PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

No. 10-2747

______________

UNITED STATES EX REL. CHARLES WILKINS;

DARYL WILLIS,

Appellants

v.

UNITED HEALTH GROUP, INCORPORATED; 

AMERICHOICE;

AMERICHOICE OF NEW JERSEY, INC.

______________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civ. No. 1-08-cv-03425)

Honorable Robert B. Kugler, District Judge

______________

Argued March 24, 2011

BEFORE: FUENTES, SMITH, and GREENBERG, 

Circuit Judges
2

(Filed: June 30, 2011)

______________

Ross Begelman, Esq. (argued)

Marc M. Orlow, Esq.

Begelman, Orlow & Melletz

411 Route 70 East, Suite 245

Cherry Hill, NJ 08034

 Attorneys for appellants

Michael C. Theis, Esq. (argued)

Jaasi J. Munanka, Esq.

Hogan Lovells US

1200 Seventeenth Street, Suite 1500

Denver, CO 80202

William P. Deni, Jr., Esq.

Bruce A. Levy, Esq.

Ellen Lubensky, Esq.

Gibbons

One Gateway Center

Newark, NJ 07102-5310

 Attorneys for appellees

Tony West , Esq.

Assistant Attorney General

Paul J. Fishman, Esq.

United States Attorney
3

Douglas N. Letter, Esq.

Teal Luthy Miller, Esq. (argued)

Attorneys, Appellate Staff

Civil Division, Room 7234

U.S. Department of Justice

950 Pennsylvania Ave., N.W.,

Washington, DC 20530-0001

 Attorneys for amicus curiae United States

______________

OPINION OF THE COURT

______________

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on an appeal from 

an order the District Court entered on May 13, 2010, granting 

the motion of appellees United Health Group, AmeriChoice, and 

AmeriChoice-New Jersey (collectively “appellees”) under 

Federal Rule of Civil Procedure 12(b)(6) to dismiss Charles 

Wilkins‟ and Daryl Willis‟ (collectively “appellants”) qui tam

action1based on the False Claims Act (“FCA”), 31 U.S.C. § 

 

1 Private individuals can bring qui tam actions on behalf of the 

Government in exchange for their right to retain some portion of 

any resulting damages award. See Schindler Elevator Corp. v. 

U.S. ex rel. Kirk, 131 S.Ct. 1885, 1889 (2011); Vt. Agency of 
4

3729, for failure to state a claim on which relief may be granted. 

Appellants have alleged that appellees, through their 

participation in federally funded health insurance programs, 

certified that they were in compliance with all healthcare laws 

and regulations even though they knowingly violated several 

Medicare marketing regulations, resulting in their submission of 

false claims for payment to the federal government. Appellants 

further alleged that AmeriChoice-NJ violated the FCA by 

illegally providing kickbacks in violation of the Medicare AntiKickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, to a New 

Jersey medical clinic to induce the clinic to switch its patients to 

AmeriChoice-NJ‟s Medicare and Medicaid programs. 

Moreover, appellants have alleged that AmeriChoice-NJ agents 

violated the AKS by enticing doctors to provide the names of 

patients eligible for Medicare and Medicaid programs. Thus, 

this action involves two distinct types of claims with which we 

will deal separately. 

In addition to involving two distinct types of claims, the 

action implicates the two medical programs to which we already 

have referred, Medicare, a federally subsidized health insurance 

program for the elderly and certain disabled persons, see 42 

U.S.C. § 1395c and d, and Medicaid, a cooperative federal-state 

public assistance program pursuant to which the federal 

government makes matching funds available to pay for certain 

medical services furnished to needy individuals, see 42 U.S.C. § 

1396. Some elderly poor are “dual eligible” under both 

 

Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 769-70, 120 

S.Ct. 1858, 1860-61 (2000).
5

programs.

2

 Though appellants mention both programs in their 

complaint, this case is essentially a Medicare case arising, as the 

District Court indicated at the outset of its opinion, “out of 

alleged fraudulent claims to Medicare.” United States ex rel. 

Wilkins v. United Health Group, Inc., Civ. No. 08-3425, 2010 

U.S. Dist. LEXIS 47080, at *1 (D.N.J. May 13, 2010) 

(“Wilkins”). 

The District Court held that appellants‟ allegationsfailed 

to state a plausible claim for relief under the FCA for two 

reasons: (1) appellants failed to identify a single false claim that 

appellees submitted to the Government, and (2) the marketing 

regulations that appellants claimed appellees violated were not 

relevant to the Government‟s decision to pay appellees‟ 

Medicare claims. In addition, the Court dismissed appellants‟ 

AKS claims because they did not include an allegation that 

appellees certified that they were in compliance with the AKS or 

that such compliance was a relevant consideration when the 

Government processed their Medicare claims. Inasmuch as we 

agree with the Court‟s disposition of appellants‟ Medicare 

marketing regulations claims but disagree with its holding with 

respect to appellants‟ AKS claims, we partially will affirm and 

 

2 Appellants state in their brief that dual eligible individuals 

receive their prescription drug coverage from Medicaid, but 

amicus curiae United States seems to describe Medicaid‟s 

responsibility more broadly with respect to dual eligible 

individuals. We are not concerned, however, with the division 

between Medicare and Medicaid of responsibility for benefits 

for dual eligible individuals on this appeal and thus will not 

address that point.
6

partially will reverse the Court‟s May 13, 2010 order and we 

will remand the case to the District Court for further 

proceedings.

II. FACTS AND PROCEDURAL HISTORY

In view of the procedural posture of this case, we set 

forth the facts as appellants have alleged them, and decide the 

appeal on the basis of those allegations and, in doing so, will 

construe the complaint in the light most favorable to appellants. 

See Lexington Nat. Ins. Corp. v. Ranger Ins. Co., 326 F.3d 416, 

417 (3d Cir. 2003). 

United Health provides access to health care services and 

resources and AmeriChoice and AmeriChoice-NJ are United 

Health subsidiaries offering Medicare Advantage (“MA”) 

plans.3 Under MA plans, AmeriChoice and AmeriChoice-NJ 

provide individuals enrolled in Medicare with health care 

 

3 Medicare Advantage, otherwise known as Medicare “Part C,” 

authorizes qualified individuals to opt out of traditional fee-forservice coverage under Medicare Parts A and B and enroll in 

privately-run managed care plans that provide coverage for both 

inpatient and outpatient services. 42 U.S.C. §§ 1395w-21, 

1395w-28. United Health also offers qualified individuals 

coverage under Medicare Part D which is a voluntary 

prescription drug benefit program. See 42 U.S.C. § 1395w-101 

et seq.
7

services and submit claims to the Government for 

reimbursement based on the number of patients enrolled in their 

Medicare programs.4 Organizations which provide services 

under Medicare do so pursuant to contracts with the Centers for 

Medicare and Medicaid Services (“CMS”), a division of the 

Department of Health and Human Services charged with 

administering the Medicare and Medicaid programs. See 42 

C.F.R. § 422.503(a). Each month, as participants offering MA 

plans, appellees certify to CMS that they continue to comply 

with all of the CMS MA guidelines including MA marketing 

regulations and the AKS.

