FIL ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T FEB 22, 2012 J OHN L EY CL ERK [PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

No. 1 0- 15 40 6 D.C. Dock etNo. 2 :0 8- cv -1 42 01 -DLG UNITED STAT ES OF AMERIC A, ex re l., Pl ai nt iff LUCAS MATHENY, DEBORAH LOVEL AND, Pl ai nt iff s–App el la nt s, ve rs us MEDCO HEALTH SOL UTIONS, INC., POLYMEDICA CORP ORATION, LIBERTY HEALTH CARE GROUP, INC., LIBERTY MEDICAL SUPPLY, INC., LIBERTY COMM ERCIAL HEALTH SERVICES CORP., etal., Defen da nt s–App el le es . App eal fro m

th e Uni te d S ta te s Di st ric t Co urt fo r th e So uthe rnDis tri ctof F lo rid a (Feb ru ary 22 , 20 12 )Befo re WILSON andFAY, Circ ui t J ud ge s, an d R ESTANI, Ju dg e. * RESTANI, Ju dg e: App el la nt s Lu cas W . Mathe ny (“ Mat he ny”) an d Deb or ahLov el an d (“ Lov el an d” ) (co ll ect iv el y “ Rel at or s” ) ap pe al th e d eci si on of t he Uni te d S ta te s Dis tri ctCo urt fo r th e So ut he rnDis tri ctof F lo rid a d is m is si ng with p reju di ce Rel at or s’ Thi rdAm en de d C om pl ai ntforfai lu re t o s ta te a cl ai m up on whi chrel ie f
m ay be grant ed . The d is tri ctco urt h el d t ha t Re la to rs fai le d t o a ll eg e with pa rti cu la rit y , as re qu ire d b y Fed eral Ru le of C iv il Pro cedur e 9 (b ), th atth e Defen da nt s kno win gl y

m ad e a fal se st at em en t fo r th e p ur po se of c on ceal in g o r av oi di ng anob li ga ti on to pay m on ey to th e g ov ern m en t. Fo r th e fo ll owi ng reas on s, we re ve rs e an d h ol d C ou nt s I a ndII o f Rea lt or s’ Thi rdAm en de d Co m pl ai ntare s uf

fic ie ntto su rv iv e a m ot io n t o d is mis s fo r fai lu re t o s ta te a cl ai m . 1

BACKGRO UND Rel at or s Lu cas Mat he ny andDebo rahLov el an d b ro ug hta qu i t am act io n 2
Honora ble J ane A . Restani, J udg e of the United States Court of Interna tional Trade , * sitti ngby designation. The Third Amended Complaint also alleg es a Count I I I , which wa s dismis sed by the 1 district court for

failure to state a c laim. Relators do not appea l the dismiss al of Count I I I . A qui tam action per

mits an private individual, known as a relator, to bringan ac tion on 2 their own a

nd the g overnme nt’s behalf . Cooper v. B lue Cross & B lue Shield of Fla ., Inc., 19 F.3d 562, 565 n.2 ( 11th Cir. 1994) (per curiam). The c omplaint is first filed under sea l to allow the g overnme nt time to investi g ate a nd intervene . 31 U.S.C. § 3730(b). I f the g overnme nt declines to interve ne, the r elator ma y continue with the ac tion, id. § 3730(c)(3) , and if succ essful,

2ag ai ns t d efen da ntMed co Heal th So lu ti on s, In c. (“ Med co ”) an d i ts subs id iarie s,

al le gi ng vi ol at io ns of t he rev ers e fal se cla im pro vi si onof t he Fal se Cla im s Act (“ FCA”) , 31 U.S.C. § 3 72 9( a)(7 ) (2 00 6) (am en de d 2 00 9)
. The s ub si di ary 3 de fen da nt s i nc lu de Po lyMedi ca Co rp or at io n (“ Po lyMedi ca”) , Lib erty Heal th care Gro up , Inc . (“ LHG”), an d Li be rty Med ic al Supp ly, In c. (“ LMS”)
. Two co rp or at e 4
ex ecu ti ve s o f LMS were als o n am edas d efen da nt s, Arl en e Per azel la , th e Exe cu ti ve Vice Pres id en t o f Ope rat io ns , andCarl Dol an , th e Vic e Pre si de ntof Sp eci al Pro

jects an d C om

pl ia nc e. W e acc ou ntth e fac ts as a ll eg edinth e Thi rdAm en de d C om pl ai nt (“ Co m pl ai nt ”). Rel at orMat he ny was em pl oyed as a Rep ort An al y st , Acco un ts Rec ei vabl e Ma na ge r, Pro ject M an ag er, an d e ve ntua ll y Cas h M an ag em en t M an ag er by defe nd an t LMS . Rela to r Lov el an d was em pl oyed as Acco un ti ng Man ag er,

may rec over be tween 25 a

nd 30 perc ent of the judgment or settlement, plus rea sonable e x penses, attorney fee s, and costs, id. § 3730(d)( 2). An F CA violator is also subject to statutory penalties of betwe en $5,000 and $10,000 pe r cla im and treble da mag es. I d. § 3729(a)
. Relator Mathe ny

first filed a c omplaint in J une 2008. The complaint was subseque ntly 3 amende d to include Relator L oveland. The United States dec lined to intervene and the district court unsea led what wa s then the Second Amended Complaint. Defe ndants moved to dismiss the Second Ame nded Complaint for fa ilure to state a c laim, which was grante d by the district court without prejudice . Relators filed the T hird Amende d Complaint i n July 2010, which the district court dismissed with prejudice a nd is the subject of this appea l. The re maining subsidiar y defe ndants are L iberty

Commercial He alth Service s Corp., 4 L iberty Direc t Services Corp., a

nd L iberty

Medica l Supply

Pharmac y , Inc. All cor

porate and individual defenda

nts are refe rre d to here in as “De fenda nts.” 3Dire ct or , Ass is ta ntCo nt ro ll er, an d C on tro ll er b y LMS an d LHG. All of t he
co rp or at e an d i nd iv idua l Def en da nt s wer e subjec t t o aCo rp or at e In te gr it y Agr eem en t (“ CIA”) , whi chth e p aren t co m pa ny Pol yMed ic a en te redin to with t he Offi ce o f th e In sp ect orGene ral of t he U.S. Departm en t o f Heal th an d Hu m an Serv ic es inNov em

be r 20 04
. The CI A requi redth e Defen da nt s t o re m itpa ym en ts

5 fro m th e g ov ern m en t tha t l ack edsu ffi ci en t d oc um en ta ti onan d p aym en ts rece iv ed in dupl ic at e o r in erro r. The C IA de fin edth es e ex ces s o r un id en ti fie d p aym en ts as

“ Ove rp aym en ts .” The C IA requi redth e Defen dant s t o re tu rnto th e g ov ern m en t al l Ov erp aym en ts withi n t hi rty days of i de nt ifi cat io n wi th th e u se of a n

“ Ove rp aym en t Re fu ndPaym en t Fo rm .” Dur in g t he ir t im e as em

pl oyees, Re la to rs be cam e aware of asch em e b y th ei r supe rv is or s t o c on ceal ap pr ox im at el y $6 9 m il li on do ll ars inOver pa ym en ts th at , un de r th e CIA, s ho ul d h av e b een rem it te d t o the go ve rn m en t. Rel at or s fi rs t le arn edof Ov erp aym en ts inanApri l 2 00 6 m eet in g a tt en de d b y Rel at orMat he ny an d Def en da nt s Pe raze ll a an d Do la n. Atth is m eet in g, Po lyMedi ca’s Co m pl ia nc e Offi cer Al an a Su ll iv anin fo rm edth e Defen da nt s tha t the Over pa ym en ts id en ti fie d

