*1 America, UNITED ex STATES rel.
Edyth SIKKENGA, Edyth L. L.
Sikkenga, behalf, on her own Plain
tiffs-Appellants,
REGENCE BLUECROSS BLUESH UTAH, formerly
IELD OF known as Utah;
Blue and Blue Cross Shield of Regional University
Associated
Pathologists, Inc.; Mitchell; P. John Pitcher; Brown, H.
Jed and Frank
Defendants-Appellees. America; Taxpayers
United States of
Against Fund; Fraud Education Ad Federal, Inc.;
minastar Bluecross Association;
Blueshield Blue Cross Alabama;
and Blue Shield of Blue Kansas;
Cross and Blue Shield Montana;
Bluecross Blueshield Nebraska;
Bluecross Blueshield Tennessee;
Bluecross Blueshield of York, Inc.;
Healthnow New Mutual of Company;
Omaha Insurance Noridian Company;
Mutual Insurance Premera
Bluecross; United Government Ser
vices, L.L.C.; Physicians Wisconsin Corporation;
Service Insurance Jon Huntsman, Jr.,
M. Utah, Governor of
Amici Curiae.
No. 05-4088.
United States Court of Appeals,
Tenth Circuit.
Dec. *3 Jr.,
Arthur England, J. Greenberg Trau- L.L.C., Miami, Florida; rig, and Daniel L. (David Day, Murray, Isom, Utah K. Greenberg L.L.C., Traurig, Denver, Colo- rado; Howell, Matthew R. Spenc- Fillmore er, L.L.C., Utah; Roger Hoole, Provo H. L.C., King, Hoole & City, Utah, Salt Lake briefs) with them on the for Plaintiffs- Appellants. Huffman,
Robert K. Miller & Chevalier Chartered, D.C., Washington, (Randy L. Dryer Blanch, and James T. Parsons Latimer, Behle Utah, & City, Salt Lake brief), him with on the for Defendants- Appellees Regence Bluecross Blueshield of Utah, Mitchell, John P. Pitcher, Jed H. and Frank Brown. Jardine,
James Ray Quinney & Nebek- er, P.C., City, Salt Lake Utah for Defen- dant-Appellee Associated Regional and University Pathologists, Inc. dollars,” Edyth Sikkenga brought suit un- Divi- Appellate Scarborough, W. Charles (“FCA”), Justice, Washington, sion, False Claims Act Department der the (Paul Warner, At- D.C., States 3729(a), M. that her former alleging U.S.C. Utah, City, Lake Salt torney, District Regence BlueCross BlueShield employer, Douglas N. Utah; D. Keisler and Peter (“Regence”), Regence man- three Utah Justice, Divi- Letter, Civil Department and Uni- agers, Regional and Associated D.C., him sion, Washington, (“ARUP”) Pathologists presented versity States brief), curiae the United for amicus Medicare claims to Government. false Plaintiffs-Appel- behalf of of America on presented also Sikkenga lants. budget payment Regence submitted a false Moorman, E.B. Joseph James Financing Au- to the Health Care request *4 Edu- Against Fraud White, Taxpayers (“HCFA”),1 that man- agency thority D.C., Fund, filed an Washington, cation Medicare, fraudulently avoided ages Against for Taxpayers curiae brief amicus by by HCFA back- adverse contract action Plain- Fund behalf of Education Fraud falsifying manipu- dating and documents tiffs-Appellants. ratings. performance contract She late its Lee, General Counsel Michael S. Regence retaliated alleged also Utah, amicus Governor, Lake City, Salt employ- by terminating her her against Huntsman, Jr., of Governor curiae Jon M. stop after she took actions this ment As- Defendanb-Appellee of behalf Utah on The court dismissed her “fraud.” district University Patholo- Regional sociated ARUP, that it against finding was claim gists, Inc. liability under “person” subject not L.L.P., Siefkin, arm-of-the-state. is an Ayers, L. Foulston the FCA because Gary Kansas, Wichita, against filed amicus curiae Re- an dismissed all claims The court Inc., Federal, Bluec- Adminastar Regence employees, finding brief for gence and Association, Blue Cross ross Blueshield was from suit Regence immune Alabama, Blue Cross Blue Shield 1395u(e), Sikkenga § and that 42 U.S.C. Kansas, Bluecross and Blue Shield provision trigger whisteblower did Montana, Bluesh- Bluecross Blueshield 3730(h) did not because she of 31 U.S.C. Nebraska, Blueshield Bluecross ield of of her Regence allege that she notified Inc., Tennessee, York Mu- Healthnow New Sikkenga’s claim. to file intent Company, Nori- Omaha Insurance tual of on the claim was also dismissed state law Premera Company, Insurance dian Mutual allege a clear and that she failed to basis Services, Bluecross, Government United public policy offended Re- substantial L.L.C., Physicians Service and Wisconsin Exercis- Sikkenga’s termination. gence Defen- Corporation on behalf Insurance jurisdiction under 28 U.S.C. ing Bluesh- Regence dant-Appellee Bluecross dismissal of the district court’s AFFIRM ield of Utah. claim, dismissal its budget false claim, and its dismiss- of her whistleblower LUCERO, PORFILIO, and Before ma- performance score her contract al of HARTZ, Judges. Circuit the low- claim. We REVERSE nipulation LUCERO, Judge. Circuit Sikkenga’s court’s dismissal er ARUP, her claim against companies [were] that “two Concerned managers false its caused of millions States out bilking Services. and Medicaid agency the Cen- ters for Medicare renamed 1. In 2001 this presented, and her state law claim “fraud,” ate action stop this Sikkenga termination, wrongful and REMAND for qui filed suit as a tam relator3 under the proceedings further consistent with this FCA, 3729(a), 31 U.S.C. against Re- decision. genee, three managers,4 and