Wilkins and Willis began employment with United 

Health Group and AmeriChoice in 2007, Willis as a general 

manager for Medicare/Medicaid marketing and sales and 

Wilkins as a sales representative. In April 2008, United Health 

terminated Wilkins‟ employment in reaction to his complaints 

concerning what he perceived were United Health‟s illegal 

practices which are the basis for this action. Similarly, at some 

point during 2008, United Health, after demoting Willis for his 

conduct in making complaints to his supervisors about what he 

perceived were United Health‟s illegal practices, went further 

 

4

The Government pays MA plan participants a set amount of 

money based on the plans‟ enrollees‟ risk factors and other 

characteristics rather than paying them a fee for specific services 

performed. See 42 C.F.R. §§ 422.300 et seq. CMS makes 

advance monthly payments to participants calculated on the 

number of enrollees, adjusted to reflect risk and variations in 

rates within the plan‟s service area. See 42 C.F.R. §§ 422.304, 

423.315. 
8

and terminated his employment. 

On July 10, 2008, appellants filed this qui tam action 

under seal in the District Court alleging that appellees‟ sales 

representatives violated the FCA by offering physicians illegal 

kickbacks and violating MA marketing rules while accepting 

payments from government funded health insurance programs. 

Specifically, appellants alleged that: (1) United Health used 

marketing flyers that CMS did not approve beforehand; (2) its 

licensed sales agents engaged in marketing activities in the 

waiting rooms of clinics and doctors‟ offices; (3) non-licensed 

individuals engaged in marketing activities; (4) United Health 

commonly used an excessive number of sales representatives at 

presentations in an attempt to “overwhelm the public;” (5) sales 

representatives asked persons to raise their hands at 

presentations if they were eligible for both Medicare and 

Medicaid; (6) marketing personnel chased people in 

supermarkets to ask them whether they were dual eligible; (7) 

United Health used brokers to engage in door-to-door 

solicitation; (8) United Health sales agents gave out prizes at 

Medicare presentations in excess of $15 in value contrary to 

CMS guidelines; (9) AmeriChoice‟s sales representatives paid 

$27,000 to a medical clinic, Reliance Medical Group, to switch 

certain eligible beneficiaries to its Medicare and Medicaid plans; 

(10) United Health‟s sales representatives offered payments to 

physicians in exchange for the physicians providing appellees 

with the names of potential new enrollees eligible for Medicare 

and Medicaid; (11) United Health failed to maintain and 
9

implement a compliance program.5 App. at 39-46. 

After appellants filed this action the Government 

investigated their claims, and, during the investigation, in 

accordance with the FCA‟s requirements the case remained 

under seal. On May 26, 2009, after the Government finished its 

investigation, it notified the parties that it would not intervene in 

the case. See 31 U.S.C. § 3730(b)(4)(B).6 On August 5, 2009, 

appellants filed an amended complaint which pleaded an FCA 

claim predicated on the allegations we discuss above and nine 

claims based on violations of state law.7 Notwithstanding the 

seeming specificity of appellants‟ complaint, they do not 

identify any specific claim for payment that United Health made 

 

5

Even though this last claim appears to be separate from 

appellants‟ claims based on marketing violations and illegal 

kickback payments, appellants do not make any separate 

arguments based on appellees‟ failure to maintain a compliance 

program.

6

The Government did not move to dismiss the action, as it could 

have done under 31 U.S.C. § 3730(c)(2)(A).

7

 The state law claims alleged that appellees‟ actions violated 

state false claims act provisions of New Jersey, Florida, Indiana, 

Michigan, Tennessee, Texas, and New York law. In addition, 

Wilkins and Willis individually alleged that appellees violated 

the New Jersey Conscientious Employee Protection Act, N.J. 

Stat. Ann. § 34:19-1 et seq. (West 2000). These state law 

allegations are not at issue in this appeal. 
10

to the federal Government in violation of the FCA. The 

complaint, however, does allege that CMS makes advanced 

monthly payments to United Health for each enrollee in its plans 

and that United Health certifies each month its “continued 

compliance with all of the CMS [Medicare Advantage] 

Guidelines and based on such certification, United Defendants 

continues [sic] to receive the monthly capitation payment.” Am. 

Compl. at 10.8 Thus appellants contend that appellees, by 

submitting claims for payment to CMS while failing to comply 

with the Medicare laws and regulations, including the AKS, 

presented false claims to the Government in violation of the 

FCA.

After the Government declined to intervene, appellees 

moved to dismiss the complaint under Federal Rule of Civil 

Procedure 12(b)(6) for failure to state a claim upon which relief 

could be granted and Federal Rule of Civil Procedure 9(b) for 

failure to plead fraud with particularity.9 The District Court 

granted appellees‟ motion for failure to state a claim and 

therefore did not address appellees‟ alternative argument for 

dismissal that appellants failed to plead their claims with the 

 

8

The parties have included the original complaint but not the 

amended complaint in their joint appendix. We, however, have 

examined both versions of the complaint, and have considered 

both in our disposition of this appeal. 

9 We have held that plaintiffs must plead FCA claims with 

particularity in accordance with Rule 9(b). See U.S. ex rel. 

LaCorte v. SmithKline Beecham Clinical Labs., 149 F.3d 227, 

234 (3d Cir. 1998).
11

particularity that Rule 9(b) requires. The Court dismissed the 

complaint because appellants did not identify “even a single 

claim for payment to the Government.” Wilkins, 2010 U.S. 

Dist. LEXIS 47080, at *13. Moreover, the Court held that 

United Health‟s failure to comply with marketing guidelines and 

regulations that were not relevant to the Government‟s decision 

to issue payment could not be the basis for a recovery for an 

FCA violation. The Court also rejected appellants‟ FCA claims 

that they based on violations of the AKS, finding that appellants 

failed to allege that United Health certified compliance with the 

AKS and also failed to allege that the Government predicated its 

funding decisions on such a certification. Finally, the Court 

declined to exercise supplemental jurisdiction over appellants‟ 

state law claims and denied appellants‟ request for leave to 

amend the complaint. 

Appellants filed a timely notice of appeal from the 

District Court‟s May 13, 2010 order, challenging the Court‟s 

decision granting appellees‟ motion to dismiss and arguing that, 

in any event, when the Court determined that it would dismiss 

the complaint it should have done so without prejudice and/or 

allowed appellants to amend their complaint. The Government, 

though declining to intervene in the District Court and 

expressing no opinion on the merits of appellants‟ claims, has 

filed an amicus curiae brief urging us to reverse the District 

Court‟s order to the extent that the Court concluded that an FCA 

claim cannot survive if the plaintiff does not identify a specific 

false claim that a defendant submitted for payment and that 

appellants‟ kickback allegations did not state a claim for relief 

under the FCA. 
12

III. JURISDICTION AND STANDARD OF REVIEW

The District Court had jurisdiction over appellants‟ FCA 

claims under 31 U.S.C. § 3732(a) and 28 U.S.C. § 1331 and 

supplemental jurisdiction over appellants‟ state law claims under 

28 U.S.C. § 1367. We have jurisdiction to review the District 

Court‟s final order under 28 U.S.C. § 1291.

We exercise plenary review of the District Court‟s order 

granting appellees‟ motion to dismiss for failure to state a claim. 

See Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364, 

367 (3d Cir. 2011). As we have indicated, we accept all factual 

allegations in the complaint as true, construe the complaint in 

the light most favorable to appellants, and determine whether, 

under any reasonable reading of the amended complaint, 

appellants may be entitled to relief. Id. In this determination 

“[t]he issue is not whether [appellants] will ultimately prevail 

but whether [they are] entitled to offer evidence to support the 

claims.” See Maio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir. 

2000) (citations and internal quotation marks omitted). We 

review the District Court‟s decisions to dismiss the complaint 

with prejudice and deny appellants‟ request for leave to amend 

their complaint for an abuse of discretion. See In re NAHC, Inc. 