Def endant Me dco, the pa

rent c ompany

of Poly Medica , is also subject to a cor porate 5 integrity agree ment, which conta ins standards more stringe nt than those containe d in Poly Medica ’s CIA. At ora l argument, Relators cla rified that a ll the corporate Def endants shar ed the same billingdepar

tment, and thus, all corpor ate de fenda nts had knowledg e of the fra udulent conduct. 4atth e m eet in g n eed edto be refu nd edto th e g ov ern m en t. Des pi te th e id en ti fic at io n

of Over pa ym en ts , Peraz el laan d Do lan s ta te d i n the Apri l 2 00 6 m eet in g t ha t the Defen da nt s wo ul d n otrep ay th e Ove rp aym en ts be cau se th ey lac ke d t he m anpo wer to do so . The Over pa ym en ts were n ev er ref

un de d a ndin st eadrem ai ne d i n t he Defen da nt s’ po ss es si on th ro ug h Ap ril 20 08 . By Marc h 2 00 8, Def

en da nt s Pera zel laan d Do la n h adid en ti fie d o ve r $6 2 m il li on inOver pa ym en ts res ul ti ng fro m th e la ckof d oc um en ta ti on an d $ 7 m il li on inOver pa ym en ts du e to dupl ic at e bi ll in gs , bi ll in gs inerro r, or so m e o th er err or . Und er the di rect io n o f Pera zel laan d Dol an , Defen da nt s d ev el op eda sc he m e b y whi chth e Ove rp aym en ts were tra ns ferr edto un rel at edpa ti en t ac co un ts , fic ti ti ou s p at ie ntacco un ts , or e li m in at ed fro m th e rec or ds th ro ug h aco m pu te r pr og ram

cal le d a“ da ta fix .” Rel at orMat he ny rep orte d t he da ta fix sch em e to Po lyMedi ca’s Co m pl ia nc e Offi cer Ki m

Ram ey an d
was lat er t ol d b y

th e Ass is ta ntVice Pres id en t o f Co m pl ianc e th atth e d at afi x sc he m e was ap pr op ria te an d h adbe enap pr ov edby Pol yMed ic a’s Ch ie f Ope rat in g Offi cer. Rel at orMat he ny work edwith o th er em pl oyees t o p erfo rm

th e d at afi x. Po lyMedi ca’s Co m

pl ia nc e Offi cer Ki m

Ram ey , des pi te kn owl ed ge of t he
sc he m e to ret ai n a ndco nc eal th e Ove rp aym en ts invi ol at io n o f th e CIA, ce rti fie d in a 20 08 rep ort t o t he go ve rn m en t tha t the Defen da nt s h adco m pl ie d wi th all CIA 5requi rem en ts (th e “ Cert ifi cat io n o f Co m pl ia nc e”). Co un t I a ll eg es th atth e 2 00 8 Cert ifi cat io n o f Co m

pl ia nc e was fal se du e to th e fai lu re t o re po rt o r rem itth e m il li on s o f do ll ars inid en ti fie d Ov erp aym en ts , andth atth e Defen da nt s m ad e an d
us edth e Certi fic at io n t o c on ceal an d a vo idth e o bl ig at io n t o re m itOver pa ym en ts . Co un t II in vo lv es th e sa m e o bl ig at io n t o re m itOver pa ym en ts withi n t hi rty da y s b utis ba se d o n asep arat e sc he m e an d s ep arat e fal se reco rd s. Inad di ti on to a cert ifi cat io n o f co m

pl ia nc e, th e CIA re qu ire d t he Defen da nt s t o s ub m itan nu al ly a
ran do m sample o f pa ti en t ac co un ts (th e “ Dis co ve ry Sam pl e”) t o t he Offic e o f In sp ect orGene ral /In de pe nd en t Re vi ew Org an iz at io n (“ IRO”) . The IR O wou ld th enrev ie w th e p at ie ntacco un ts inth e Dis co ve ry Sam pl e to de te rm in e whe th er al l CIA requi rem en ts ha d b een sat is fie d. If the IRO rev ie w res ul te d i n a n e rro r rat e o f ab ov e 5 %, th e IRO wo ul d i ni ti at e anau di t o f al l p at ie ntacco un ts . In st eadof s up pl y in g aDis co ve ry Sam pl e o f ran do m

pa ti en t ac co un ts as requi red , Defen da nt s re m ov edacco un ts th atco nt ai ne d Ov erp aym en ts , gen erat ed
m ul ti pl e sa m

pl es , andth enrem ov edall rem ai ni ng ev id en ce o f th e Ove rp aym en ts fro m th es e sa m

pl es un ti l a p erfe ctsample wa s cr eat ed . As a res ul t, the Dis co ve ry Sam pl e p as se d t he an nu al IRO rev ie w in20 05 th ro ug h 2 00 8 wi th a 0% e rro r rat e an d t he Defen da nt s av oi de d aful l au di t, wh ic h wo ul d h av e rev eal edth e un res ol ve d Ov erp aym en ts . Rela to r Mat he ny pers on al ly part ic ip at edinth e 6m an ip ul at io n o f th e Dis co ve ry Sam pl e. Co un t II all eg es th e Defen da nt s m ad e an d
us edth es e fal se Dis co ve ry Sam pl es to co nc eal th e o bl ig at io n t o re mit Ove rp aym en ts withi n thi rty days of i de nt ifi cat io n.

JURI SDICT IO N AND STANDARD OF REVIEW W e h av e juri sd ic ti on to rev ie w a fin al ord er o f th e d is tri ctco urt u nd er 2 8 U.S.C. § 1 29 1. W e rev ie w de n ov o adi sm is sa l fo r fai lu re t o s ta te a cl ai m up on 6 whi chrel ie f m ay

be gra nt ed . Cor se ll o v . Lin care , Inc ., 42 8 F .3d10 08 , 10 12 (11 th Ci r. 20 05 ) (p er cu ria m) (ci ti ng Uni te d S ta te s ex rel . Claus env. Lab . Cor p. o f Am ., In c., 29 0 F .3d13 01 , 13 07 n.1 1 (1 1t h C ir. 2 00 2) ). W e acc ep t as tru e th e fac ts al le ge d i n t he co m

pl ai ntan d c on st ru e th e fac ts inth e li gh t m os t fa vo rab le to th e pl ai nt iff . Cor se ll o, 4 28 F.3dat 1 01 2; Whi te v. Lem ack s, 1 83 F.3d12 53 , 12 55 (1 1t h C ir. 1 99 9)
. DISCUSS IO N The Fal se Cla im s Act(“ FCA”) im po se s l iabi li ty on a ny pers on who

“ kn owi ng ly m ak es , us es , or c au se s t o b e m ad e o r us ed , a fal se reco rdor s ta te m en t to co nc eal , avo id , or d ecre as e anob li ga ti on to pa y or tran sm itm on ey

or p ro pe rty to th e Gov ern m en t[.]” 31 U.S.C. § 3 72 9( a)(7 ). Thi s i s kno wn as th e “ rev ers e 7 The district cour

t had jurisdiction under 28 U.S.C. § 1331 and 31 U.S.C. § 3732. 6 In 2009, Congr ess amende d and re numbere d sections of the F CA. Fra ud Enforc ement 7 (continued...) 7fal se cla im ” p ro vi si on of t he FCA b ecau se li ab il ity res ul ts fro m

av oi di ng th e pa ym en t o f m on ey

du e to th e g ov ern m en t, as op po se d t o s ub m it ti ng to th e go ve rn m en t a f

al se cla im . See Un it edSta te s v . Pem co Aero pl ex , Inc ., 19 5 F .3d 12 34 , 12 35 –3 6 (1 1t h C ir. 1 99 9) . The p ur po se of t he FCA is to en co ur ag e p riv at e ci ti zen s wh o a re awar e o f frau d a ga in stth e g ov ern m en t t o e xp os e th e fraud , whi le pr ev en ti ng op po rtu ni st ic su it s b y in di vi du al s wh o h ear o f frau d p ub li cl y bu t p la y no pa rt i n e xp os in g i t. Co op er, 1 9 F .3dat 5 65
. To es tabl is h arev ers e fal se cla im , a rel at orm us t p ro ve : (1 ) a fal se reco rdor st at em en t; (2) th e d efen da nt ’s kn owl ed ge of t he fal si ty; (3) th atth e d efen da nt
m ad e, us ed , or c au se s t o b e m ad e o r us eda fal se st at em en t o r rec or d; (4) forth e pu rp os e to co nc eal , avo id , or d ecre as e anob li ga ti on to pa y m on ey to th e go ve rn m en t; an d (5 ) th e m at eri al ity of t he mis rep res en ta ti on . See 3 1 U.S.C. § 3 72 9( a)(7 ); s ee al so Uni te d S ta te s v . Bou rs eau , 53 1 F .3d11 59 , 11 64 –7 0 (9 th Ci r. 20 08 ). At the pl ead in g s ta ge , a co m pl ai ntall eg in g v io la ti on s o f th e FCA m us t sa ti sf y two pl ead in g re qu ire m en ts . Firs t, the co m pl ai ntm us t p ro vi de “ a sh ort an d pl ai n s ta te m en t o f th e cl ai m sh owi ng th atth e p le ad er i s en ti tl edto rel ie f.” Fed . R. (...continued) 7 & Re cover