ARUP. In her capacity, individual Sikken- ga also brought an FCA whistleblower re- I taliation suit and several state law actions program Medicare is a federal insurance against Regence managers. and its provides elderly health benefits for Sikkenga brought four claims under the and disabled individuals. See 42 U.S.C. FCA, claim, including a whistleblower §§ 1395 et seq. program is adminis- several state law claims. In her first FCA through organizations tered private con- (“Claim 1”), cause of action Sikkenga al- Department tracted of Health and leged that Regence and ARUP violated the Human Services.2 pro- Medicare Part A FCA when Regence paid claims for labora- vides for in-patient services, basic hospital tory testing submitted ARUP that were nursing care, and, home and hospice improper under Specifi- Medicare Part B. instances, some home health services. cally, Sikkenga alleged that ARUP used B, voluntary Part supplemental program, *5 diagnostic falsely code to document the provides reimbursement for outpatient necessity medical of thousands of claims services, hospital physicians services of where ARUP did not obtain that code and other professionals, health care and referring from the physician and the code certain durable supplies medical and did not document the true medical necessi- equipment. years, For five Sikkenga ty of the test performed. Sikkenga also worked for Regence, the Medicare carrier claimed that falsely ARUP submitted to for the State of Sikkenga’s job Utah. in- Regence, carrier, a B Medicare Part vari- cluded reviewing by claims submitted med- ous claims related to renal failure providers, ical service under a including laborato- code ARUP, suggesting patient that the ries such as a was in- laboratory entirely by, kidney owned volved a transplant, and University located at the when such a procedure Utah Medical Center. After should have complaining paid through been internally A, that ARUP Medicare Part presenting was false not Part B. After amend- reimbursement, claims for ing Medicare complaint, and her Sikkenga also asserted that Regence appropri- had failed to take Regence that “caused” present ARUP to 2. Prior by leged Part A was administered false claimant "in the name of the Gov- organizations known as "fiscal intermediar Agency ernment.” Vermont Natural Re- by ies” organizations and Part B known as Stevens, sources v. United States ex rel. "carriers.” See Blue Cross and Blue Shield 765, 768, U.S. 120 S.Ct. 146 L.Ed.2d Maryland, Dep’t Inc. v. United States Health (2000). Sikkenga Complaint filed her Servs., (D.D.C. F.Supp. & Human against Regence defendants and ARUP 1989). Carriers and intermediaries now pursuant qui provisions under seal to the tam collectively called "medicare administrative of the FCA. The United States declined to 1395h(a), §§ contractors.” 42 U.S.C. complaint intervene and the was unsealed 1395u(a), 1395kk-1. and served on the defendants. FCA, 3. Under the an action can be com- Regence 4.The itself, managers three by menced are John either the United States action, ("Mitchell”), ("Pitch- qui as a Mitchell private person, tam a Jed H. Pitcher "relator,” er”), (“Brown”). acting person "for the and for the and Frank Brown against United States Government” the ál- argued public policy further termination violation claims.5 She false these claim.6 of a Medicare data- Regence’s query that independent presen- to an
base amounted The district court dismissed Claim be- government, of a false claim tation it that Regence cause determined both a false get of a false record to or the use Regence managers were immune under government paid “person” and that suit ARUP FCA; FCA. Claim because was limitations; by the FCA’s statute of barred cause of action In her second FCA Sikkenga allege 3 because failed to Claim (“Claim 2”), alleged that Re- Sikkenga the particularity required fraud with directly budget submitted false gence 9(b); Federal Rule of Civil Procedure Ear- 1992, in connection with request alleged Sikkenga because had not Claim third process. Her ly Claims Review intent that she had notified of her 3”) (“Claim alleged of action cause an FCA claim. there were to file Because fraudulently avoided Contractor ter- grounds suggest no Program Evaluation Performance mination was violation of a clear (“CPEP”) backdating score reductions public policy an under- substantial absent Medi- involving Comprehensive a letter claim, court her lying FCA dismissed paying ARUP’s cal Review claim as wrongful law termination state than “reviews.” “adjustments” rather Sikkenga’s appeal We of each well. review essence, by manipu- Sikkenga claimed that of these dismissals. scores, Regence was able its CPEP
lating II its con- renewals of to obtain unmerited Part B carrier tract as Medicare court Sikkenga contends the district Utah, claims for administrative all *6 dismissing three errors in Claim made thereafter were under the contract costs that her FCA claim ARUP submitted Sikkenga assert- Finally, also Regence fraudulent. that Re- “false” claims to First, FCA Whistleblower retaliation paid argues ed an she gence them. 4”). (“Claim most of Sikkenga ruling abandons erred in the district court claims, only immunity appealing provision, law Medicare Part B’s her state 1395u(e),7 with wrongful provided Regence court’s of her U.S.C. district dismissal good deal- Sikkenga implied faith and fair allowed covenant of The district court 5. complaint failings ing employment in the contract. her to cure in the amend allegations under Federal Rule of Civil Proce- Prescription the Medicare 7.The enactment of particularity for and a lack dure Improvement Drug, Act of Modernization "causing presented” claims to be her 108-173, (2003), Pub.L. Stat.2066 9(b). Federal of Civil Rule Procedure immunity provision language alters complaint a included initial also applicable to "medicare administrative made was dis- conspiracy allegation. That claim contractors”: Rule the district court under missed 12(b)(6), Sikkenga was not reasserted OF MEDICARE ADMINIS- LIABILITY subject complaint, and not a her amended TRATIVECONTRACTOR.— (A) appeal. admin- of this IN GENERAL.