Sec. Litig., 306 F.3d 1314, 1332 (3d Cir. 2002); Lake v. Arnold, 

232 F.3d 360, 373 (3d Cir. 2000). 

IV. DISCUSSION

A. The Record on Appeal
13

Before we discuss the merits of appellants‟ claims we 

address a dispute between the parties concerning whether we 

should consider certain exhibits that appellants have included in 

the appendix. Though ordinarily the parties on an appeal do not 

have a dispute over what documents should be in the record, in 

this case we address this question because appellants have 

included two documents in the joint appendix, without our 

leave, that neither party filed in the District Court and that the 

Court therefore did not consider, i.e., the February 13, 2008 

testimony of Kerry Weems, Acting Administrator for CMS, 

before the Senate Finance Committee on “Selling to Seniors: 

The Need for Accountability and Oversight of Marketing by 

Medicare Private Plans, Part 2” and a December 2009 report the 

United States Government Accountability Office authored on 

Medicare marketing. See addendum to app. at 1-58. Appellants 

contend that we should consider these materials as they are a 

matter of “public record” which “are inextricably intertwined 

and connected to items that are part of the record . . . .” 

Appellant‟s br. at 12-13.

Though we do not doubt the authenticity of these 

documents, nevertheless we will not consider them because the 

parties did not present them to the District Court and we do not

find any indication in the record that the Court considered them 

on its own initiative. See Fed. R. App. P. 10(a) (stating that 

record on appeal is composed of original papers and exhibits 

filed in district court, transcript of proceedings, if any, and a

certified copy of docket entries prepared by district court clerk); 

Fed. R. App. P. 30 (limiting contents of a party‟s appendix to 

record before district court). While we recognize that there 

might be “exceptional circumstances” which could justify our 
14

consideration of these materials even though they were not 

presented to the District Court, we discern no such 

circumstances on the appeal. See Acumed LLC v. Advanced 

Surgical Servs., Inc., 561 F.3d 199, 226 (3d Cir. 2009). 

We recognize that appellants argue that we should take 

judicial notice of the two documents as they are part of the 

“public record.” Appellant‟s reply br. at 2. Although a court of 

appeals may take judicial notice of a matter of public record not 

presented to the district court when reviewing the disposition of 

a motion to dismiss under Rule 12(b)(6), see, e.g., Papasan v. 

Allain, 478 U.S. 265, 268 n.1, 106 S.Ct. 2932, 2935 n.1 (1986), 

we think that ordinarily a court of appeals should not take 

judicial notice of documents on an appeal which were available 

before the district court decided the case but nevertheless were 

not tendered to that court, the precise situation here.10 See Zell 

v. Jacoby-Bender, Inc., 542 F.2d 34, 38 (7th Cir. 1976) (refusing 

to take judicial notice of documents filed in companion case to 

undermine trial court‟s findings where to do so would violate 

rule that appellate court must consider only record before trial 

court). Therefore, we will make our analysis by considering 

only the record that the parties made in the District Court for 

that Court‟s consideration of appellees‟ motion to dismiss.11 

 

10 Weems testified before appellants filed this action and the 

Accountability Office submitted the December 2009 report after 

appellants filed the action but before the District Court decided 

the case.

11 We add, however, that even if we expanded the record to 
15

B. The False Claims Act

1. FERA Amendments

At this early point in our discussion we consider a recent 

amendment to the FCA. On May 20, 2009, Congress enacted 

the Fraud Enforcement and Recovery Act of 2009 (FERA), Pub. 

L. No. 111-21, 123 Stat. 1617 (2009), which amended the FCA 

and re-designated 31 U.S.C. § 3729(a)(1) as 31 U.S.C. § 

3729(a)(1)(A) and 31 U.S.C. § 3729(a)(2) as 31 U.S.C. § 

3729(a)(1)(B). The pre-FERA version of the FCA, imposed 

liability on:

[A]ny person who—

(1) knowingly presents, or causes to be presented, 

to an officer or employee of the United States 

Government or a member of the Armed Forces of 

the United States a false or fraudulent claim for 

payment or approval; 

(2) knowingly makes, uses, or causes to be made 

or used, a false record or statement to get a false 

or fraudulent claim paid or approved by the 

Government.

31 U.S.C. § 3729(a)(1)-(2).

 

include the two documents our result on this appeal would not 

be different.
16

The FCA as FERA has amended it, now imposes liability 

on:

[A]ny person who—

(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[.]

31 U.S.C. § 3729(a)(1).

The FCA defines “material” as “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). For 

purposes of this case both versions of the FCA define a claim in 

pertinent part as a “request or demand . . . for money or property 

that . . . is presented to an officer, employee, or agent of the 

United States . . . .” 31 U.S.C. § 3729(c) (pre-FERA); 31 U.S.C. 

§ 3729(b)(2)(A)(i) (post-FERA). FERA contains a retroactivity 

provision which applies only to section 3729(a)(1)(B), and 

provides that that clause “take[s] effect as if enacted on June 7, 

2008, and appl[ies] to all claims under [the FCA] that are 

pending on or after that date.”12 Pub. L. No. 111-21 § 4(f)(1), 

 

12 Congress adopted the term “material to,” as well as the 

retroactivity provision, in response to the Supreme Court‟s June 

9, 2008 decision in Allison Engine Co. v. U.S. ex rel. Sanders, 
17

123 Stat. at 1625.

Though appellants filed their complaint on July 10, 2008, 

and their amended complaint on August 5, 2009, they cited to 

the pre-FERA version of the FCA in both their original and 

amended complaints. Nevertheless, appellants argued in the 

District Court that the addition of “material to” in section 

3729(a)(1)(B) made it easier to state a claim under the FCA 

inasmuch as, under the amended version of the FCA, a relator 

only need show that compliance with the applicable regulations 

which the defendant allegedly violated would have a tendency to 

influence the Government‟s payment decision. The Court, 

though assuming that the amendment applied in this case, held 

that Congress‟ addition of a materiality requirement did not 

change the meaning of the FCA. Appellants do not contend that 

the Court erred in this conclusion but they do argue that the 

 

553 U.S. 662, 128 S.Ct. 2123 (2008), which Congress viewed 

the Court as having decided incorrectly. See S. Rep. No. 111-

10, at 11 (2009), reprinted in 2009 U.S.C.C.A.N. 430, 437-39 

(“To correct the Allison Engine decision . . . in section 

3729(a)(2) the words „to get‟ were removed striking the 

language the Supreme Court found created an intent requirement 

for false claims liability under that section. In place of this 

language, the Committee inserted the words „material to‟ a false 

or fraudulent claim.”). In Allison Engine, the Supreme Court 

held that a plaintiff “must prove that the defendant intended that 

the false record or statement be material to the Government‟s 

decision to pay or approve the false claim.” 553 U.S. at 665, 

128 S.Ct. at 2126.
18

original complaint “clearly alleged a time period were [sic] 

claims would be pending on June 7, 2008.” Appellants‟ br. at 

16 n.17. Appellees argue that the majority of courts considering 

the applicability of the retroactivity provision have determined 

that the retroactivity provision does not apply to cases which 

were pending on June 7, 2008.13 Appellees‟ br. at 9 n.6 (citing 

Hopper v. Solvay Pharm., Inc, 588 F.3d 1318, 1327 n.3 (11th 

Cir. 2009)).14 

We need not decide whether the earlier or amended 

version of the FCA is applicable because we conclude that 

appellants‟ claims based on appellees‟ alleged violation of the 

Medicare marketing regulations cannot survive appellees‟ 

motion to dismiss under either version of the statute. Moreover, 

as we explain later, appellants‟ claims under the AKS fall only 

under pre-FERA section 3729(a)(1), which was still in force at 

the time that appellees submitted their claims for payment to the 

Government and at the time that appellants filed this suit. 