y Act of 2009, § 4( a), Pub. L . No. 111–21, 123 Stat. 1617, 1621–22 (2009). The se amendments do not apply to this case. See id. § 4( f), 123 Stat. at 1625. Citations herein re fer to the FCA w ithout the 2009 amendments. 8Ci v. P. 8 (a)( 2) . A com pl ai ntcan no t m erel y

reci te th e el em en ts of acau se of a ct io n bu t m us t co nt ai n fa ctua l al le ga ti on s s uf fic ie ntto rai se th e ri gh t t o re li ef ab ov e th e sp ecu la ti ve lev el . Bell Atl . Cor p. v . Twom

bl y , 55 0 U.S. 5 44 , 55 5 (2 00 7)
. Seco nd , a co m pl ai ntm us t co m pl y with R ul e 9 (b )’s he ig ht en edpl ead in g s ta nd ard , whi ch requi res a party to “ st at e wit h p art ic ul ari ty the cir cu m st an ces co ns ti tu ti ng frau d o r m is ta ke .” Fed . R. Civ . P. 9(b ); C laus en , 29 0 F .3dat 1 30 8– 09 (ho ld in g R ul e 9 (b ) ap pl ie s t o F CA cl ai m s) . The p ur po se of Rul e 9 (b ) is to “ al ert [] defen da nt s t o t he pr eci se m is co nduc t wi th whi chth ey are ch arg edan d p ro te ct [] defen da nt s ag ai ns t sp ur io us ch arg es . . . .” Ziem bav. Ca sc ad e In t’l, In c., 25 6 F .3d11 94 , 12 02 (11 th Ci r. 20 01 ) (ci ta ti on an d i nt ern al qu ot at io n m ark s o m it te d)
. The pa rti cu la rit y

requi rem en t o f Ru le 9(b ) is sat is fie d i f th e co m pl ai nt al le ge s “ fact s as to ti m e, pl ace, a ndsubs ta nc e o f th e d efen da nt ’s all eg edfrau d, sp eci fic al ly the de ta il s o f th e d efen da nt s’ all eg ed ly fraudul en t ac ts , when th ey oc cu rred , andwho en ga ge d i n the m .” Hop pe r v. So lv ay Ph arm ., Inc ., 58 8 F .3d 13 18 , 13 24 (1 1th C ir. 2 00 9) (in te rn al qu ot at io n m ark s o m it te d) (ci ti ng Claus en , 29 0 F .3dat 1 31 0) ); s ee al so Ziem ba , 25 6 F .3dat 1 20 2 (n ot in g t he pl ead in g st an da rd s ar e sa ti sf

ie d i f al le gi ng pre ci se ly wha t s ta te m en ts were m ad e in what do cu m en ts , when , wher e an d b y who m , th e co nt en t, the m an ne r in whi chth ey m is le d t he pl ai nt iff

, andwhatth e d efen da nt s o bt ai ne d a s a c on se qu en ce o f th e 9frau d) . W e ad dr es s fi rs t the is su es co m m onto Co un t I a ndII an d t he n turn t o e ach
co un t i nd iv idua ll y . I. Is su es Comm on to Co unts I a nd I I A. Obl ig at io n The di stric t co urt d is m is se d C ou nt s I a ndII fo r fai lu re t o e st ab li sh th e ex is te nc e o f anob li ga ti on th atwas kno win gl y unpa id
. Defen da nt s d o n ot

8 ch al le ng e th e ex is te nc e o f anob li ga ti on , on ly whe th er tha t o bl ig at io n was vi ol at ed , whi chwe di sc us s b el ow. We con cl ud e Rel at or s h av e ad equa te ly alle ge d with p art ic ul ari ty the ex is te nc e o f anob li ga ti on to pa y m on ey to th e g ov ern m en t. To s us ta in a rev ers e fal se cla im act io n, re la to rs m

us t s ho w th atth e de fen da nt s o wedanob li ga ti on to pa y m on ey to th e Uni te d S ta te s atth e ti m e o f th e al le ge dl y fal se st at em en ts . See Pem co , 19 5 F .3dat 1 23 6– 37 . An ex pr es s co nt ractua l o bl ig at io n t o re m itex ces s g ov ern m en t p ro pe rty is ade fin it e an d c le ar ob li ga ti on forFCA p ur

po se s. See i d. at12 38 (ho ld in g a“ writ te n c on tra ctwhi ch

9

The district cour

t does not state whethe r it evaluated the existence of a n obligation 8 under Rule 8 or

9. Be causewe c onclude Rela tors have ple d the exist ence of an oblig ation with particula rity , we do not dec ide which plea ding sta ndard a pplies. Although not a

pplicable to this case , we note that Congre ss rec ently amende d the FCA 9 to define “ obligation” as “a n established duty , whether or not fixed, arising f

rom an e x press or implied contrac tual, grantor- grante e, or lice nsor-lice nsee r elationship, from a f ee- based or

simil ar relationship, from statute or regulation, or from the r etention of a ny overpa y ment[.] ” F raud Enforc ement & Recove ry Act of 2009, § 4(b)(3) , 123 Stat. at 1623. This amendment was not retroa ctive, and thus, this definition does not apply here . See id. § 4(f) , 123 Stat. at 1625. 10ex pr es sl y

ob li ga te d [d efen dant ] to be res po ns ib le an d a cco un tabl e fo r th e go ve rn m en t p ro pe rty in i ts po ss es si on an d t o re tu rnth atpro pe rty . . . inacco rd an ce with t he go ve rn m en t’s i ns tru ct io ns ” a s uf fic ie ntob li ga ti on ). Here, the Co m

pl ai ntco nt ai ns de ta il edall eg at io ns rel at in g t o t he Defen da nt s’ con tra ctua l o bl ig at io n t o i de nt ify, repo rt, a ndrem itex ces s go ve rn m en t m on ey

inacco rd an ce wi th th e CIA’s i ns tru ct io ns . Spe ci fic al ly, Rel at or s al le ge th atth e CIA o bl ig at edDefen da nt s t o re po rt andrem itall Ove rp aym en ts withi n thi rty days of i de nt ifi cat io n t hr ou gh th e u se of the Ove rp aym en t Re fu ndPaym en t Fo rm . This all eg at io n i s s up po rte d b y th e te rm s o f th e CIA, wh ic h s ta te th at“ [i]f atan y ti m e, Po lyMedi ca i de nt ifi es or l earn s o f an y Ove rp aym en t, Po lyMedi ca s ha ll no ti fy th e p ay or. . . withi n 3 0 d ay s af te r id en ti fic at io n o f th e Ove rp aym en t . . . . Pol yMed ic a sh al l re pa y th e Ove rp aym en t to th e ap pr op ria te pa y or

. . . .” The CI A def

in es Over pa y m en ts as “ th e am ou ntof 1 0
m on ey Po lyMedi ca h as rece iv edinex ces s o f th e am ou ntdu e an d p ay ab le un de r an y Fed eral he al th care pro gr am requi rem en ts .” The C om pl ai ntex pl ai ns th at
m on ey is no t “ du e an d p ay ab le ” if Po lyMedi ca l ack s t he ne ces sary do cum en ta ti on to m at chth atm on ey

to a sp eci fic pa ti en t ac co un t. With ou t the ne ces sa ry

The CIA and a ccount spre adshee ts are attached to the Complaint as exhibits , and thus, 1 0 we may consider the m here . Fe d. R. Civ. P . 10(c) (“Acopy of a written instrument that is an exhibi t to a pleading

is a part of

the pleadingfor a ll purposes.”).