—No medicare shall be liable istrative contractor certifying payment by a for a Sikkenga's law of action four state causes 6. officer, disbursing in connection wrongful unless termination in violation were: adminis- payment, such the medicare public policy, with breach of contract for failure acted reckless disre- pay, trative contractor with pay accrued intentional inflic- vacation distress, obligations medicare gard of its under the tion of emotional breach immunity premised absolute suit Regence in its Medicare Part B Review payment Second, Analysis on its of ARUP’s claims. Division. During her em- ployment, Sikkenga Sikkenga contends that the court became erred concerned ruled, Regence 12(b)(6), paying was when under Rule ARUP for labo- ratory testing claims that did not adequately she had failed to ade- allege that quately document their medical necessity, Regence had “caused” present ARUP to potentially and were improper under Finally, false Sikkenga appeals claims. Medicare Part Specifically, B. Sikkenga the district court’s determination that was concerned that using ARUP was ARUP was an arm-of-the-state and there- generic ICD-9 code 796.4 “other abnormal fore “person” not a liable under the FCA. finding,”
clinical to document the medical necessity of thousands of claims when a A specific more code applicable.8 was Sik- major has been the Medicare kenga thought that using ge- claims this Part B pursu- carrier for Utah since code, neric when ARUP had not obtained ant to a Department contract with the the code from the referring physician, did Health and Human Services’ Health Care not document the necessity true medical (“HCFA”). Financing Administration Un- performed, test and as such were not contract, der its responsible was properly payable under Medicare Part B. processing paying Medicare BPart Sikkenga suspected also that ARUP false- provid- submitted medical care ly submitted various ICD-9 codes related part ers. As of its claims pro- evaluation to renal failure connection with CPT cess, Regence contractually obligated code a code suggesting that to ensure that paid only claims were patient was kidney involved in a trans- care'— n medically necessary requirement plant, procedure that should have been for reimbursement under the Medicare paid through A, Medicare Part rather than program. Part B.9 Because of her concern that these 20,1990, From June until she was termi- fraudulent, claims were Sikkenga imple- 4, 1995, April nated on Sikkenga worked mented internal audits to closely more administrative contract intent ICD-9-CM codes refers to the International defraud the United States. Diseases, Revision, Classification of Ninth *7 (B) RELATIONSHIP TO FALSE CLAIMS codes, coding Clinical Modification system a Nothing in this subsection shall be ACT.— diagnosis used to describe the or medical liability construed to limit for conduct that condition for which medical services are ren- would constitute a violation of sections dered when Medicare claims are submitted to through title United States Medicare carriers. Such codes are not re- Code. quired independent from clinical laboratories (d)(3). § 42 U.S.C. 1395kk—1 services, non-physician for but by can be used The 2003 amendments to the Medicare Act them to document medical services. See 42 go did not into effect until October 424.3, §§ C.F.R. 424.32. apply retroactively do not alleging to cases by fraud prior a contractor to that date. Ad- 9. CPT codes refer to “Current Procedural ditionally, the Centers for Medicare and Med- codes, Technology” which describe medical Services, icaid reorga- the new name for the treatments, tests, proce- services such as HCFA, nized phase has until 2011 to in new dures, accepted report- and are an means of contracts with medicare administrative con- ing government such medical Therefore, services to interpretation tractors. our programs. health insurance immunity 1395u(e)(3) provision § under will apply brought existing to actions or older contracts for the near future. using suspect statutory claim. The version of Medicare’s claims evaluate ARUP’s immunity codes, Regence’s matter to in effect at the time provision referred the section, abuse discussed case internal fraud and this states: supervisors within Re- with her the matter (1) No designated pursuant individual to its change to gence, and instructed ARUP a contract under section as a this certi- she Sikkenga claims that billing practices. shall, in the fying officer absence of posi- ultimately her terminated gross negligence or intent to defraud the Regence April in 1995 because tion with States, respect liable with to United ac- managers’ with her her dissatisfaction by any payments certified him under regarding tions ARUP. this section. (2) shall,
B
No
disbursing officer
intent
gross negligence
or
absence
any
liability
person
on
imposes
FCA
States,
defraud
be liable with
to be
“knowingly presents, or causes
who
any
him
respect
payment by
employee of the
to an officer or
presented,
if it
upon
this section
was based
a vouch-
... a
or
false
United States Government
signed by
certifying
desig-
er
officer
payment
claim
or approval,”
fraudulent
(1)
nated
provided
paragraph
3729(a)(1),
“knowingly
§
or
31 U.S.C.
this subsection.
used,
uses,
makes,
made
or causes to be
or
get
false
record or statement
false
(3) No
shall
such carrier
be liable
by
paid
approved
or
or fraudulent
any payments
referred
3729(a)(2).
§
Government.”
U.S.C.
(2).
paragraph
claim, Sikkenga alleged
In
first FCA
her
1395u(e) (1999).
§
42 U.S.C.
and the individual defen-
Body,
the Eleventh Circuit held that
paying
had violated
dants
immunity
A
provision,
Part
involving
false
the 796.4 codes
Medicare’s
claims
1395h(i)(3),10
pro
unambiguously
Relying
United U.S.C.
renal failure tests.
immunity to Medicare fiscal
Cross and Blue
vided absolute
Body
States ex rel.
Blue
intermediaries,
Alabama, Inc.,
express
in contrast to the
F.3d
Shield of
1395h(i)(1)
(2),
limitation
§§
Cir.1998),
present
inter-
the district court
provided immunity
immunity provision,
payments
preted the Medicare
1395u(e),
only in
certifying
disbursing
officers
provide
absolute
U.S.C.