Therefore, we will decide this case under the pre-FERA version 

of section 3729(a)(1). 

 

13 This is a puzzling argument inasmuch as this case was not 

pending on June 7, 2008.

14 At least one district court has held that FERA‟s retroactivity 

provision violates the Ex Post Facto Clause of the United States 

Constitution. See U.S. ex rel. Sanders v. Allison Engine Co., 

667 F. Supp. 2d 747, 756 (S.D. Ohio 2009). Clearly, we need 

not consider that possibility.
19

2. Establishing a Claim Under the FCA

The primary purpose of the FCA “is to indemnify the 

government-through its restitutionary penalty provisions-against 

losses caused by a defendant‟s fraud.” Mikes v. Straus, 274 

F.3d 687, 696 (2d Cir. 2001) (citing U.S. ex rel. Marcus v. Hess, 

317 U.S. 537, 549, 551-52, 63 S.Ct. 379, 388 (1943)). A 

plaintiff, in order to establish a prima facie FCA violation under 

section 3729(a)(1), must prove that “(1) the defendant presented 

or caused to be presented to an agent of the United States a 

claim for payment; (2) the claim was false or fraudulent; and (3) 

the defendant knew the claim was false or fraudulent.” U.S. ex 

rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir. 2004) 

(internal quotation marks omitted); Hutchins v. Wilentz, 

Goldman & Spitzer, 253 F.3d 176, 182 (3d Cir. 2001). As we 

have indicated, a private individual, otherwise known as a 

relator, may bring a civil action in the name of the United States 

to enforce this provision of the FCA and may share a percentage 

of any recovery resulting from the suit. 31 U.S.C. § 3730(b) &

(d).

There are two categories of false claims under the FCA: a 

factually false claim and a legally false claim. U.S. ex rel. 

Conner v. Salina Reg‟l Health Ctr., Inc., 543 F.3d 1211, 1217 

(10th Cir. 2008). A claim is factually false when the claimant 

misrepresents what goods or services that it provided to the 

Government and a claim is legally false when the claimant 

knowingly falsely certifies that it has complied with a statute or 

regulation the compliance with which is a condition for 

Government payment. Id. A legally false FCA claim is based 

on a “false certification” theory of liability. See Rodriguez v. 
20

Our Lady of Lourdes Med. Ctr., 552 F.3d 297, 303 (3d Cir. 

2008), overruled in part on other grounds by U.S. ex rel. 

Eisenstein v. City of New York, 129 S.Ct. 2230 (2009). On this 

appeal, we are concerned only with allegedly legally false claims

related to appellees‟ eligibility to receive payment, as appellants 

do not contend that appellees did not deliver the services for 

which they sought payment. 

There is a further division of categories of claims as the 

courts have recognized that there are two types of false 

certifications, express and implied. See, e.g., Conner, 543 F.3d 

at 1217. Under the “express false certification” theory, an entity 

is liable under the FCA for falsely certifying that it is in 

compliance with regulations which are prerequisites to 

Government payment in connection with the claim for payment 

of federal funds. Rodriguez, 552 F.3d at 303. There is a more 

expansive version of the express false certification theory called 

“implied false certification” liability which attaches when a 

claimant seeks and makes a claim for payment from the 

Government without disclosing that it violated regulations that 

affected its eligibility for payment. Id. Thus, an implied false 

certification theory of liability is premised “on the notion that 

the act of submitting a claim for reimbursement itself implies 

compliance with governing federal rules that are a precondition 

to payment.” Mikes, 274 F.3d at 699; see also United States v. 

Sci. Applications Int‟l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 

2010) (“Courts infer implied certifications from silence where 

certification was a prerequisite to the government action 

sought.” (internal quotation marks and citation omitted)).

The United States Court of Federal Claims seems to have 
21

been the first court to recognize that there can be implied false 

certification liability under the FCA. See Ab-Tech Constr., Inc. 

v. United States, 31 Fed. Cl. 429 (Fed. Cl. 1994), aff‟d, 57 F.3d 

1084 (Fed. Cir. 1995). In Ab-Tech the court held that AbTech‟s submission of payment vouchers to the Government 

impliedly certified that Ab-Tech was continuing to adhere to the 

eligibility requirements of a federal small business program in 

which it was a participant. Id. at 433-34. Though the vouchers 

did not contain any express misrepresentations, Ab-Tech‟s 

failure to honor the requirements of the program rendered it 

subject to false certification liability under the FCA. Id. at 434.

 While we have held that there can be express false 

certification liability under the FCA, see U.S. ex rel. Kosenske 

v. Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009), we have 

not decided whether there can be implied false certification 

liability under the FCA. See Rodriguez, 552 F.3d at 303-04.15 

However, other courts of appeals have considered this 

possibility and a majority of those courts, including those in the 

Second, Sixth, Ninth, Tenth, Eleventh, and District of Columbia 

Circuits have recognized that there can be implied false 

certification liability under the FCA. See Mikes, 274 F.3d at 

699-700; U.S. ex rel. Augustine v. Century Health Servs., Inc., 

289 F.3d 409, 415 (6th Cir. 2002); Ebeid ex rel. U.S. v. 

 

15

 In Rodriguez we stated that we have “yet to adopt in a 

holding the false certification theory, either in its express or 

implied version.” 552 F.3d at 303-04. But, as we have 

indicated, we later recognized that there can be FCA liability 

under an express false certification theory and therefore our 

statement in Rodriguez is no longer true.
22

Lungwitz, 616 F.3d 993, 996-98 (9th Cir. 2010); Conner, 543 

F.3d at 1217-18; McNutt ex rel. U.S. v. Haleyville Med. 

Supplies, Inc., 423 F.3d 1256, 1259 (11th Cir. 2005); Sci. 

Applications Int‟l Corp., 626 F.3d at 1266, 1269; but see U.S. ex 

rel. Hutcheson v. Blackstone Med. Inc., ____ F.3d ____, 2011 

WL 2150191, at *7 (1st Cir. June 1, 2011) (declining to employ 

judicially created categories of express and implied false 

certification); Harrison v. Westinghouse Savannah River Co., 

176 F.3d 776, 786 n.8 (4th Cir. 1999) (stating without 

addressing validity of implied false certification theory under 

FCA, that its precedent makes the theory “questionable”). We 

now join with these many courts of appeals in holding that a 

plaintiff may bring an FCA suit under an implied false 

certification theory of liability.

We adopt the implied false certification theory for 

liability for several reasons. First, the implied false certification 

theory gives effect to Congress‟ expressly stated purpose that 

the FCA should “reach all fraudulent attempts to cause the 

Government to pay [out] sums of money or to deliver property 

or services.” S. Rep. No. 99-345, at 9 (1986), reprinted in 1986 

U.S.C.C.A.N. 5266, 5274; see also United States v. NeifertWhite Co., 390 U.S. 228, 232, 88 S.Ct. 959, 961 (1968) (“[T]he 

[FCA] was intended to reach all types of fraud, without 

qualification, that might result in financial loss to the 

government.”). Moreover, our ruling is consistent with 

Congress‟ stated intent inasmuch as under the implied false 

certification theory of liability, even in the absence of a false 

certification of compliance, the Government or qui tam

plaintiffs successfully may bring an action that holds a claimant 

liable for submitting legally false claims to the Government: 
23

[A] false claim may take many forms, the most 

common being a claim for goods or services not 

provided, or provided in violation of contract 

terms, specification, statute, or regulation . . . . 