11do cu m en ta ti on , th e en ti re p aym en t re cei ve d i s anOver pa ym en t tha t m

us t b e rep ai d. Th e Co m

pl ai ntou tl in es th e p ro cedur es setby the CIA whi chDefen da nt s m us t u se to rem itany

id en ti fie d Ov erp aym en ts . Und er the se pro cedur es Ove rp aym en ts m

us t b e rem it te d wi th anOver pa ym en t Re fu ndPaym en t Fo rm withi n t hi rty days of i de nt ifi cat io n. Th e Ove rp aym en t Re fu ndPaym en t Fo rm requi res Po lyMedi ca t o s pe ci fy a reas on forth e Ove rp aym en t s uc h a s dup li cat e, bi ll edinerro r, or

in su ffi ci en t d oc um en ta ti on . Thu s, Re la to rs ha ve all eg edan ex pr es s co nt ractua l o bl ig at io n o n b eh al f of th e Defen da nt s t o re mitOver pa ym en ts withi n t hi rty days of i de nt ifi cat io n a ndde fin edth atob li ga ti on inde ta il with refe ren ces to parti cu lar co nt ractsec ti on s. Th es e fac tu al all eg at io ns are s uf fic ie nt to pl eadwith p art ic ul ari ty the ex is te nc e o f anob li ga ti onto pay m on ey to th e go ve rn m en t. B. Kno w in gl y The di stric t co urt fo un d t ha t Re la to rs ha d fa il edto all eg e th atth e Defen da nt s kno win gl y

subm it te d afal se Cert ifi cat io n o f Co m pl ianc e. The Defen da nt s d o n otsp eci fic al ly addres s R el at or s’ cha ll en ge inth is reg ard . W e co nc lu de th e Co m

pl ai ntad equa te ly alle ge s t ha t the Cert ifi cat io n o f Co m pl ia nc e an d t he Dis co ve ry

Sam pl e were kno win gl y

fal se . The FCA im

po se s l iabi li ty if th e d efen da ntkn owi ng ly “m ak es , us es , or 12cau se s t o b e m ad e o r us ed , a fal se reco rdor s ta te m en t . . . .” 31 U.S.C. § 1 1 37 29 (a)( 7) . At th e p le ad in g s ta ge , “ kn owl ed ge , andot he r co nd it io ns of ape rs on ’s
m in d m ay

be all eg edge ne ral ly.” Fed. R. Ci v. P. 9 (b ). Here, Rel at or s al le ge th at Defen da nt s Pe raze ll a an d Do lan “ wil lfu ll y an d kno win gl y

de vi se d asch em e to crea te fal se reco rd s t o e li m in at e th e cas h o ve rp aym en ts .” Add it io na ll y , Rel at or s al le ge Co m

pl ia nc e Offi cer Ki m

Ram ey was fu ll y aware o f th e m is m an ag em en t o f Ove rp aym en ts an d the us e o f th e d at afi x i n v io la ti on of t he CIA, bu t n ev erthe le ss cert ifi edth atth e Defen da nt s wer e in co m pl ia nc e wit h a ll CIA requi rem en ts . On Co un t II , Rel at or s al le ge “ [t]he crea ti on of m ul ti pl e ran do m

Dis co ve ry

Sam pl e li st s was anin te nt io na l an d kno win g a tt em pt ” b y th e Defen dant s t o m ak e a fal se reco rdan d a vo idanob li ga ti on to th e g ov ern m en t. Un de r Ru le 9(b )’s st an dard s, th es e g en eral all eg at io ns are s uf fic ie nt . II . Cou nt I : Fal se Certi fic at io n o f Compli an ce In o rd er t o s ta te a cau se of a ct io n, a F CA rel at or m us t al le ge : (1 ) a fal se reco rdor s ta te m en t; (2) th e d efen da nt ’s kn owl ed ge of t he fal si ty; (3) th atth e de fen da ntm ad e, us ed , or c au se d t o b e m ad e o r us eda fal se st at em en t o r rec or d; (4 ) fo r th e p ur

po se to co nc eal , avo id , or d ecre as e anob li ga ti on to pa y m on ey to

The F CA defines “ knowing ly” as when a pe rson “( 1) has a ctual knowledg e of the 1 1 information; (2) a cts in deliberate ignoranc e of the truth or fa lsity of the infor

mation; or (3) a cts in rec kless disreg ard of

the truth or fa lsity

of the infor

mation . . . .” 31 U.S.C. § 3729(b). 13th e g ov ern m en t, an d; (5) th e m at eri al it y of t he m is rep res en ta ti on . See 3 1 U.S.C. § 3 72 9( a)(7 ); s ee al so Bo ur se au , 53 1 F .3dat 1 16 4– 70 . Here, th e rem ai ni ng el em en ts at i ss ue are wh ethe r th ere was a Cert ifi cat io n o f Co m pl ia nc e, an d i f so , whe th er i t was fal se an d m at eri al
. A. Ex is tenc e a nd Sub m is si on of t he Cert ifi ca tio n o f Compli an ce The di stric t co urt fo un d R el at or s fa il edto all eg e a b as is of kno wled ge of t he
co nt en ts of t he Defen da nt s’ Cert ifi cat io n o f Co m pl ia nc e. The Def

en da nt s ar gu e th is ba si s o f kn owl ed ge m us t b e p ers on al kn owl ed ge of the actua l ce rti fic at io n o r it s s ub m is si on an d t ha t o nl y em pl oyees i n t he co m

pl ia nc e d ep art m en t co ul d o bt ai n su chkn owl ed ge . Accor di ng to Defen da nt s, wi th ou t s uc h kno wled ge , th e al le ga ti on th ata Cert ifi cat io n o f Co m pl ia nc e actua ll y

ex is te d o r was subm it te d i s co nc lu so ry . W e co nc lu de th e Co m pl ai ntall eg es with p art ic ul ari ty the actua l
ex is te nc e an d s ub m is si on of t he Cert ifi cat io n a ndth us , is no t co nc lu so ry . 1 2 Inord er t o p le adth e subm is si onof afal se cla im with p art ic ul ari ty, a rel at or We note that for a

reve rse f alse c laim action, pre sentment of a f alse c laim is not at 1 2 issue and pre sentment of a f alse stateme nt is not required by the statute and thus, does not ne ed to be pled. See 31 U.S.C. § 3729(a)(7) ; c.f. Hoppe r, 588 F .3d at 1327 (holdingthe abse nce of a prese ntment clause in § 3729(a)(2) means re lators do not have to plea d the ac tual prese ntment of a fa lse claim). When the f alse stateme nt is alleg ed to be a Certification of Compli ance , howeve r, submissi on to the g overnme nt may be one w ay

to demonstrate how the Certification was materia l to the conce alment of a

n obligation. Thus, we will consider whe ther the Cer tification was submitt ed to the g overnme nt, not, as Defe ndants alleg e, bec ause our prec edent r equire s it, but beca use submission may

be nec essar

y to demonstrate mate riality . See Ne der v. United States, 527 US 1, 16 (1999) (de finingmateria lity as havingthe “na

tural tende ncy

to influence . . . the decisionmakingbody

to which it was addr essed” ) (c itations omi tted). 14m

us t i de nt ify the pa rti cu la r do cum en t an d s ta te m en t al le ge d t o b e fal se , who m ad e orus edit , when th e st at em en t was m ad e, ho w th e st at em en t was fal se , andwhat th e d efen da nt s o bt ai ne d a s a r es ul t. See Hop pe r, 58 8 F .3dat 1 32 4 (c it in g C laus en , 29 0 F .3dat 1 31 0) . Here, th e Co m pl ai ntco nt ai ns factua l al le ga ti on s re la ti ng di rect ly to the subm is si on of t he Cert ifi cat io n o f Co m pl ia nc e. Rel at or s s ta te ex act ly whi chdo cu m en ts (th e an nu al rep ort o f 20 08 ), ex act ly whi chsen te nc e an d it s s ub st an ce (“ Po lyMedi ca i s i n c om pl ia nc e wit h a ll of t he requi rem en ts of t hi s CIA”) , who was re sp on si bl e (Co m pl ia nc e Offi cer Ki m