or intent
pay-
gross negligence
absence of
immunity to Medicare contractors’
basis,
Body,
(1)In gross negligence the absence of payments provided as would be their certi States, or intent to defraud the United fying disbursing H.R.Rep. officers.”11 1395u(e)(3) (Section language (1965) analysis §§ was not in- 1816(g)(1), *9 original 1842(e)(1), (2)). 1842(e)(3) cluded in the draft of House Resolu- and Section of (Social 6675, Security applicable tion 6675 Amendments of H.R. to carriers under Medi- 1965). 89-213, 148, B, H.R.Rep. No. at ultimately care Part became codified at 42 (1965) as immunity available to Re- structure. The 89-682, (Conf.Rep.), at No. as carrier gence a Medicare under 2228, 2231. reprinted in 1965 U.S.C.C.A.N. 1395u(e)(3) with § is co-extensive that of history Thus, unequivocally legislative the disbursing and officers —in certifying its ambiguity might exist any resolves words, immunity the cases other excludes poor grammatical the statute’s of because involving gross negligence.12 and fraud 404, 165, (1965), 1395u(e)(3), reprinted provision we are at as in 1965 § the U.S.C. U.S.C.C.A.N.1943, 2104, language 1816(g)(3) applied to 2117. The interpreting. Section APart Con- under Medicare from HEW's letter included the fiscal intermediaries 1395h(i)(3). 89-682, at 42 U.S.C. Report. H.R.Rep. codified No. at 37 became ference 1965, 17, Secretary (1965) the May of (Conf.Rep.), reprinted Assistant On in 1965 as Health, Education, 2228, Wel Department and of of U.S.C.C.A.N. 2231. The amendment Cohen, ("HEW”), fulfilling a fare Wilbur immunity provisions, in such a short both the Finance Commit promise to Senate time, made span language explana- of with the HEW, Secretary forwarded rec of tee the reports tion included in the committee from changes clarifying and technical ommended the and Conference both Senate Finance to the in a from HEW to the resolution letter Committees, strongly the indicates intent of The the Committee. title Chairman of grant immunity Congress absolute was not "Provide proposed amendment was: relevant instead, 1395u(e)(3), but as to carriers in certifying or employing agency of that an Report, provide stated Conference the lia disbursing be excused from officer would immunity same as their cer- carriers with the The text bility officer is excused.” when such tifying disbursing officers. "(3) change was: shall be the No carrier of payments for liable the United States Further, in contrast to the district court’s 12. (2).” Bill to paragraph A referred to in below, history legislative the ac evaluation Program Hospital the Insurance Provide a for companying Congress's 2003 amendment Security Aged Act with Under the Social statute that the textual the Medicare indicates Supplementary Program and Health Benefits pres change immunity provision, to the now Assistance, Expanded Program Medical 1395kk-1(d), in ent at U.S.C. was not Old-age, Surviv to Increase ors, Under Benefits law, change merely but to con tended Disability System, to Im Insurance immunity provide tinue to the same limited Pro prove Public Assistance the Federal-State enjoyed prior carriers that Medicare Hearings Purposes: on grams, Other and for amendment: Fin., the Comm. on 89th H.R. 6675 S. Before will suc- contractor reform Medicare (1965) (Letter Cong. Wilbur of the Hon. subject to ceed if unlimited Cohen). contractors are Explaining recommended payments liability carrying out the amendment, civil Secretary stat Assistant Cohen expected The conference ... them. ed: agreement continue the would therefore provide changes are needed in order to liability certify- policy limiting past organizations agencies and authorized officers, disbursing ing and and Medicare part A payments make and carriers for whom those administrative contractors part B payments to make authorized serve, pay- respect to officers with certain liability immunity same from ments. payments provided would incorrect as addition, language contained disbursing certifying their officers. 1395k-l(d) agree- conference of] the [§§ Id. administrative ment clarifies Medicare Com On June the Senate Finance are not liable for inadvertent contractors published amend mittee these recommended but, errors, billing past, in the are liable print. of S. ments a committee Fin., Staff damages resulting disre- all reckless Cong., Justi Comm. 89th Text for gard the United States. or intent to Amendments to H.R. 6675 Recom defraud fications disregard Health, Importantly, the reckless stan- Department Edu mended cation, (Comm. standard under dard the same 28-29 Print and Welfare balances 1965). False Act. This standard changes in Claims proposed were Cohen's practical ad- need shelter Medicare re Senate Committee cluded in the Finance civil from frivolous S.Rep. 89- ministrative contractors port June No. dated *10 Sikkenga’s court C dismissed first FCA against Regence cause of action without statute, interpretation Our howev- prejudice provided Sikkenga op- er, that we require does not reverse the portunity complaint to her spe- amend to district of Sikkenga’s court’s dismissal cifically plead facts that would support her payment fraudulent their entire- claim that Regence caused ARUP to sub- ty. not provide Because the does FCA mit false claims.14 The district court sub- payment remedy for claims for a false sequently rejected Sikkenga’s position that claim, or fraudulent dismissal of these her allegations amended were sufficient to claims under was appropri- Rule allege Regence “caused” ARUP to However, Sikkenga ate.13 alleged also claims. present so, false In doing caused Regence fraudulent claims to court interpreted “causing the FCA’s to be government. be submitted to the federal presented” language requiring “some 1395u(e)(3), Section which contains a fraud sort of affirmative action on the part of the exception, provide immunity does not for imposing liability.” defendant before In- carriers who cause fraudulent claims to be terpreting complaint allege to presented. only passive acceptance claims, of ARUP’s order did recog- district court’s not the district court found that Sikkenga’s immunity Regence nize for as to Sikken- allegations had failed to demonstrate ga’s “causing presented” to be action, affirmative and dismissed the claim Instead, the FCA. acknowledging that against Regence Regence and the defen- “Regence’s 12(b)(6). immunity may not extend to dants under Rule On the same prohibition against FCA’s ‘causing’ grounds, the district court dismissed Sik- false claims to presented,” kenga’s argument, the district presented for the first litigation by disgruntled providers immunity provision, indicating bene- rather than program's complete ficiaries with pre- the Medicare inter- abandonment normal protecting sumption est disbursing govern- itself from contractor that individuals applies fraud... responsible negligent .[The to Medicare fis- ment pay- FCA] funds are for ments, cal intermediaries and carriers under Congress's cur- indicates instead intent to provide rent law. some limitation this normal default S15,606, S15,644 rule, Cong. Rec. not a "blank check” for Medicare carri- added) (statement (emphasis Grassley of Sen. ers to commit fraud from the free FCA. during Drug, debate on Medicare Im- 13. Similarly, no cause of action exists provement and Modernization Act of to the individual 108-173, merely defendants (2003)). Pub.L. No. 117 Stat.2066 "paying” for the claims. reading potential Our avoids the the statute pitfall Body created its broad all- —that immunity encompassing Sikkenga would The district instructed render court Medi- "allege specific demonstrating care carriers under the FCA immune for facts that the remotely premised payment actions present Defendants caused ARUP to —and obligation merely allowing meets our construe false claims statutes har- rather than moniously. Weapons Working accepting See Chemical such claims.” Because the district Group Dep't Army, court dismissed the cause of first action with- (10th Cir.1997) (stating prejudice plead that we are out re- failure fraud with quired apparently conflicting particularity construe stat- under Federal Rule of Civil Pro- 9(b), harmoniously possible).