[Claims made to Medicare or Medicaid programs] 

may be false even though the services are 

provided as claimed if, for example, the claimant 

is ineligible to participate in the program. . . . 

S. Rep. No. 99-345, at 9, reprinted in 1986 U.S.C.C.A.N. 

5266, 5274. 

In addition, the language and the structure of the FCA 

support the conclusion that a claim based on an implied false 

certification “may constitute [an actionable] false or fraudulent 

claim.” Shaw v. AAA Eng‟g & Drafting, Inc., 213 F.3d 519, 

531 (10th Cir. 2000) (internal quotation marks omitted). “Under 

§ 3729(a)(2), liability is premised on the presentation of a „false 

record or statement to get a false or fraudulent claim paid or 

approved.‟” Id. On the other hand, section 3729(a)(1) requires 

only that a claimant present “a „false or fraudulent claim for 

payment or approval‟ without the additional element of a „false 

record or statement.‟” Id. Therefore, section 3729(a)(1), when 

compared with section 3729(a)(2), indicates that a plaintiff can 

bring a claim under the FCA even without evidence that a 

claimant for Government funds made an express false statement 

in order to obtain those funds. Id. 

As several courts of appeals have held, however, the 

implied certification theory of liability should not be applied 

expansively, particularly when advanced on the basis of FCA 
24

allegations arising from the Government‟s payment of claims 

under federally funded health care programs. In particular, the 

Court of Appeals for the Second Circuit in Mikes recognized 

that the rationale behind Ab-Tech “does not fit comfortably into 

the health care context because the [FCA] was not designed for 

use as a blunt instrument to enforce compliance with all medical 

regulations - but rather only those regulations that are a 

precondition to payment . . . .” Mikes, 274 F.3d at 699. 

Moreover, in Rodriguez, although we did not expressly adopt 

the implied false certification theory, we stated that “[t]o state a 

claim under [the implied false certification] theory it is 

necessary to allege not only a receipt of federal funds and a 

failure to comply with applicable regulations, but also that 

payment of the federal funds was in some way conditioned on 

compliance with those regulations.” 552 F.3d at 304. Thus, 

under this theory a plaintiff must show that if the Government 

had been aware of the defendant‟s violations of the Medicare 

laws and regulations that are the bases of a plaintiff‟s FCA 

claims, it would not have paid the defendant‟s claims. See

Conner, 543 F.3d at 1219-20 (“If the government would have 

paid the claims despite knowing that the contractor has failed to 

comply with certain regulations, then there is no false claim for 

purposes of the FCA.”). Absent this requirement, the FCA 

could turn “into „a blunt instrument to enforce compliance with 

all . . . regulations‟ rather than „only those regulations that are a 

precondition to payment.‟” Rodriguez, 552 F.3d at 304 (quoting 

Mikes, 274 F.3d at 699). With these principles in mind, we now 

will consider appellants‟ FCA allegations.

3. Violations of Medicare Marketing Regulations
25

As we already have indicated, appellants contend that 

United Health personnel engaged in marketing practices which 

violated several Medicare marketing regulations, including: (1) 

using marketing flyers and forms that CMS did not approve; (2) 

engaging in marketing activities in the waiting rooms of clinics 

and doctors‟ offices; (3) allowing non-licensed individuals to 

engage in marketing activities; (4) using an excessive number of 

sales representatives at presentations in an attempt to 

“overwhelm the public;” (5) asking persons to raise their hands 

at Medicare presentations if they were dual eligible for Medicare 

and Medicaid; (6) chasing people in supermarkets to ask 

whether they were dual eligible; (7) using agents to engage in 

door-to-door solicitation; and (8) giving out prizes at Medicare 

presentations in excess of $15 in value.

The District Court held that appellants‟ allegations that 

United Health engaged in illegal marketing did not state a claim 

for relief under either an express or implied false certification 

theory. According to the Court, these allegations did not state a 

claim under an express false certification theory inasmuch as 

appellants failed to plead a single instance of United Health 

submitting a false claim for payment to the Government: 

“Without an allegation of a claim, Relators‟ False Claims Act 

claim is like a battery without a touching, or a defamation 

without a statement.” Wilkins, 2010 U.S. Dist. LEXIS 47080, at 

*14. In support of its holding, the Court cited to our opinion in 

Rodriguez, but appellants and amicus curiae contend that the 

District Court mischaracterized the holding of Rodriguez, and 
26

we agree.

16

In Rodriguez, we based our holding affirming the district 

court‟s Rule 12(b)(6) dismissal of the relators‟ FCA action on 

their failure adequately to plead, under an implied false 

certification theory, that the defendant violated a law or 

regulation connected to the Government‟s decision to pay the 

defendant‟s claims rather than on the relators‟ failure to identify 

a specific claim for payment that the defendant submitted to the 

Government. 552 F.3d at 304. It is true that to recover under 

the FCA, we have recognized that ultimately a plaintiff must 

come forward with at least a “single false [or fraudulent] claim” 

that the defendants submitted to the Government for payment. 

U.S. ex rel. Quinn v. Omnicare Inc., 382 F.3d 432, 440 (3d Cir. 

2004). Thus, in Quinn we held that the district court correctly 

granted the defendant‟s Federal Rule of Civil Procedure 56(f) 

motion for summary judgment based on the plaintiff‟s failure to 

identify a single claim for payment to the Government arising 

from defendant‟s alleged Medicare fraud. Id. But to our 

knowledge we never have held that a plaintiff must identify a 

specific claim for payment at the pleading stage of the case to 

state a claim for relief. See Fowler v. UPMC Shadyside, 578 

F.3d 203, 213 (3d Cir. 2009) (“It is axiomatic that the standards 

for dismissing claims under Fed. R. Civ. P. 12(b)(6) and 

granting judgment under . . . Fed. R. Civ. P. 56 are vastly 

different.”). 

 

16 The District Court also cited one of our not precedential 

opinions but we will not discuss that case. See 3d Cir. Internal 

Operating P. 5.7 (“The court by tradition does not cite to its not 

precedential opinions as authority.”).
27

In any event, as appellants correctly point out, the 

question of whether a plaintiff, at the pleading stage, must 

identify representative examples of specific false claims that a 

defendant made to the Government in order to plead an FCA 

claim properly is a requirement under the more particular 

pleading standards of Rule 9(b). See Ebeid, 616 F.3d at 998-99 

(listing cases and noting disagreement among courts of appeals). 

But here, as we stated above, the District Court explicitly

declined to analyze appellants‟ claims under the pleading 

requirements of Rule 9(b). 

Nevertheless, we see no need to decide whether 

appellants‟ marketing claims satisfied the pleading requirements 

of Rule 9(b), because, despite our rejection of the District 

Court‟s reasoning with respect to appellants‟ claim under an 

express false certification theory, we will affirm its holding 

dismissing appellants‟ claims predicated on the Medicare 

marketing regulations on the same ground that the Court 

provided for denying appellants‟ claims under an implied false 

certification theory. Thus, we will affirm the District Court‟s 

order rejecting appellants‟ claims predicated on the violation of 

Medicare marketing regulations because appellants‟ allegations 

that appellees violated the regulations do not state a plausible 

claim for relief under the FCA inasmuch as the Government‟s 

payments of appellees‟ Medicare claims were not conditioned 

on their compliance with the marketing regulations.

As we stated above, to plead a claim upon which relief 

could be granted under a false certification theory, either express 

or implied, a plaintiff must show that compliance with the 

regulation which the defendant allegedly violated was a 
28

condition of payment from the Government. Rodriguez, 552 

F.3d at 304; Mikes, 274 F.3d at 698. In determining whether 

compliance with a regulation was a condition of payment from 

the Government, courts have distinguished between regulations 

which are conditions of participation in the Medicare programs 

and conditions of Government payment of Medicare funds. 