Ram ey un de r th e d ire ct io n of Defen dant s Do la n a ndPera zel la ), whe n the Cert ifi cat io n was subm it te d (2 00 8 rep orti ng pe rio d) , ho w th e st at em en t m is le d t he go ve rn m en t (f al se ass ur an ce o f
co m pl ianc e), an d wh atth e Defen da nt s g ai ne d a s a r es ul t ($ 69 m il li on ). Thi s i s n ota cas e li ke Claus enan d i ts pro ge ny, in wh ic h t he co m pl ai nt fai le d t o a ll eg e an y

factua l s pe ci fic s i de nt ifyin g t he ex is te nc e o r subm is si onof a n actua l cl ai m . See e.g ., Cor se ll o, 4 28 F.3dat 1 01 3– 14 (ho ld in g c om pl ai ntfai le d t o sa ti sf y Ru le 9 wh enitfai le d t o a ll eg e th e who , what , when , wher e, an d h ow o f th e frau du le ntsubm is si on s) ; Un it edSta te s ex rel . Atk in s v . McIn te er, 4 70 F.3d13 50 , 13 58 (11 th Cir . 20 06 ) (h ol di ng co m pl ai ntfai le d t o a ll eg e wit h p art ic ul ari ty the actua l s ub m is si on of afal se cla im ); C laus en , 29 0 F .3dat 1 31 2 (h ol di ng rel at or ’s fai lu re t o a ll eg e if

or wh enan y

actua l i m pr op er cl ai m s wer e subm it te d was fat al to 15co m

pl ai nt ). Here, Rel at or s p le d s pe ci fic s re la ti ng to th e subm is si on of asp eci fic st at em en t i n asp eci fic do cu m en t, s ub m it te d b y a sp eci fic pe rs on du rin g asp eci fic
rev ie w, as re qu ire d b y

a pa rti cu la r go ve rn m en t co ntract . Becau se th es e al le ga ti on s are wel l-p le d, we m ay

acce ptth em

as t ru e an d c on cl ud e th ata Cert ifi cat io n was actua ll y subm it te d. Re la to rs do no t n eedto furth er s up po rt t he ir we ll -p le d fa ctua l al le ga ti on s wi thso m e o th er “ factua l b as is ,” su chas p ers on al kn owl ed ge of t he
subm is si on or e m

pl oym en t i n t he co m

pl ia nc e d ep art m en t. See Claus en , 29 0 F .3d at13 12 –1 4 (n ot in g c or

po rat e o ut si de rs m ay

ha ve a hard er t im e g athe rin g t he factua l s pe ci fic s n eces sary to pl eada cl ai m

bu t n ot in g t he same ple ad in g s ta nd ard ap pl ie s re ga rd le ss of the rel at or ’s st atus ). Eve n i f Rel at or s d idne edto all eg e so m e le ve l o f pe rs on al kn owl ed ge or in si de r st atus , th ey

ha ve do ne so . In ad di ti on to Rel at orMat he ny’ s i nv ol ve m en t i n th e Apr il 20 06 m eet in g i n wh ic h Ov erp aym en ts were i de nt ifi ed , Rel at orMathe ny al le ge s s ub se qu en t i nv ol ve m en t i n t he di sc us si on s an d o pe rat io n o f th e d at afi x. Fo r ex am pl e, in a m eet in g o n Ap ril 21 , 20 08 , Com pl ia nc e Offi cer Ki m

Ram ey al le ge dl y ask edRel at orMathe ny whathapp en edto all of the unba tc he d c as h a nd Rel at orMat he ny repo rte d t he da ta fix sch em e. Rel at orMat he ny als o m etwith Ass is ta nc e Vic e Pre si de ntof C om pl ia nc e Nan cy

Greg ory on or abo utApri l 2 3, 20 08 to di sc us s t he us e o f th e d at afi x a ndcas h Ov erp aym en ts . Thes e al le ga ti on s 16de m on st rat e th atRel at orMat he ny, des pi te no t t ech ni cal ly a m em be r of th e co m pl ianc e d ep artm en t, was in vo lv edan d p ers on al ly aware of th e p ro ces s h e n ow cl ai m s t o b e fraudul en t. Per so na l i nv ol ve m en t wi th th e fu nd s, d ire ctco nv ers at io ns with Def en da nt s re ga rd in g the Over pa ym en ts , andpe rs on al kn owl ed ge of t he
acco un t p ro cedur es an d C IA requi rem en ts furth er s up po rt R el at or s’ all eg at io ns . See Un it edSta te s ex rel . W al ke r v. R &F Pr op ert ie s o f Lak e Cn ty. In c., 43 3 F .3d 13 49 , 13 60 (11 th Cir . 20 05 ) (n ot in g t ha t al le ga ti on s o f pe rs on al kn owl ed ge res ul ti ng fro m

em pl oym en t an d c on ve rs at io ns with b il li ng em pl oyees c anpro vi de
supp ort t o aFCA co m

pl ai nt ). Thu s, Re la to rs est ab li sh edth e ex is te nc e an d
subm is si on of aCert ifi cat io n o f Co m pl ia nc e b y

Defen da nt s. We no w tu rnto whe th er thi s C ert ifi cat io n was fal se . B. Fal se Sta tement Inord er t o e st ab li shth atth e Certi fic at io n o f Co m pl ia nc e was a fal se st at em en t, Re la to rs m

us t al le ge with p art ic ul ari ty how Def en dant s v io la te d t he CIA. The di st ric t co urt h el d andth e Defen dant s ar gu e th atth e Co m pl ai ntfai le d t o al le ge a factua l b as is to sh ow tha t the fun ds id en ti fie d i n t he Co m pl ai ntwere actua ll y Over pa ym en ts . W e co nc lu de Rel at or s h av e p le d wi thpa rti cu la rit y th e 1 3
The district cour

t found the fa ilure to show the oblig ation was not repaid was f atal to 1 3 the Complaint. In order

to show the Certification of Compli ance was false, Relators must alleg e that at the time of Cer

tification the CIA had be en violated, r eg ardle ss of whethe r it was later (continued...) 17ex is te nc e o f Ove rp aym en ts th atwere n otrep ai d a cco rd in g t o t he CIA in st ru ct io ns

an d t hu s, h av e es tabl is he d avi ol at io n o f th e CIA. Inord er t o p le adwith p art ic ul ari ty, Rel at or s m us t al le ge th e ti m e, pl ace, a nd
subs ta nc e o f th e Defen da nt s’ vi ol at io n o f th e CIA, s pe ci fic al ly, th e d et ai ls of t he wha t co ns ti tu te d t he vi ol at io n, wh enitoc cu rred , andwho en ga ge d i n i t. See Hop pe r, 58 8 F .3dat 1 32 4. Here , Rel at or s al le ge th atinApri l 2 00 6 andag ai n i n Mar ch20 08 , Defen dant s Pe raze ll a an d Do la n i de nt ifi ed$6 2 m il li on in Ove rp aym en ts res ul ti ng fro m in su ffi ci en t d oc um en ta ti on an d $ 7 m il li on in Ove rp aym en ts res ul ti ng fro m dupl ic at e b il li ng s o r ot he r erro rs . Thes e Ove rp aym en ts rem ai ne d i n t he Defen dant s’ acco un ts form or e th anth irt y da y s un ti l Def en da nt s el im in at edth e Ove rp aym en ts fro m th ei r rec or ds , or app li edth e Ove rp aym en ts to fic ti ti ou s p at ie ntacco un ts or u nr el at edpa ti en t ac co un ts . Bec au se th e CIA re qu ire d Def en da nt s t o re m itall Over

pa ym en ts withi n t hi rty days of id en ti fic at io n, an d t he id en ti fie d Ov erp aym en ts rem ai ne d i n t he Defen da nt s’
acco un ts fortwo y ears , th e Co m pl ai ntall eg es th atth e Defen da nt s d idno t co m pl y with t he CIA requi rem en ts . (...continued) 1 3 repa id. Moreover , Relators alleg e the oblig ation was not mere ly to remit Overpa