utes provided Sikkenga sixty when It is im- cedure days portant to complaint plead note that under normal rule amend her her first liability certifying disbursing particularity required officers cause action with the 9(b), supervisors, super- their officers and "identify such Rule her to instructed negligent payments. specific visors properly are liable even did claims that docu- 3527(a), necessity.” §§ 31 U.S.C. 3528. The ment Medicare medical
713 systematically Re- themselves to circumvent complaint, that in her amended time requirements a Medicare the Contract and querying actions gence’s Security related Working regu- the Social Act and called the “Common database (“CWF” “Host”),15 purpose getting the lations for the or either File” paid govern- to false claims the govern- a claim the ARUP’s false presentation 3729(a)(2), ment, the with Medicare B funds or, 31 ment Part even under U.S.C. though fully were making, using or of a false record these Defendants knowing not pay- aware that such claims were get paid approved.16 to a false claim to dismissal of these able. turn the We now 12(b)(6). Rule
claims under alleged “[b]y assuring also that She that claims to ARUP such would continue
1 accepted, encouraged, be facilitat- Rule review dismissals We ed, presentation and caused ARUP’s 12(b)(6) novo, a uphold such de and will payment.” (emphasis claims add- false “only appears it that dismissal when ed). sup- no set of facts prove can
plaintiff 2 him to claims that would entitle port relief, allega- well-pleaded accepting the In order to determine whether Sikken- complaint true constru- tions of the allegations Rule ga’s survive a light most favorable to ing them the challenge, must first decide what Inc., Start, v. Head plaintiff.” Dubbs entity required an to have “caused” Cir.2003) (quotations F.3d to presented claim be FCA. One omitted). to whether Our role is assess case, Long ex rel. SCS legally alone plaintiffs complaint Inst., F.Supp. Bus. & Technical upon relief to state sufficient (D.D.C.1998), grounds, rev’d other may granted. Id. (D.C.Cir.1999), Sikken- supports F.3d 890 a third ga’s prevent view that the failure to fo- complaint, Sikkenga
In her amended having false after party filing claims the “resolution” reached between cused on knowledge were false is claims defendants, Re- individual a claim under FCA. sufficient to state ARUP that “allowed” ARUP gence, and with the 796.4 continue to submit claims ongoing has an busi- Where defendant code, that: arguing repeated with a false relationship ness claimant, knows defendant
by way
[defen-
of this ‘resolution’ ...
claims, yet
not cease do-
among
the false
does
agreement
reached an
dants]
File, Host,
they
796.4 to docu
Working
is a
used the ICD-9 code of
15.
Common
The
computerized
maintaining
necessity. Regence
Medi-
database for
continued
ment medical
beneficiary
persons with-
care
information
assert
the district court that these
before
assigned geographical
area.
CWF/
requirements
of Fed.
lists failed to meet
separate
by a
contractor
Host is maintained
9(b)
they
specify
because
failed
R.Civ.P.
Department Health
under contract with
Sikkenga's the
were false under
which claims
Services,
Medicare
and contains
Human
merely stating
ory. Regence argued
beneficiary
data.
entitlement and utilization
claims were false was not
some of the listed
Maryland,
&
See Blue Cross Blue Shield of
9(b)'s particularity
Rule
re
to meet
sufficient
Dep't Health & Human
Inc. v. United States
held
quirements.
the district court
Because
Servs.,
(D.D.C.1989).
F.Supp.
4n.
allege
Sikkenga
a violation of
failed
12(b)(6), did not decide
Rule
the FCA under
two
ARUP
Sikkenga also
lists of
included
9(b)
Regence's pending Rule
motion.
alleges
that she
were false because
claims
ing
the claimant
ing
prevent
or dis-
the fraudulent acts of
business with
oth-
ers.”
close the
the United
We share this concern.
false
*12
States,
the defendant’s ostrich-like be-
Generally,
knowledge
mere
of the
havior
“a course of con-
itself becomes
submission of
knowledge
claims and
of the
duct that
fraudulent
allowed
claims to be
falsity of
is
those claims
insufficient
to
presented
government.”
liability
establish
the FCA. See
United States v. President & Fellows
1032,
United
Murphy,
States v.
937 F.2d
151,
College,
F.Supp.2d
(6th
Harvard
Cir.1991).