Conner, 543 F.3d at 1220; Mikes, 274 F.3d at 697 (“Since the 

Act is restitutionary and aimed at retrieving ill-begotten funds, it 

would be anomalous to find liability when the alleged 

noncompliance would not have influenced the government‟s 

decision to pay.”). The Court of Appeals for the Tenth Circuit 

explained the difference between conditions of participation and 

conditions of payment: “Conditions of participation . . . are 

enforced through administrative mechanisms, and the ultimate 

sanction for violation of such conditions is removal from the 

government program,” while “[c]onditions of payment are those 

which, if the government knew they were not being followed, 

might cause it to actually refuse payment.” Conner, 543 F.3d at 

1220. 

Appellants assert that 42 C.F.R. § 423.509, pursuant to 

which CMS may terminate a contract with a Medicare sponsor 

that fails to comply with the applicable marketing guidelines, 

demonstrates “[t]he relevancy and materiality of compliance” 

with the marketing guidelines. Appellants‟ br. at 23. Indeed, 

section 423.509 states that “CMS may at any time terminate a 

contract if CMS determines that the Part D plan sponsor . . . 

[s]ubstantially fails to comply with . . . [m]arketing requirements 

in subpart V of this part.” 42 C.F.R. § 423.509(a)(8)(i); 42 

C.F.R. § 422.510(a)(11) (same for MA organization). The same 

regulation, however, provides that before CMS may issue a 
29

notice of intent to terminate a Medicare contract it will provide a 

plan sponsor “a reasonable opportunity of at least 30 calendar 

days to develop and implement a corrective action plan to 

correct the deficiencies.” 42 C.F.R. § 423.509(c)(1)(i); 42 

C.F.R. § 422.510(c)(1)(i). The regulation further provides, in 

section (c)(2)(iii), an exception for the 30-day correction period 

if the termination is based on “credible evidence, [that the Plan 

Sponsor] has committed or participated in false, fraudulent, or 

abusive activities affecting the Medicare, Medicaid, or other 

State or Federal health care programs, including submission of 

false or fraudulent data.” 42 C.F.R. § 423.509(a)(4); 42 C.F.R. § 

422.510(c)(2)(iii) (referring to 42 C.F.R. § 422.510(a)(4)). The 

regulation also contains an exception to the requirement that a 

sponsor be allowed a 30-day correction period where CMS‟s 

delay in termination, or the financial difficulties of the Plan 

Sponsor, pose an imminent and serious risk to the health of the 

individuals enrolled in the sponsor‟s plan. 42 C.F.R. § 

423.509(c)(2)(i)-(ii); 42 C.F.R. § 422.510(c)(2)(i)-(ii). Thus, 

sections 423.509 and 422.510 clearly demonstrate that 

compliance with the marketing regulations is a condition of 

participation and not a condition of payment as the regulations 

draw a line between the type of violations which are correctible 

and, if corrected, will allow the sponsor to continue as a 

Medicare program participant and the type of violations which 

lead to immediate termination of a CMS contract. 

Accordingly, the fundamental flaw in appellants‟ 

allegations is that the amended complaint does not cite to any 

regulation demonstrating that a participant‟s compliance with 

Medicare marketing regulations is a condition for its receipt of 

payment from the Government. Nor do appellants cite 
30

examples, in case law or otherwise, of the Government seeking 

recovery of Medicare payments for services that a provider 

actually performed on the basis that its lack of compliance with 

marketing regulations rendered those services fraudulent. 

Appellants offer no evidence beyond a CMS published 

statement that the guidelines “were developed after careful 

consideration by CMS of current industry practices, recent 

advancements in communication technology, and how best to 

protect the interests of Medicare beneficiaries.” Appellant‟s br. 

at 21; app. at 210. This statement, however, does not indicate 

that a participant‟s compliance with marketing regulations is a 

condition for Government payment under the federal health care 

programs. Moreover, we think that it is appropriate for us to 

presume that the CMS surely develops all of its regulations after 

careful consideration of these and other relevant factors no 

matter what it determines should be the consequences of a 

participant‟s non-compliance with the regulations.17

 

17 Similarly, appellants contend that Weems‟ statement, which 

we have determined is not part of the record on which we will 

decide this appeal, that “protecting people with Medicare from 

deceptive or harmful practices is among our highest priorities at 

CMS,” demonstrates the relevancy of the marketing guidelines 

to the Government‟s decision to pay Medicare claims. 

Appellant‟s br. at 21. However, even if we included that 

statement in the materials that we consider in deciding this 

appeal, we would regard the statement as demonstrating only 

that CMS considers the marketing regulations to be very 

important, but we would not regard the statement as indicating 

what the consequence of non-compliance should be. After all, 
31

Further, considering that the Government has established 

an administrative mechanism for managing and correcting 

Medicare marketing violations which includes remedies for 

violations other than the withholding of payment otherwise due, 

it is clear that, although the Government considers substantial 

compliance with the marketing regulations “a condition of 

ongoing Medicare participation, it does not require perfect 

compliance as an absolute condition for receiving Medicare 

payments for services rendered.” Conner, 543 F.3d at 1221. 

Furthermore, we think that anyone examining Medicare 

regulations would conclude that they are so complicated that the 

best intentioned plan participant could make errors in attempting 

to comply with them. Moreover, it is ironical that if we allowed 

appellants, though they are ostensibly acting on behalf of the 

Government, to bring suit based on United Health‟s noncompliance with marketing regulations, we would short-circuit 

the very remedial process the Government has established to 

address non-compliance with those regulations. “It would . . . 

be curious to read the FCA, a statute intended to protect the 

government‟s fiscal interests, to undermine the government‟s 

own regulatory procedures.” Id. at 1222. 

Finally, like the District Court in this case and the courts 

of appeals in Conner and Mikes, we question the wisdom of 

regarding every violation of a Medicare regulation as a basis for 

a qui tam suit. Conner, 543 F.3d at 1221; Mikes, 274 F.3d at 

 

as appellees aptly point out, “[p]resumably all regulations and 

agency guidelines have some importance to the government 

agency, or there would be no purpose for the agency to 

promulgate them.” Appellees‟ br. at 24. 
32

699-700. Federal agencies are unquestionably better suited than 

federal courts to ensure compliance with Medicare marketing 

regulations. In the circumstances, we believe that by permitting 

qui tam plaintiffs to file suit based on the violation of 

regulations which may be corrected through an administrative 

process and which are not related directly to the Government‟s 

payment of a claim, courts unwisely would shift the burden of 

enforcing the Medicare regulations to themselves even though 

the administration of the vast and complicated Medicare 

program is best left to the administrators.18 In this regard, we 

point out that if we adopted appellants‟ broad theory of FCA 

liability, every time a plan participant‟s agent gave out a prize 

worth over $15.00, or asked Medicare participants eligible for 

Medicaid to raise their hands at a meeting, assuming that these 

are improper marketing techniques, the agent‟s conduct could be 

the basis for a federal court action. We do not think that this is 

the purpose of 42 C.F.R. § 423.509, 42 C.F.R. § 422.510, the 

marketing regulations, or the FCA. 

In sum, inasmuch as compliance with the Medicare 

marketing regulations is not a condition for Government 

payment under the federal health insurance programs, the 

District Court properly dismissed appellants‟ FCA claims based 

on appellees‟ violations of those regulations for failure to state a 

claim upon which relief could be granted. 

