P. Victor Gonzalez v. Planned Parenthood of La
2014 U.S. App. LEXIS 13999
| 9th Cir. | 2014Background
- Gonzalez, former CFO of Planned Parenthood Los Angeles, filed a qui tam suit under the federal False Claims Act (FCA) and the California False Claims Act (CFCA) alleging Planned Parenthood overbilled Family PACT/Medi‑Cal for contraceptives by billing its “usual and customary” rates instead of acquisition cost.
- Planned Parenthood participated in Family PACT and signed provider agreements requiring compliance with federal law and Family PACT billing requirements; the term “at cost” appears only in the Family PACT billing manual.
- From 1997–2004 Planned Parenthood billed reimbursements using its usual/customary rates; California Department of Healthcare Services (CDHS) corresponded with Planned Parenthood in 1997–98 about billing and received a reply stating Planned Parenthood billed at usual/customary rates, to which CDHS did not object.
- A 2004 CDHS audit found overcharges and acknowledged ambiguity in the billing manual’s definition of “at cost”; CDHS did not pursue recovery.
- Gonzalez was hired as CFO in 2002, fired in 2004, filed the qui tam complaint in December 2005, and the United States declined to intervene; the district court dismissed his third amended complaint with prejudice for failure to plead falsity/scienter under the FCA and held CFCA claims time‑barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gonzalez plausibly pleaded that Planned Parenthood presented false claims under the FCA | Gonzalez argued billing usual/customary rates instead of acquisition cost amounted to false claims | Planned Parenthood pointed to CDHS correspondence and audit ambiguity showing no knowing falsity | Dismissed — plaintiff did not plausibly plead the required knowing scienter; complaint contradicted by attached letters |
| Whether Rule 8/9(b) pleading standards were satisfied for FCA scienter | Gonzalez asserted falsity and scienter via alleged regulatory breaches and audit findings | Planned Parenthood argued the letters and state response showed an innocent or disputed interpretation, not knowledge of falsity | Dismissed — allegations only possible, not plausible; Rule 8(a)/9(b) unmet |
| Whether district court abused discretion by denying leave to amend | Gonzalez sought further amendment to cure pleading defects | Planned Parenthood argued amendment would be futile given attachments and prior amendments | Affirmed — denial not an abuse; futility justified refusal to allow further amendment |
| Whether CFCA claims were timely under California’s discovery statute | Gonzalez argued the CFCA claim accrual was later than CDHS correspondence or audit | Planned Parenthood argued state correspondence in 1997/98 (and audit) put the State on notice; suit filed in 2005 was untimely | Affirmed — CFCA claims barred by the three‑year statute of limitations from state discovery |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (establishes plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim, not merely possible)
- Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) (applies Iqbal/Twombly plausibility to FCA claims)
- Hagood v. Sonoma Cnty. Water Agency, 81 F.3d 1465 (9th Cir. 1996) (‘‘known to be false’’ means a lie; FCA scienter requires knowing falsity)
- United States ex rel. Hopper v. Anton, 91 F.3d 1261 (9th Cir. 1996) (innocent mistakes or differing interpretations are not FCA falsity)
- United States v. Gonzalez‑Rincon, 36 F.3d 859 (9th Cir. 1994) (appellate review may affirm on any supported ground)
- United States v. Bourseau, 531 F.3d 1159 (9th Cir. 2008) (state agency’s communications can bear on whether a defendant acted knowingly)