3729(a)(l)’s
323
187
1039
Under
(D.Mass.2004)
Long, 999
(quoting
F.Supp.
requirement
person
that a
“cause” a false
91).
at
that
in
Sikkenga asserts
United
presented,
appropriate
to be
the
fo
Hess,
States
rel. Marcus v.
the
ex
Su-
cus
inquiry
specific
of the
“the
is on
con
preme
the
interpreted
“causing
Court
to
person
duct of the
whom
the Govern
presented
be
an
language” of
earlier ver- ment seeks to collect.” United States v.
any person
Bornstein,
sion of
“reach
303, 313,
the FCA to
who
523,
423 U.S.
96 S.Ct.
knowingly
causing
govern-
(1976).
in
the
Thus,
assisted
with government.” the U.S. 544- The Third Circuit has borrowed tradi- 45, (1943) (em- 379, L.Ed. 443 S.Ct. tional principles analyze of tort law to cau- added). However, phasis Hess involved sation for damages under the FCA. See text consideration of the of the FCA as a Hibbs, 347, United States v. 568 F.2d whole, “causing solely pre- not the to be (3d Cir.1977) that, (holding assessing 544-45, provision. sented” at Id. 63 S.Ct. FCA, damages under “a the causal connec- Hess’s We do consider “assisted” tion must be shown between loss and language dispositive in analyzing be fraudulent conduct” that and “a broad ‘but adequately pled whether a she has “caus- for’ compliance test is not in with the ing claim. presented” to be [FCA]”). approach Such an useful Relying on States ex analyzing well, United rel. Shaver causation under 3729 as (8th v. Lucas 237 F.3d Corp., provides W. and proxi- familiar test —that of Cir.2001), and States v. Mackby, United mate causation—to determine whether (9th Cir.2001), there 827-28 the is a sufficient nexus between the argue requires defendants that the FCA conduct party of the the pres- ultimate present affirmative instruction to entation of support false claim liabil- false claim imposing liability. ity before separates under the FCA. a test Such rejected parties’ chaff, district court both conten- the wheat from allowing tions, interpreting Shaver proceed claims to against parties instead who can Medtronic, fairly Glass v. States ex rel. be said to have caused claim to be Inc., Cir.1992), presented F.2d government, while win- require “some of affirmative nowing only sort action on out those claims attenu- part imposing a defendant before ated links specific between the defendants’ liability Motivating FCA].” actions presentation [under and the of the false district court its concern that too claim. Attempting to strike this same bal- ance, broad an interpretation the “causes to required the district court “some sort presented” language of an part FCA “would on the affirmative action of the impose liability merely parties fail- defendants.” agree We a standard con- passive acquies- specifically, “agreeing mere circumvent” more than requiring purposes most consistent with the statutory cence requirements, tractual Furthermore, a standard FCA. such “assuring” con- ARUP would balance between appropriate strikes accept tinue to the claims coded with merely liability parties shielding from who disputed Sikkenga alleges 796.4 code. fraudulent acts of oth- prevent fail to continuing actions these assisted ARUP ers, ensuring liability attaches the allegedly to submit false claims. She do or assist “affirmative acts” that cause supports description alleged her claim.17 of a fraudulent presentation *13 specific with actions taken Re- scheme to Sikken Applying this standard gence support that she claims were in dis allegations, disagree with the ga’s we “agreement this to circumvent.” Because Sikkenga that trict court’s assessment allegations in the we must construe these sufficiently allege “causing a to be failed to most to we can- light Sikkenga, favorable under the Our role claim FCA. presented” Sikkenga prove not conclude that could no 12(b)(6) is reviewing Rule dismissal a support set of facts in of her claim the weigh evidence that potential “not against Regence would entitle her to relief trial, might at but to assess parties present “causing” alleg- present for ARUP to the complaint alone is the plaintiffs whether edly false reverse Accordingly, claims. we upon sufficient to state a claim legally Sikkenga’s the district court’s dismissal of v. may granted.” relief be Sutton which Regence claim that “caused” ARUP Blind, the 173 State Sch. & Utah Deaf for 12(b)(6),18 false under present claims Rule (10th Cir.1999). 1226, Although F.3d 1236 proceedings further con- and remand for case, state Sikkenga’s allegations a close actions, opinion.19 with sistent this engaged certain narrow, par- enlarge, field of 17.Although we rather than the partial concurrence the scope may liability be im- dissent not rule on the actions which tial would FCA, posed. estab- causation under the consider resolving lishing necessary this standard reason, of Sik- 18. For same dismissal a A bald the case before us. assertion presented” kenga’s "causing claims pre- to be a false claim to be defendant has caused against the defendants individual plainly would fail to state a claim sented 1106, Bellmon, reversed. See Hall v. 935 F.2d also relief. Cir.1991) (10th ("[C]onclusory alle- 1109-10 gations supporting however, factual averments caution, without express no We that we insufficient to state claim on are Sikkenga’s complaint opinion as to whether based.”). can We therefore must relief be 9(b) plead requirements of Rule meets allega- Sikkenga’s consider whether factual particularity. ex with See States fraud United support "causes to be tions are sufficient to Am., Corp. 290 F.3d Clausen v. Lab. rel. presented” FCA claim. 1301, Cir.2002) (11th (holding that 1308-09 FCA); 9(b) applies to actions under the Rule proximate standard strikes causation 1014, Bly-Magee California, v. 236 1018 F.3d comports proper analytical balance and Cir.2001) "(same); (9th ex rel. requiring strict construction rule Epic Mgmt. Group, 193 v. Acker, Russell Healthcare punitive See v. civil statutes. Comm’r 304, Cir.1999) (5th (same); Harrison 87, 91, 144, F.3d S.Ct. 4 L.Ed.2d 361 U.S. Co., Westinghouse F.3d above, River v. Savannah (1959). support As there is no noted Cir.1999) (same); 783-84 causing position that a defendants' rel. v. SmithKline Beecham States ex LaCorte presented requires order to claim a direct (3d Labs., Inc., 149 F.3d remaining Clinical only present a claim. The false 1998) (same); pre- Gold Morrison-Knudsen Cir. plausible of "causes to be constructions Cir.1995) Co., (2d 1476-77 proximate sented” but for causation cases). (same, Although we admit proximate collecting By adopting causation causation. integration of Medicare databases for each eligible beneficiary. Medicare Carriers complaint, her amended Sikken Manual, 3, §§ Part seq. et. This ga theory introduced a new of FCA liabili query clearly a secondary CWF/Host ty, arguing that Regence’s quer actions in data review within payment process. ying the amounted to either CWF/Host such, Being the district court’s dismissal of presentation of a false premised upon Re- government, or, under 31 U.S.C. gence’s query to the Host/CWF 3729(a)(2), knowing, making, or us Rule is AFFIRMED.20 ing of get a false record to a false claim paid approved. The district court re D jected theory, finding this We now turn to the district
Regence’s
court’s deci-
query to the Host and the
sion that ARUP is an
payment but,
CWF is not a claim for
arm-of-the-state and
rather,
subject
thus not
liability
secondary data review within
FCA. After according
parties
the Medicare claim
processing
pay
year
one
*14
of limited
process
designed
discovery
ment
that
to look at
the issue of wheth-
an
er
body
additional
of information
ARUP is a state entity,
to en
the district
payments only go
applied
sure that
court
to beneficia
the test we articulated in
Paulsen,
ries with proper utilization and
Sturdevant v.