y ments, but to do so within thi rty

day s of identification with the Overpa y ment Request For

m. The fa ilure to use that proce ss within the thirty day deadline is itself a

violation of the CIA, re g ardle ss of whethe r Over pay ments were eventua lly

repa id. Thus, whether

the Def endants violated the CIA does not turn on repa

y ment of the Ove rpay

ments. 18Rel at or s s up pl y parti cu lariz edfact s t o s up po rt t he se all eg at io ns . Rela to rs al le ge th e d at e o f th e m eet in g i n wh ic h Ov erp aym en ts were i de nt ifi ed , sp eci fy th e em pl oyees i n a tt en da nc e b y

na m e an d t it le , andid en ti fy so m e o f th e acc ou nt s di sc us se d i n t he m eet in g b y acco un t n um

be r an d am ou nt . Atta ch edas e xh ib it s t o th e Co m pl ia ntare s ev eral sp read sh eetid en ti fy in g the acco un ts di sc us se d a t the Apr il 20 06 m eet in g b y

pa ti en t o r acc ou ntnu m

be r, th e Me di care or M ed ic ai d c la im in vo ic e num

be r orrei m

bu rs em en t ch ecknu m

be r, th e li ne it em

nu m be r of th e in vo ic e, th e carrie r, fis cal in te rm ed ia ry or i ns ur an ce co m

pa ny cod e, th e am ou ntof Ove rp aym en t, an d h ow l on g t he Over pa y m en t re m ai ne d i n e ach pa ti en t ac co un t. Altho ug h t he Co m

pl ai nt ’s exh ib it s i nc lu de de ta il s o n o nl y a po rti on of t he
acco un ts all eg edto co nt ai n Ov erp aym en ts , th e in cl us io n o f so m e rec or ds forso m e of th e acc ou nt s i s s uf

fic ie nt . Atk in s, 4 70 F.3dat 1 35 8– 59 (no ti ng th atwhi le da te s, am ou nt s, an d a cco un t n um be rs canpro vi de pa rti cu la rit y , Rul e 9 (b ) do es no t
m an da te all of t ha t i nf

orm at io n fo r eac h a ll eg edcla im , on ly “ so m e o f th e in fo rm at io n fo r atlea stso m e o f th e cl ai m s” ) (quo ti ng Claus en , 29 0 F .3dat 1 31 2 n.2 1)
. Rel at or s fu rth er s up po rt t he ir a ll eg at io n o f th e ex is te nc e o f Ove rp aym en ts with p ers on al kn owl ed ge of the id en ti fic at io n. Re la to r Mat he ny all eg es he was pr es en t atth e m eet in g wh enth e acc ou nt s wer e id en ti fie d b y a Co m pl ia nc e Offi cer 19as Over

pa ym en ts . He als o a ll eg es th athe di sc us se d t he ex is te nc e o f Ove rp aym en ts with C om pl ia nc e Offi cer R am ey

an d the ap pr op ria te ne ss of t he da ta fix sch em e. Su chco nv ers at io ns an d d ire ctkn owl ed ge rel at in g t o h ow the Defen da nt s i de nt ifi edOver pa y m en ts furth er s up po rts Rel at or s al le ga ti on s. See Cl au se n, 2 90 F.3dat 1 30 6 (s earc hi ng th e co m pl ai ntforall eg at io ns of b il li ng pr act ic es or s eco nd -h an d i nf orm at io n abo utbi ll in g p ract ic es ); s ee al so W al ke r, 43 3 F .3dat 1 36 0 (h ol di ng at l eas t o ne pe rs on al di sc us si on reg ard in g d efen da nt s bi ll in g p ract ic es an d b ei ng to ldho w th e d efen dant s b il l the go ve rn m en t s uf fic ie nt to supp ort an all eg at io n o f a fraudul en t cl ai m). Here, Rel at or Mat he ny’ s p ers on al kn owl ed ge an d d is cu ss io ns rel at in g t o h ow, wh en , andwho id en ti fie d t he
ex is te nc e o f Ove rp aym en ts len ds supp ort t o t he all eg at io n t ha t Ov erp aym en ts ex is te d, wer e id en ti fie d b y th e d efen da nt s, an d c anbe fou ndinth e atta ch ed
acco un ts . Thu s, Re la to rs ’ al le ga ti on s ar e p art ic ul ar b ecau se th ey est ab li sh ex act ly ho w th e Defen dant s v io la te d t he CIA, in cl ud in g wh enth e v io la ti on s o ccu rred , who di rect edan d p erfo rm edth e v io la ti on s, h ow an d wh ic h a cco un ts were affe ct ed , andwhatth e Defen dant s g ai ne d a s a r es ul t. Defen da nt s ar gu e th es e al le ga ti on s fa il to sat is fy th e p art ic ul ari ty requi rem en t b ecau se th e Co m pl ai ntdo es no t s ho w th e fu nd s i de nt ifi edinth e Co m pl ai ntwere re cei ve d fr om fed eral pa y or s o r th atth ey were i n e xc es s o f th e 20am ou ntdu e an d p ay ab le to Defen da nt s. Co nt rary to Def en da nt s’ firs t ar gu m en t, th e Co m pl ai ntco nt ai ns de ta il edall eg at io ns th atth e Ove rp aym en ts were re cei ve d fro m Med ic are, M ed ic ai d, o r ot he r fed eral ly fun de d h eal th care pro gr am s. Th e Co m pl ai ntsp eci fie s t he Med ic are o r Med ic ai d i nv oi ce num be r orrei m

bu rs em en t ch eckan d the “ carr ie r, fis cal in te rm ed ia ry an d/ orin su ran ce co m

pa ny cod e” fo r acco un ts all eg edto co nt ai n Ov erp aym en ts . The ex hi bi ts als o i de nt ify the Med ic are o r Med ic ai d c la im in vo ic e num

be r fo r th e cl ai m

ori gi na ll y

subm it te d t o th e g ov ern m en t o r th e g ov ern m en t re im bu rs em en t ch ecknu m

be r. By pro vi di ng th e sp eci fic am ou nt , in vo ic e num be r, an d c arri er co de , th e Rel at or s h av e al le ge d th e ex is te nc e o f fed eral fun ds with p art ic ul ari ty. Defen da nt s’ sec on d a rg um en t, re la ti ng to th e d efi ni ti on of “ du e an d pa y ab le ,” is equa ll y

witho utm eri t. The Co m pl ai ntall eg es $6 2 m il li on in Ove rp aym en ts res ul te d fr om th e la ckof s uf

fic ie ntdo cu m en ta ti on to m at chth e pa ym en ts to sp eci fic pa ti en t ac co un ts . As de sc rib edab ov e, Rel at or s al le ge in de ta il , andwith s up po rt o f th e CIA, h ow am ou nt s n ot“ du e o r pa y ab le ” in cl ud e pa ym en ts forwhi chDefen da nt s ca nn otpro vi de su ffi ci en t d oc um en ta ti on to m at ch th e p aym en t t o apa ti en t. Rel at or s s up po rt t he ir a ll eg at io ns with e xh ib it s t ha t id en ti fy th e sp eci fic fic ti ti ou s p at ie ntacco un t n um be rs us edto ho ldth e unm at ch ed pa ym en ts . The ex hi bi ts als o s ho w acco un ts th atha ve po si ti ve ba la nc es aft er al l 21de bi ts , cred it s, an d p aym en ts , whi chsu gg es t the go ve rn m en t p ai d Def en da nt s m or e th anDefen da nt s re qu es te d t o c ov er the co stof t he pa rti cu la r pa ti en t. Altho ug h Def

en da nt s d is pu te th e in te rp ret at io n o f th e CIA t o i nc lu de pa ym en ts th atlac k s uf

fic ie ntdo cu m en ta ti on , su chanarg um en t g oe s t o t he m eri ts of t he cas e an d d oe s n otaffe ctth e su ffi ci en cy of t he Co m

pl ai nt ’s all eg at io ns at t he pl ead in g st ag e. 1 4 Rel at or s h av e th eref

or e p le d wi th pa rti cu la rit y th atDefen da nt s i de nt ifi ed Ove rp aym en ts bu t fa il edto rep ort o r rem itth e fu nd s as th e CIA re qu ire d. Be cau se Rel at or s h av e es tabl is he d avi ol at io n o f th e CIA, the Cert ifi cat io n o f Co m pl ia nc e subm it te d b y

