United States v. DC
793 F.3d 120
D.C. Cir.2015Background
- DCPS sought federal Medicaid reimbursement for FY1998 via interim claims and year-end cost reports under the Medicaid State Plan and 42 C.F.R. § 413 principles of reasonable cost reimbursement.
- Davis & Associates (a subcontractor) prepared DCPS’s FY1998 interim claims and retained original supporting documentation “for audit purposes”; DCPS later replaced Davis & Associates with Maximus for FY1999.
- DCPS did not submit the year-end cost report prepared by Davis & Associates; Maximus prepared and submitted FY1998 Special Education and Transportation Cost Reports in 2000, which led to contested adjustments and a proposed $7.6 million federal settlement.
- Davis filed a qui tam FCA suit alleging DCPS falsely certified it had documentation to support the FY1998 Transportation Cost Report when, in fact, Davis & Associates had physical possession of the underlying service records.
- The district court granted summary judgment for Davis on the Transportation Cost Report, finding DCPS submitted a single false claim knowingly and imposed maximum penalties; the D.C. Circuit reviewed de novo.
Issues
| Issue | Plaintiff's Argument (Davis) | Defendant's Argument (District) | Held |
|---|---|---|---|
| Whether DCPS’s FY1998 Transportation Cost Report contained an implied false certification that required DCPS to possess supporting documentation at time of submission | Davis: DCPS certified it had records to verify services; but Davis & Associates had physical possession, so DCPS falsely certified | District: Regulations required maintenance/availability of records but not physical possession; DCPS reasonably relied on Davis & Associates to produce records for audit | Held: No implied false certification; DCPS reasonably expected Davis & Associates to provide records, so no false claim |
| Whether noncompliance with the cited Medicaid recordkeeping regs is a condition of payment for FCA liability | Davis: Recordkeeping obligations are prerequisite to payment, so false certification triggers FCA | District: These regs govern participation/maintenance, not necessarily payment condition | Held: Court did not decide categorical status because Davis failed to show knowing violation; DCPS reasonably complied via contractor arrangement |
| Whether DCPS acted knowingly/recklessly (FCA scienter) in submitting the report | Davis: Submission was knowing because DCPS lacked physical records and had fired Davis & Associates | District: DCPS reasonably believed records could be produced through Davis & Associates and was not grossly negligent | Held: No evidence of knowing or reckless conduct; summary judgment for District required |
| Whether Davis forfeited new legal theories on appeal (e.g., that cost report must be generated directly from underlying service docs) | Davis: (argued at oral argument) DCPS was required to generate report directly from service documentation | District: Argument was not raised below or in briefs and thus forfeited | Held: Forfeited; court declined to consider the late-raised theory |
Key Cases Cited
- United States ex rel. Davis v. District of Columbia, 679 F.3d 832 (D.C. Cir. 2012) (prior appellate decision addressing relator status and remand)
- United States v. Sci. Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010) (explains implied certification theory for FCA claims)
- United States ex rel. Siewick v. Jamieson Sci. & Eng’g, Inc., 214 F.3d 1372 (D.C. Cir. 2000) (requires that certification be a prerequisite to government action for implied-certification FCA liability)
- United States v. Krizek, 111 F.3d 934 (D.C. Cir. 1997) (defines reckless disregard as an extension of gross negligence for FCA scienter)