entitle
particularity requirements. ty-
717
express
under the
claim under 28 U.S.C.
instruction that
FCA we
for an FCA
tion
must
being
apply
longstanding interpretive
on the claim
made
depends
person
presumption
the term
does not
is interpret-
a
term
against
person
Stevens,
sovereign.
include a
See
529 U.S.
Agency
FCA. See Vermont
ed under the
784,
14;
at
n.
First and it is clear that treasury legally State of Utah’s is not In incorporated ARUP was liable for judgment against Act, Corporation ARUP. the Utah Business engages activity in nationwide Revised ARUP currently exists the Utah laboratory. From 1984 commercial It is licensed in Corporation Act. Business subsid- wholly was owned ARUP nine states markets its services all corporate entity, Associ- separate iary fifty. laboratory of a In addition to performing Inc., University Pathologists, ated operations University for the of Utah Med- by the (“AUP”), in turn owned Center, provides ical ARUP also laborato- University Although of AUP was Utah. ry testing parties.25 for third The record membership ARUP corporation, non-stock percentage does not disclose the labora- 2002, ARUP’s stock.23 Until issued itself provided parties third tory services by-laws were incorporation articles provide routine versus are those an adopted by that would be similar to those benefit, or research but educational After ordinary business concern. clear from nature of claims dissolution, amended AUP’s 2002 ARUP provides that ARUP a substantial number incorporation explicitly its articles of tests and earns the bulk of its revenue restric- operations comport with limit its operations University from its outside required ARUP contends were tions community.26 incep- of Utah law from its operation provisions governing Under Utah Code argu- its Tightening focus of tion. ordinary corporations, and those control- ment, contends that its commercial ARUP higher ling State Utah’s education that offer a operations are limited to those system, may ARUP sue be sued. educational valuable “substantial 16-10a-302(l), §§ Ann. Code 53B-2- Utah stu- experience registered research incorporated is not as a non- 101. ARUP Yet, faculty.”24 ARUP’s actual dents and although it has profit corporation, been than operations much broader business 501(c)(3) §a contends, granted tax-exempt status as geo- and are not limited ARUP entity by the IRS. ARUP can enter into testing ser- type graphically entities, and contracts with commercial performs. vices it parties over we should evaluate Belying ARUP's that it is an '‘inte- whether Utah, gral” part University filing the Uni- at the time of the 1999 ARUP's status actively selling ARUP versity has considered underlying complaint, or if can abuse past, and sold ARUP’s substance changes post-filing to ARUP’s consider the laboratory. testing to a division commercial incorporation. corporate articles changed incorporation its articles of ARUP recognize that Revised Busi- 24. We Utah's request be treated as tax-ex- facilitate its Corporation corpora- Act authorizes a ness empt the Internal Revenue Service. Our subject *17 engaging is in business that tion is, however, of determination ARUP’s status to in- regulation under another Utah statute dependent alteration in ARUP’s specifically corporate. The Act states such incorporation, so we decline the articles of authorized, "only permit- incorporation if is dispute. parties’ into this invitation to wade of, subject the by, to all limitations ted and Utah Ann. 16-10a- other statute.” Code provides routine and esoteric 25. ARUP both 301(2). contends the State Board ARUP laboratory testing. The more esoteric tests has, authority, statutory Regents of its research benefit to provide an educational or regulations ARUP's that constrain issued Department Pathology and School of the a "sub- activities to that offer business those Medicine. valuable educational or research stantial and registered experience and facul- students year ending in June 26. For the fiscal pointed regulations ty,” but such are not seventy-six percent revenues de- of ARUP's present the by parties and are not the hospitals. testing provided to other some between the rived record. There is debate Sciences,27 accounts its own name. ior Vice-President maintains bank Health 53B-7-103(3). §Ann. See Utah Code in turn reports directly who to the Univer- sity President, it is of Di- ARUP’s Board Further, relationship between the the rectors that policies operational “sets and Department University Medical Center’s objectives providing appropriate while than Pathology and ARUP more oversight of ARUP’s ... business affairs inter-departmental agreement. Rather opera- monitors ARUP’s business [and] providing through than services a more management tions and financial scheme, help it operating Depart- informal the compete marketplace within the for labora- Pathology routinely ment of has entered tory University into services.” commercial contracts ARUP to President provide of approximately provides only the services half “strategic oversight.” pathologists of its to ARUP. At ARUP’s recognize We there are ties be- inception, the Medical Center sold ex- its ARUP, tween University the but these isting hospital laboratory opera- clinical arise as an incidence of ownership, and are pursuant competitive tions and assets to a several degrees removed from the direct contract purchase awarded to ARUP. This relationship up set under Utah law be- was funded a combination of con- funds tween University the of Utah and the Department tributed of Pathology State. The University, entire including payable and notes departments various ARUP, subject governance University. Of ARUP’s 1215 em- Regents, State Board of appoint- which is ployees, barely percent “patholo- ten are ed approved by the Governor and gists,” fellows,” “residents and or “labora- State Senate. property ARUP’s is vested AS, tory science students in BS and MS with the through State Utah the Univer- programs operational responsi- that have sity and the Regents, Utah Board of employees bilities.” The bulk of ARUP University, President as repre- “laboratory are in operations,” “general owner, administrative,” sentative of the appoints ARUP’s “sales and market- services,” ing,” directors. The “handling “customer Chairman of the & Universi- logistics.” Although University’s ty De- Medical Department School’s of Pathol- partment Pathology provided capital ogy traditionally operates Chairman ARUP, up to set the bulk of Further, ARUP’s of ARUP. there are some indica- revenues flow from ARUP’s commercial tions that ARUP is connected with the operations to University, rather than University Medical operation- School on an University from the to ARUP. Retirement al mandatory level. Several pathology plans employees, opposed ARUP courses in Department of Pathology those simultaneously individuals occupying ARUP, are offered within pro- ARUP positions within ARUP and University training vides hands-on Depart- for the Utah, covered under different ment of Pathology. ARUP’s infusions of private system system retirement than the funds support Depar- functions within the for University employees. Obstetrics, ments of Pathology, and Pedia- provides it is trics. wholly space