Defen da nt s co ns ti tu te d afal se st at em en t. We no w tu rnto whet he r

Def endants a rgue Relators’ definition of Over pay ments to include pay

ments with 1 4 insufficient doc umentation is based on CIA provisions taken out conte x t. Specifica lly , Def endants a rgue the de finition relied on by Relators applies only

for pur poses of the a

nnual “Claims Review” a

nd if such a de finition applied to Overpa y ments in other situations, a definition for only

this purpose would not be nee ded. We ca nnot and do not conclude whether Def endants have a via

ble def ense to Relator s’ alleg ations based on the inter pretation of the CIA. At the pleadingstag e, we are limit ed to conc luding whe ther Relator s’ Complaint alleg es a plausible claim for

relief that has bee n pled with particula rity . In addition to the definition disputed by

Def endants, Relator s alleg e that the Ove rpay ment Refund F orm requir ed De fenda nts to specify why the re funded mone y

was a n Over pay ment and that one of

the ava ilable def

initions was “ insufficient doc umentation.” Relators a lso alleg e that fe dera l law prohibits Defe ndants from tra nsfer ringpay ments designated f

or one patient to a differ ent patient ac count. It seems plausible that if the De fenda nts lacked the documentation nec essar y to determine to whic h patient the pay

ment applied, the pa

y ment was not “due and payable” beca use the De fenda

nts could not apply

that pay ment to the corr ect patient acc ount. Moreover , even if the def inition of Over pay ments does not include pay ments with insufficient documentation, Relators alleg e that $7 milli on in Overpa

y ments resulted fr om duplicate billings or pa y ments billed in error. T hus, even if Def endant’ s interpre tation of the CIA is corr ect, this mere ly decr ease s the damag e to the g overnme nt and does not destroy Relators’ plausible c laim for re lief.

22th atCert ifi cat io n o f Co m pl ia nc e h ada m at eri al affe cton th e g ov ern m en t’s de ci si on -m ak in g. C. Mat eri al The di stric t co urt h el d R el at or s fa il edto sh ow h ow the Defen da nt s u se d o r cau se d t o b e u se d, the Cert ifi cat io n o f Co m pl ia nc e to co nc eal , avo id , or d ecre as e anob li ga ti on to th e g ov ern m en t. Defen da nt s d o n otsp eci fic al ly addres s 1 5 Rel at or s’ cha ll en ge inth is reg ard . W e h ol d t ha t b ecau se th e CIA re qu ire d t he Defen da nt s t o p ro vi de anaccu rat e acc ou ntof a ny exce ss go ve rn m en t p ro pe rty in th e Defen da nt s’ po ss es si on , andth e Certi fic at io n o f Co m pl ia nc e m is rep res en te d th e v al ue of t he pro pe rty in t he Defen da nt s’ po ss es si on , th e subm is si on of t he Cert ifi cat io n p lay eda m at eri al rol e in th e co nc eal m en t an d a vo id an ce o f an ob li ga ti on . To b e m at eri al , a m is rep res en ta ti on m us t h av e th e ab il ity

to in flu en ce the go ve rn m en t’s d eci si on -m ak in g. Se e Ned er, 5 27 U.S. at 1 6 (d efi ni ng m at eri al it y as The F CA require s a showingthat the def endants “ makes, uses, or

cause to be made or 1 5 used” a false statement with the purpose to c oncea l an obliga tion. 31 U.S.C . § 3729(a) (7). In Astra, on whic h the district court ba sed its conclusion, it was undisputed that the def endants did not make the c ertifica

tions, and thus, relators ne eded to show that the defe ndants “used” the cer tifications. United States ex rel. Culli ns v. Astra, Inc., 2010 WL625279, at *6 (S.D. F la. 2010). To the e x tent the district court found the Complaint di d not alleg e the De fenda nts “make, use, or c ause to be made or used” a Certification of Compli ance , we r efe r to our above discussion which conc luded Relators a dequate ly pled the existence a

nd submissi on of a Cer

tification. To the extent the district court conc luded Relators fa iled to show how the Certification played a r ole in the conce alment of the oblig ation, we c hara cterize the issue as materia lity of the misrepre sentation and re fer to the followingdiscussion.

23ha vi ng th e “ na tu ral ten de nc y to in flu en ce . . . th e d eci si on m ak in g b od y to whi chit
was ad dr es se d” ). W

he n t he go ve rn m en t re li es on th e d efen da ntto id en ti fy an d rep ort the va lu e o f go ve rn m en t p ro pe rty in t he de fen da nt ’s po ss es si on , andth e de fen da ntm is rep res en ts th e v al ue of t ha t p ro pe rty, the mis rep res en ta ti onis
m at eri al . See Pem co , 19 5 F .3dat 1 23 5 (h ol di ng co m pl ai ntall eg edth e requi red el em en ts of arev ers e fal se cla im cau se of a ct io n) . In Pe m co , th e d efen da nt ’s
co nt ractrequi redth e d efen da nt“up on de te rm in in g t ha t i t p os se ss edex ces s go ve rn m en t p ro pe rty . . . [to id en ti fy ] th e ex ces s p ro pe rty andto di sp os e o f th at pr op erty inacco rd an ce wi th th e g ov ern m en t’s i ns tru ct io ns .” Id . at 1 23 7. Th e de fen da ntco rp or at io n i n P em co id en ti fie d e xc es s g ov ern m en t ai rcra ft wi ng s i n i ts po ss es si on bu t m is -rep orte d t o t he go ve rn m en t the type o f ai rcra ft wi ng . Id. at 12 36 . As a res ul t, the go ve rn m en t ag reedto sel l the ex ces s p ro pe rty to t he de fen da nt s ata si gn ifi can t d is co un t. Id . at 1 23 6– 37
. Here, Re la to rs ha ve si m il arl y all eg eda co nt ractua l arran ge m en t wh ereb y th e go ve rn m en t re li es on th e Defen da nt s t o i de nt ify andrep ort ex ces s g ov ern m en t pr op erty inth e Defen da nt s’ po ss es si on . Once t he Defen da nt s i de nt ifi edex ces s pa ym en ts , th ey

ha d t he ob li ga ti on to rep ort an d re m itth e fu ll va lu e acc or di ng to th e CIA i ns tru ct io ns . Alth ou gh th e Defen da nt s i de nt ifi edOver pa ym en ts as e arl y as Apri l 2 00 6 a ndco nt in ue d t o i de nt ify mil li on s o f do ll ars inOver pa ym en ts 24th ro ug h 2 00 8, the Defen da nt s as su redth e g ov ern m en t, thr ou gh th e Certi fic at io n,

th atth ey di d n otpo ss es s an y

un rep orte d Ov erp aym en ts . By cert ifyin g t ha t the y di d n otowe t he go ve rn m en t an y ad di ti on al m on ey , th e Defen da nt s co nc eal edth e tru e v al ue of t he go ve rn m en t p ro pe rty in i ts po ss es si on . W e co nc lu de th e m is rep res en ta ti on was m at eri al be cau se , as ares ul t o f th e Certi fic at io n o f Co m pl ia nc e, th e g ov ern m en t was un ab le to id en ti fy an d re co ve r ex ces s go ve rn m en t p aym en ts . Thu s, Re la to rs ha ve su ffi ci en tl y pl edeachele m en t o f a
rev ers e fal se cla im

forth e Certi fic at io n o f Co m pl ia nc e an d t he di st ric t co urt’s di sm is sa l o f Co un t I i s re ve rs ed
. II I. Cou nt I I: Fal se Dis co ve ry Sa m pl e The di stric t co urt d oe s n otex pl ic it ly addres s C ou ntII, bu t s eem s t o h av e di sm is se d i t fo r fai lure t o e st ab li sh th e ex is te nc e o f anob li ga ti on th atwas n ot rep ai d. Defen da nt s ar gu e th e d is m is sa l o f Co un t II sh ou ldbe affi rm edbe cau se th e Co m pl ai ntdo es no t p le adwith p art ic ul ari ty tha t a Di sc ov ery Sam pl e was actua ll y subm it te d. Sp eci fic al ly, Defen da nt s ar gu e th e Co m pl ai ntdo es no t al le ge when
su chsamples were s ub m it te d, t o wh om th ey were s ub m it te d, wh o s ub m it te d t he m , orwhatex act ly the subm is si on co nt ai ne d. Defe nd an ts arg ue Rel at orMathe ny’ s pe rs on al in vo lv em en t i s i ns uf fic ie ntto supp ort h is all eg at io ns be cau se he co ul d