4. The Anti-Kickback Statute

 

18 In reaching this conclusion we point out that administrators 

sometimes address and resolve problems informally using 

procedures that courts would not employ.
33

The AKS, in relevant part, provides that 

(2) whoever knowingly and willfully offers or

pays any remuneration (including any kickback, 

bribe or rebate) directly or indirectly, overtly or 

covertly, in cash or in kind to any person to 

induce such person—

(A) to refer an individual to a person for 

the furnishing or arranging for the 

furnishing of any time or service for which 

payment may be made in whole or in part 

under a Federal health care program, or

(B) to purchase, lease, order, or arrange 

for or recommend purchasing, leasing, or 

ordering any good, facility, service, or item 

for which payment may be made in whole 

or in part under a Federal health care 

program,

shall be guilty of a felony upon conviction 

thereof, shall be fined not more than $25,000 or 

imprisoned for not more than five years, or both.

42 U.S.C. § 1320a-7b(b)(2).19

 

19 As part of the comprehensive health care legislation Congress 

enacted in 2010, it amended the AKS to clarify that “a claim that 

includes items or services resulting from a violation of this 

section constitutes a false or fraudulent claim for purposes of 
34

As we stated above, a prima facie claim under the FCA 

requires that the plaintiff show that “(1) the defendant presented 

or caused to be presented to an agent of the United States a 

claim for payment; (2) the claim was false or fraudulent; and (3) 

the defendant knew the claim was false or fraudulent.” Schmidt, 

386 F.3d at 242. We have held that “[f]alsely certifying 

compliance with the . . . Anti-Kickback Act[] in connection with 

a claim submitted to a federally funded insurance program is 

actionable under the FCA.” Kosenske, 554 F.3d at 94. Further, 

in Schmidt we stated that “[a] certificate of compliance with 

federal health care law is a prerequisite to eligibility under the 

Medicare program.” 386 F.3d at 243 (citing 42 C.F.R. § 

413.24(f)(4)(iv)). 

 

[the FCA].” Patient Protection and Affordable Care Act of 2010 

(“PPACA”), Pub. L. No. 111-148 § 6402(f), 124 Stat. 119, 759 

(to be codified at 42 U.S.C. § 1320a-7b(g)). But the PPACA 

was not in effect at the time of the alleged violations at issue in 

this case or at the time that appellants filed this action, and there 

is no indication that Congress intended for the PPACA to apply 

retroactively. See Graham County Soil & Water Conservation 

Dist. v. U.S. ex rel. Wilson, 130 S.Ct. 1396, 1400 n.1 (2010) 

(“The [PPACA] makes no mention of retroactivity, which would 

be necessary for its application to pending cases given that it 

eliminates petitioners‟ claimed defense to a qui tam suit.”). 

Therefore we will not consider this amendment in our analysis 

of appellants‟ AKS claims. In the circumstances, though we are 

aware that there is an ongoing nationwide dispute with respect 

to the constitutionality of the PPACA, we are not joining in that 

controversy, at least not at this time.
35

In dismissing appellants‟ AKS allegations, the District 

Court stated that “[r]elators never once alleged that United 

Health certified compliance with the [AKS], nor did they allege 

that such compliance was relevant to the Government‟s funding 

decisions (if indeed any were made, which Relators failed to 

allege).” Wilkins, 2010 U.S. Dist. LEXIS 47080, at *18. 

Appellants argue that “[a] certificate of compliance with federal 

health care law is a prerequisite to eligibility under the Medicare 

Program,” see appellant‟s br. at 41 (citing 42 C.F.R. § 

413.24(f)(4)(iv)), and argue that they specifically referenced that 

certificate of compliance in the amended complaint by referring 

to the Medicare Managed Care Manual which states that a plan 

sponsor ensures compliance with applicable federal laws, 

including, specifically, the FCA and the AKS. 

The Government, as amicus curiae, supports appellants‟ 

position by pointing out that Medicare regulations require MA 

and Prescription Drug Plan (“PDP”) organizations to operate 

under agreements with CMS which include a provision 

requiring that the organization comply with the AKS. See 42 

C.F.R. §§ 422.504(h) (“The MA organization agrees to comply 

with—(1) Federal laws and regulations designed to prevent or 

ameliorate fraud, waste, and abuse, including... [the AKS]”). 

United Health responds that the District Court‟s holding was 

correct inasmuch as “[n]owhere within the four corners of 

Relators‟ Amended Complaint did the Relators allege the nexus 

between compliance with the AKS and payment to a Medicare 

Advantage plan contractor. . . .” Appellees‟ br. at 34.

The issue of whether appellants properly pleaded an FCA 

claim based on United Health‟s express false certification of 
36

compliance with the AKS presents a close question. Yet we 

cannot ignore appellants‟ pleading in their amended complaint 

that “[e]ach month . . . United Defendants certify to CMS its 

continued compliance with all of the CMS MA Guidelines and 

based on such certification, United Defendants continues [sic] to 

receive the monthly capitation payments.” App. at 31. 

Moreover, in the next section of the amended complaint, 

appellants summarized the applicable Medicare regulations and 

pleaded that an MA Organization may not provide “[a]ny 

incentive that might have the effect of inducing enrollees to use 

a particular provider, practitioner or supplier cannot [sic] violate 

1128A(a)5 [sic] of the Social Security Act and the 

corresponding regulations related to the federal anti-kickback 

statute.” Id. at 32. Further, appellants alleged that 

AmeriChoice paid $27,000 to the Reliance Medical Group to 

induce the owners of the clinic to change dual eligible 

beneficiaries from Horizon Blue and move them to 

AmeriChoice, and that AmeriChoice agents enticed doctors into 

receiving additional income if they provided agents with names 

of the physicians‟ patients. Arguably, these allegations state a 

claim for relief under an express false certification theory 

inasmuch as appellants allege that appellees falsely certified 

compliance with the AKS in order to receive monthly payments 

from the Government.

But we need not decide whether the amended complaint 

states a claim under an express false certification theory because 

appellants‟ allegations in the amended complaint clearly state a 

claim for relief under an implied false certification theory of 

liability. Under an implied false certification theory, instead of 

looking at the defendant‟s representations to the Government, 
37

“the analysis focuses on the underlying contracts, statutes, or 

regulations themselves to ascertain whether they make 

compliance a prerequisite to the government‟s payment.” 

Conner, 543 F.3d at 1218. Accordingly, we conclude that the 

District Court‟s holding that because appellants failed to allege 

in their complaint that United Health certified its compliance 

with the AKS their AKS claim must fail is incorrect when we 

analyze the amended complaint under an implied false 

certification theory of liability. To plead a claim for relief under 

an implied certification theory, appellants were required to 

allege, as they did, that appellees submitted claims for payment 

to the Government at a time that they knowingly violated a law, 

rule, or regulation which was a condition for receiving payment 

from the Government. 

We reach our conclusion because appellants‟ amended 

complaint meets the implied false certification standards for 

liability as they alleged that appellees received payment from the 

federal health insurance programs despite their knowing 

violation of the AKS. Moreover, unlike the plaintiffs in 

Rodriguez, 552 F.3d at 304, appellants alleged that compliance 

with the AKS was an express condition of payment to which 

appellees agreed when they entered into an agreement with 

CMS. See app. at 31-32; 37-38 (stating that “Compliance with 

CMS MA Guidelines . . . are express conditions of payment” 

and stating that the AKS is part of the MA Guidelines). We 

conclude that appellants, in stating a plausible claim for relief at 

this stage of the proceedings for their complaint to survive a 

Rule 12(b)(6) motion, need not allege a relationship between the 

alleged AKS violations and the claims appellees submitted to 
38

the Government.20 Rather, the complaint is sufficient to survive 

a Rule 12(b)(6) motion to dismiss because appellants have 

pleaded that appellees knowingly violated the AKS while 

submitting claims for payment to the Government under the 

federal health insurance program. See Ebeid, 616 F.3d at 998 

(“Implied false certification occurs when an entity has 

previously undertaken to expressly comply with a law, rule, or 

regulation, and that obligation is implicated by submitting a 

claim for payment even though a certification of compliance is 

not required in the process of submitting the claim.”). 

