repudiated these statements, stating she was intoxicated when she made them. Moreover,

while the statements, taken alone, suggest the possibility of wrongdoing, there is no evidence to support actual wrongdoing. The district

court found that Gary was not involved with the preparation of the

cost reports and did not know how third-party payments were

included in those reports. Thus, she did not have any first-hand information about how GHA billed Medicare or apportioned its revenue.

Bondy’s third fact witness, Arun Potdar, who was an accountant in

charge of preparing GHA’s original cost reports for the years 1988

3GHA argues that this conversation was inadmissible hearsay. Because

we find that this conversation does not help Bondy’s case, we do not

reach the hearsay issue. 

UNITED STATES v. CONSUMER HEALTH FOUNDATION 7
through 1991, testified that when he saw Donner’s revised reports, he

"had a suspicion." The revised reports submitted for those years did

not contain third-party offsets even though the original versions of

those reports explicitly showed them. He believed that the revised

method of preparing the cost reports "was like adding $4 to $6 million

to [GHA’s] annual reimbursement" and that this result "surprised"

him. He testified that the only way to change the reimbursement figure from what he had originally included in the cost reports was to

"manipulate[ ] the numbers." Although the revised cost reports raised

Potdar’s suspicions, Potdar was unable to testify that GHA submitted

any false or fraudulent information to Medicare. Indeed, Potdar did

not work in GHA’s accounting department when the revised cost

reports were prepared. Although Potdar’s testimony, like that of Wilson and Gary, may raise some question about GHA’s reporting methods, he could not testify as to any specific fraudulent activity or claim

by GHA. He was not involved with the preparation of the revised cost

reports for 1988 through 1991 nor with the cost reports submitted for

1992 through 1994, and he offers no testimony or documentary evidence that disputes GHA’s statement that GHA effectively used the

"apportionment statistic" method for accounting for the third-party

payments, even though it did not reveal an explicit offset. 

In addition to the testimony of these five witnesses, Bondy

presented substantial documentary evidence in support of his claims,

notably the original and revised cost reports. It is undisputed that

there was a difference between those two reports of several million

dollars and that this difference arose from the offsetting of third-party

revenue by GHA. The issue that remains, however, is whether GHA

properly offset or included the third-party revenues in their calculation of Medicare reimbursements. The defendants posit that their calculation of the "apportionment statistic" properly accounted for those

revenues. They also state in their brief that HCFA "approved" of the

calculation method chosen by GHA. 

The record, however, is devoid of any statements by HCFA that

specifically approved of GHA’s methods or, for that matter, anything

that documents GHA’s methods. The only explicit reference in the

record that HCFA approved of GHA’s methods were statements by

Donner who both worked and testified as an expert witness for GHA.

The burden in this case, however, is not on GHA to show that HCFA

8 UNITED STATES v. CONSUMER HEALTH FOUNDATION
approved of GHA’s apportionment statistic method but on Bondy to

show that HCFA disapproved of that method or that the method chosen was not in accordance with HCFA’s established procedures. As

the district court concluded, he cannot do either. 

The independent auditor who reviewed GHA’s revised reports for

1988 through 1991 did conclude that GHA "is not properly offsetting"

some revenue and that GHA did not "maintain records that detail the

sources of these revenue accounts" that would permit for proper offsetting of that revenue. But the auditor did not propose any adjustment based on those failures. For the 1992 through 1994 cost reports,

the auditor initially recommended an adjustment but, upon receipt of

some documentation from GHA, withdrew that recommendation. Furthermore, GHA and HCFA entered into a binding settlement agreement based on the final reimbursement figures. Bondy does not

present any evidence that would indicate why this settlement agreement should not permit a reasonable inference that HCFA approved

of GHA’s methods. 

In sum, although the documentary evidence, like the testimonial

evidence, may have created some suspicion about GHA’s accounting

methods, Bondy was unable to provide the district court with evidence sufficient to carry his burden of showing that GHA submitted

a false claim to Medicare or even to rebut the inference to be drawn

from HCFA’s acceptance of GHA’s accounting. None of his evidence

can move beyond "mere speculation." See Beale v. Hardy, 769 F.2d

213, 214 (4th Cir. 1985) (holding that, for purposes of defeating a

motion for summary judgment, a party "cannot create a genuine issue

of material fact through mere speculation or the building of one inference upon another"). Therefore, we affirm the district court’s order

grating summary judgment for GHA on the first two counts of

Bondy’s complaint. 

III

Bondy also contends that the district court erred in entering summary judgment on his retaliation claim, filed under 31 U.S.C.

§ 3730(h). The court found that claim barred by res judicata. 

The three elements of res judicata are well established. See Shoup

v. Bell & Howell, 872 F.2d 1178 (4th Cir. 1989). First, the parties in

UNITED STATES v. CONSUMER HEALTH FOUNDATION 9
the prior litigation and the subsequent litigation must be the same or

in privity with each other. Id. at 1179. Second, the claims in the subsequent litigation "must be substantially the same as those in the prior

litigation." Id. Third, the prior litigation must have "resulted in a judgment on the merits." Id. 

The parties in Bondy’s claim of age discrimination against GHA

filed in 1995 are the same or are in privity with the parties in this

case. In the present case, the defendants are Consumer Health Foundation, Humana Group Health Plan, Inc., and Kaiser Permanente, Inc.

In the prior litigation, the defendants were GHA and Humana; Consumer Health and Kaiser are successors-in-interest to GHA. Therefore, the parties are in privity with each other. Bondy argues that the

parties are not the same for the purposes of res judicata because in

a qui tam action, the real party-in-interest is the United States. But 31

U.S.C. § 3730(h) authorizes claims based on retaliatory terminations

by employees themselves, not by the United States on behalf of the

employees. Thus, Bondy, as an employee, not the United States, is the

real party-in-interest. 

The claims in the two suits are also "substantially the same."

Although age discrimination and retaliatory termination suits are

based on different statutory violations, the inquiry is whether the two

suits "‘arise[ ] out of the same transaction or series of transactions.’"

Keith v. Aldridge, 900 F.2d 736, 740 (4th Cir. 1990) (quoting Hartnett

v. Billman, 800 F.2d 1368, 1373 (4th Cir. 1986)). In this case, the

same transaction is involved — Bondy’s termination — and res judicata bars relitigation not only of every claim actually presented in the

prior litigation but also "every claim that might have been presented."

In re Varat Enters., Inc., 81 F.3d 1310, 1315 (4th Cir. 1996). There

can be no question about Bondy’s right to have asserted the retaliation

claim in 1995, as he had already begun investigating GHA’s billing

practices when he was terminated. 

Finally, the prior judgment against Bondy was "on the merits."

Bondy contends otherwise. In the earlier age discrimination suit, the

district court granted summary judgment for the defendants because

Bondy failed to submit a response to the defendants’ motion for summary judgment. While a careful examination of Bondy’s claim on the

merits may not therefore have occurred, the judgment was neverthe10 UNITED STATES v. CONSUMER HEALTH FOUNDATION
less on the merits. It is well settled that grants of summary judgment

are considered "on the merits" for the purposes of res judicata. Shoup,

872 F.2d at 1181. Indeed, for purposes of res judicata, default judgments are considered to be "on the merits." Credit Alliance Corp. v.

Williams, 851 F.2d 119, 122 (4th Cir. 1988). 

Because the three elements of res judicata are met here, we affirm

the district court’s grant of summary judgment for the defendants on

Bondy’s third count. 

For the reasons given, the judgment of the district court is

AFFIRMED.

UNITED STATES v. CONSUMER HEALTH FOUNDATION 11