25ha ve be enwork in g o n t he crea ti on of asample f orDefen da nt s’ in te rn al us e o nl y an d n otforsubm is si on to th e g ov ern m en t. Bec au se we co nc lu de d abo ve th at Rel at or s ad equa te ly alle ge d a n o bl ig at io n, we ad dr es s o nl y th e Defen da nt s’ arg um en t. Here, the Co m

pl ai ntall eg es th atth e Defen dant s m ad e a fal se Dis co ve ry Sam pl e inOcto be r of

20 05 , 20 06 , 20 07 , and20 08 . The Co m pl ai ntall eg es th atth e Defen da nt s s ub m it te d t he Dis co ve ry Sam pl es to th e IRO au di to r du rin g t he an nu al
rev ie w inNov em

be r of th e sa m e y ears . The Co m pl ai ntall eg es inde ta il who m ad e th e Dis co ve ry

Sam pl es (LMS Bu si ne ss Anal y stem pl oyee Bo b S wiat ek ), who ap pr ov edan d d ire ct edth e p ro ces s (De fen da nt s Pe raze ll a an d Do la n) , andho w va rio us em

pl oyees, i nc lu di ng Rel at orMathe ny, alte redth e p at ie ntacco un ts to pr oduc e a fal se Dis co ve ry Sam pl e. Thu s, the Co m

pl ai ntall eg es whatst at em en t was fal se (th e Dis co ve ry

Sam pl e), i n wh atdo cu m en ts (th e an nu al rev ie w do cu m en ts ), whe n i t was subm it te d (b etweenOcto be r an d No ve m be r of each y ear) , to who m

itwas s ub mit te d (I RO au di to r), wha t the st at em en t d idan d d idno t co nt ai n (P ai d C la im s wi th no ev id en ce o f Ove rp aym en ts ), who ap pr ov edth e pr oc es s, an d wh o was res po ns ib le forde ve lo pi ng th e Dis co ve ry Sam pl es . The Co m pl ai ntdo es no t h owe ve r, sp eci fy by nam e o r ti tl e th e p ers onwho actua ll y pu sh edth e se ndbu tt on an d t ran sm it te d t he Dis co ve ry Sam pl e to th e IRO au di to r. 26W e d o n otco nc lu de th e ex cl us io n o f th is de ta il is fat al to Rel at or s’ Complai nt .

As Defe nd an ts reco gn iz e, we are m or e to le ran t t owa rdco m pl ai nt s t ha t l eav e ou t s om e p art ic ul ari ti es of t he subm is si on s o f a fal se cla im if t he co m

pl ai ntals o al le ge s p ers on al kn owl ed ge or p art ic ip at io n i n t he frau du le ntco nduc t. See W al ke r, 43 3 F .3dat 1 36 0 (h ol di ng di sc us si on s wi thbi ll in g e m pl oyee reg ard in g th e fraudul en t p ract ic es an d p art ic ip at io n i n t he pro ces s t ha t l edto fal se cla im s su ffi ci en t t o s at is fy

Ru le 9(b )). Rel at orMat he ny all eg es pe rs on al in vo lv em en t i n no t o nl y th e p ro ces s t ha t l eadto a fal se Dis co ve ry Sam pl e, bu t the crea ti on of t he actua l Di sc ov ery Sam

pl e th atwas s ub m it te d. We reco gn iz edth atRel at or Mat he ny’ s p ers on al in vo lv em en t d oe s n otrel at e to th e actua l s ub m is si on of t he Dis co ve ry

Sam pl e, bu t we co nc lu de Mat he ny’ s d et ai le d a ll eg at io ns of t he
acco un ti ng reco rd s, h is po si ti on at t he co m pa ny, andhi s i nv ol ve m en t wi th th e pa ti en t ac co un ts pro vi de su ffi ci en t s up po rt t o R el at or Mathe ny’ s al le ga ti on th athe
was work in g o n t he reco rd s u se d t o p op ul at e th e Dis co ve ry Sam pl e an d t he Dis co ve ry

Sam pl e it se lf, andno t m erel y anin te rn al sample. Se e Walke r, 43 3 F .3d at13 60 (ho ld in g e xp lana ti on s as to why rel at orbe li ev edfal se cla im s wer e subm it te d s uf

fic ie ntwhen rel at orha d p ers on al kn owl ed ge of t he sch em e). Seco nd , th is is no t a c as e, su chas C laus en , wher e th e p res en tm en t o f a fal se st at em en t i s an ele m en t o f th e cau se of a ct io n a ndth e si n quano n o f li ab il it y . See 27Cl au se n, 2 90 F.3dat 1 31 1. In st ead , th e subm is si onis rel ev an t o nl y to th e ex te nt ne ces sa ry to sh ow a m at eri al effe cton th e g ov ern m en t’s d eci si on -m ak in g. To th at en d, Re la to rs pro vi de ad di ti on al factua l s up po rt t o s ho w th e Dis co ve ry Sam pl e was subm it te d t o t he IRO au di to r. Acco rd in g t o t he Co m pl ai nt , on ce the Defen da nt s s ub m it te d aDis co ve ry Sam pl e, th e IRO wo ul d re vi ew th e sa m pl e acco un ts forOver

pa y m en ts or o th er erro rs . If th e Dis co ve ry Sam pl e res ul te d i n gr eat er tha n a5% erro r rat e, a fu ll au di t o f th e Defen da nt s’ acco un ts wou ldoc cu r. Fo r eac h year be twee n 2 00 5 a nd20 08 , th e IRO re vi ewedth e Dis co ve ry Sam pl e an d fo un d a0% erro r rat e. If a Di sc ov ery Sam pl e h adne ve r be ensubm it te d, the IRO co ul d n otha ve pe rfo rm eda rev ie w or d et erm in edanerro r rat e. Mo reo ve r, th e Co m pl ai ntall eg es th e CIA re qu ire d aDis co ve ry Sam pl e to be subm it te d e ve ry y ear a s p artof t he lar ge r an nu al rev ie w andsupp orts th atall eg at io n wi th ex pr es s co nt ractlan gu ag e. The u se of the Dis co ve ry Sam pl e to de te rm in e whe th er the 1 6 IRO co nduc te d a n e nt ire au di t o f th e Defen dant s’ acco un ts an d t he ex is te nc e o f a

Def endants a rgue that the CIA re quired the IRO to select the r andom sample a nd 1 6 there fore , the Def

endants ne ver submitted any thing to the IRO. Assuming the IRO selects the random sample itself, the I RO must st ill be made aw areof the total population of De fenda nts’ acc ounts in order to selec t a sample. Thus, e ven under the Def endants’ inter

pretation, the Def endants ha d to alert the IRO of the ac counts in some way . Whil e such c onduct may not be sufficie nt to establish presentment for an (a)(1) claim, it is sufficient to establish a material link betwee n the manipulated r ecor ds and the g overnme nt’s actions. More over, if D efe ndants manipulated the total population of a ccounts, a s alleg ed, and theI RO selecte d a ra ndom sample, Def endants c aused the I RO to use or make a fa lse (i.e. not ra ndom) rec ord. See 31 U .S.C. 3729(a) (2) ( imposing liability of a pe rson who “makes, uses, or c auses to be ma de or use d” a false statement). 28co nt ractua l o bl ig at io n t o s ub m itth e Dis co ve ry Sam pl e le nd s s up po rt t o R el at or s’ al le ga ti on s. We con cl ud e Rel at or s h av e p le d a ll th e rem ai ni ng ele m en ts fora rev ers e fal se cla im

forth e Dis co ve ry

Sam pl es an d t hu s, the di st ric t co urt’s di sm is sa l o f Co un t II is rev ers ed
. CONCLUSI ON Fo r th e fo reg oi ng reas on s, the di st ric t co urt’s d is m is sa l o f Co un t I a ndII o f th e Thi rdAm en de d C om pl ai ntis REVERSED.

29