 We disagree with the District Court to the extent that it 

held that compliance with the AKS was not a condition for 

payment from the Government under the federal health 

insurance program. Compliance with the AKS is clearly a 

condition of payment under Parts C and D of Medicare and 

appellees do not refer us to any judicial precedent holding 

otherwise. In fact, the precedents hold the opposite. See, e.g., 

Kosenske, 554 F.3d at 94 (“Falsely certifying compliance with 

the Stark or Anti-Kickback Acts in connection with a claim 

submitted to a federally funded insurance program is actionable 

under the FCA.”); McNutt, 423 F.3d at 1259-60; Conner, 543 

F.3d at 1223 n.8 (listing cases). Indeed, as both amicus curiae 

and appellants point out, Medicare regulations specifically name 

the AKS as a statute that is “designed to prevent or ameliorate 

fraud, waste, and abuse.” 42 C.F.R. §§ 422.504(h), 423.505(h). 

 

 

20 We emphasize again that we are not reviewing these claims 

under the particularized pleading standards of Rule 9(b).
39

We have not overlooked appellees‟ argument that our 

holding will transform the FCA into a strict liability statute in 

which “every participant in the Medicare program impliedly 

certifies each time it submits a claim for payment to the program 

that the claim does not arise from some payment arrangement 

that—however attenuated, immaterial, and unknowing—could 

be characterized as a violation of the AKS.” Appellees‟ br. at 

36. Rather, we consider but reject this argument. First, the 

AKS does not prohibit all payment arrangements related to 

federal health care programs as the statute contains several safe 

harbor provisions allowing such arrangements. See 42 U.S.C. § 

1320a-7b(b)(3)(A)-(F). Further, contrary to appellees‟ 

argument, a defendant could not be held accountable for an 

“unknowing” illegal payment arrangement inasmuch as the AKS 

explicitly requires that for any payment to induce a person to 

refer an individual for the furnishing of healthcare services to be 

unlawful it must be made knowingly and willfully. 

In order to avoid FCA liability under an implied 

certification theory, participants making claims to the 

Government under the federal health care programs have to 

ensure that they are not violating the federal health care laws 

which they agreed to follow when they entered into contracts 

with CMS. As we made clear above, for purposes of the FCA, 

this compliance does not require perfect adherence to 

regulations which are not prerequisites to payment from the 

Government. Compliance, however, does require a participant 

in a federal health care program to refrain from offering or 

entering into payment arrangements which violate the AKS, 

while making claims for payment to the Government under that 

program. We do not think this is an unreasonable requirement 
40

to impose on federal health care contractors, for as Justice 

Holmes once wrote: “Men must turn square corners when they 

deal with the Government.” Rock Island, A. & L. R. Co. v. 

United States, 254 U.S. 141, 143, 41 S.Ct. 55, 56 (1920). And 

as the United States as amicus curiae points out, “[t]he 

Government does not get what it bargained for when a 

defendant is paid by CMS for services tainted by a kickback.” 

Amicus curiae br. at 31. Therefore, we hold that appellants, by 

alleging that appellees violated the AKS while submitting 

claims for payment to a federal health insurance program, have 

stated a plausible claim for relief under the FCA. 

C. Amendment of the Complaint

Appellants argue that the District Court erred by 

dismissing the case with prejudice. In this regard, they contend 

that if the Court found the amended complaint to be deficient, it 

should have dismissed the case without prejudice. Of course, 

this argument now is partially moot as we are reversing the 

District Court‟s order with respect to appellants‟ AKS claim. 

But we nevertheless address the contention because the 

argument remains germane with respect to the marketing claims. 

On the merits, we are satisfied that appellants do not provide a 

convincing argument that the District Court, to the extent that 

we hold that it correctly dismissed the complaint, abused its 

discretion by dismissing it with prejudice instead of without 

prejudice, nor do they explain how if permitted to amend they 

could cure the deficiencies that we have identified in their 

complaint. In making this point we observe that when a district 

court allows plaintiffs the opportunity to amend a complaint so 

that they can survive a Rule 12(b)(6) motion, it is implicit in the 
41

court‟s ruling that if the plaintiffs seek to amend the complaint 

they will do so only in good faith and allege facts that they 

believe they can prove.21 Accordingly, appellants‟ failure to 

explain how they could have amended the complaint to cure its 

deficiencies is a critical omission.

Appellants also argue that the District Court 

misconstrued their statement in their reply to appellees‟ motion 

to dismiss that “[i]n the event that the Court concludes that the 

Complaint does not meet the standards of Rule 9(b), Relator 

requests that he be provided the opportunity to amend the 

Complaint . . . . ” Appellants‟ br. at 43. Appellants argue that 

the amended complaint adequately pleaded the causes of action 

and that “[t]he request was made only if, and subject to, the 

Court concluding, after a review of United‟s [Motion to 

Dismiss] and the Relator‟s [sic] opposition, that deficiencies 

existed.” Id. at 44. 

Whatever appellants‟ intentions were in asking the 

District Court to permit them to amend their complaint, we 

agree with that Court that the request, without an attached 

amended complaint, was not the proper method for appellants to 

seek to amend their complaint. See Fletcher-Harlee Corp. v. 

Pote Concrete Contractors, Inc., 482 F.3d 247, 252 (3d Cir. 

 

21 We are not suggesting that appellants have acted or would act 

in bad faith and have made or would make allegations that they 

did not believe. In fact, we do not doubt that appellants believe 

that they can prove the allegations they already have made, and, 

if permitted to amend their complaint again, would be able to 

prove their new allegations.
42

2007) (stating “that a failure to submit a draft amended 

complaint is fatal to a request for leave to amend”). Therefore, 

to the extent that appellants requested leave to amend their 

complaint, the Court did not abuse its discretion by denying their 

deficient request to amend nor did it abuse its discretion by not 

granting them leave to amend sua sponte. Id. To the extent, if 

any, that the Court misunderstood appellants‟ request to amend 

their complaint, that circumstance has no bearing on this appeal. 

Should appellants on the remand submit another request to 

amend their complaint in any respect, it will be up to the District 

Court to decide whether to grant them leave to amend their 

complaint, and in making that determination to consider the 

procedural appropriateness and substantive merits of the request. 

See Fed. R. Civ. P. 15(a). 

V. CONCLUSION

For the foregoing reasons, we will affirm the portion of 

the District Court‟s May 13, 2010 order which dismissed 

appellants‟ FCA allegations based on appellees‟ violation of 

Medicare marketing regulations and will reverse the order 

insofar as it grants appellees‟ motion to dismiss appellants‟ 

amended complaint based on its allegations that appellees 

submitted false claims to the Government by violating the AKS. 

We will remand the case to the District Court for further 

proceedings consistent with this opinion. On remand, the 

District Court should rule on appellees‟ Rule 9(b) contention 

raised in their motion to dismiss with respect to the portion of 

appellants‟ reinstated amended complaint. The parties shall bear 

their own costs on this appeal.