While clear that ARUP is a ARUP also office corporation, owned University components the stock of which is other at below- *18 Utah, University However, owned day- its market rents. when we evalu- to-day operations independent. Al- ate the relationship entire between ARUP though ARUP’s Chairman reports to Sen- and the University, ARUP retains sub- University 27. Who is also Dean of the Medical School. being and reasons our autonomy operations, in ment’s twin remain its
stantial little, guide.” Hess v. Port Auth. Trans- prime any guidance if with operates Hudson, 30, 47, Corp., U.S. 115 S.Ct. University or from the interference L.Ed.2d 245 (recognizing State.28 dig- of State and protection treasuries in nity sovereigns system our federal as the Eleventh Amendment’s twin reasons financial component the third As for Hess, As in and being). common sense history a independence, record shows of the Amendment the rationale Eleventh relationships complex, intertwined immunity require sovereign do not improvement be- capital projects funding agency an structured to be attach when is University ARUP’s tween the and ARUP. self-sustaining long history has by inde- financial statements are audited 49-50, way. its own Id. at paying accountants, in- subsequently pendent 394. S.Ct. in financial separate item the cluded as This University of Utah. statements ordinary corpo- a state forms an When legisla- at some point ration, anticipated is used financial data and actual determining appropria- in the overall to enter independence, private ture sector Ann. Code University. compete entity, for the Utah as a even tions commercial Nevertheless, is clear though may sup- the income devoted to 53B-7-101. be use, self-sus- that enti- port public that since has been some function or ARUP and ty funds not an are con- taining, generating operating is arm-of-the-state. We activity. its It from our review of the record through commercial vinced profit designed as a com- operate substantial ARUP was equally clear that ARUP’s enterprise, ego mercial not as the alter University rather than surplus flows persuasive We When, here, the State of Utah. find entity vice-versa. in two cases from the reasoning recent fi- and is structured to achieve privatized articulate and First Circuits which entity Seventh the state independence nancial it, that: disregard its owns we will not retains merely the state [entity] structure because that tie the to the state strings our title to asset. From proprietorial many its in a state are found cases which record, conclude that formerly review of state privatize decides to designed only not self- They pri- ARUP was do require function. not cen- sustaining, “profit but a commercial farce in which vatization be treated as a Center. University entity ter” for the Medical benefits privatized enjoys the being being not and so both of the state regulations that constrain freed from Court, recognized by agencies, being and of the state Supreme As state immunity point being from suit feder- indicators of and so immune “[w]hen directions, the Eleventh Amend- al court. different Office, poten- licenses its Although present General’s how ARUP in the record circumstances, Sturdevant, tially we do relevant in other weAs cautioned in few vehicles. rely compelling several and often less up easy caught become in the minuti- “it is contradictory ARUP's status. indicators of ae,” eclipse” the details “must not but these Among these are ARUP has raised whether between instrumentalities distinction immunity as a defense Eleventh Amendment political of a state. subdivisions state cases, represented other ARUP is whether at 1170. Attorney by private counsel or the Utah *19 722 issue, analysis In our of this we first Hospital & Wisconsin
Takle v. Univ. of statute, language turn to the 768, Auth., F.3d 771 Cir. 402 Clinics reads: 2005); Fresenius Medical Care see also (b) A civil action under sec- Res., Rico, [31 U.S.C.] Inc. v. Puerto
Cardiovascular
may
brought—
tion
not be
Cir.2003).
(1st
723 and could be “government” generally, of the United place in the to stand ered tarn relators when the Thus, qui read to exclude even the FCA. through States has not intervened. When gov only to the referred Congress though ambiguous, meaning is plain a statute’s legislative text in the FCA’s ernment legislative may guidance courts seek it obvious context made history, the to determine statutory purpose intent rela- qui tarn to include Congress intended In re Geneva intent. See congressional These courts provisions. in these tors (10th Co., 1173, 1178 Cir. 281 F.3d Steel that, generalized of this because have held the statute “government,” 2002). the term use of if apply as be read to limitations should portions examined Several courts have official of the United were an
a relator this history applicable legislative 3731(b)(2). § See United States analysis only lim- their is provision, but Inc., Corning, 118 Downy v. ex rel States the issue before deciding ited assistance (D.Utah 2000); 1160, 1170 Unit F.Supp.2d 4, n. at 1214 n. Hyatt, us. See 91 F.3d Northrop Corp., Hyatt v. ex rel. 99-660, ed States No. at (quoting H.R.Rep. Cir.1996). 1211, Un 1214-16 99-345, (1986), (1986), No. at 30 S.Rep. stat year the three interpretation, 5266, der this in 1986 U.S.C.C.A.N. reprinted the begins running when limitations 5280, Amin, ute of 5295); F.Supp.2d at 172-73 wrongdo knowledge same). gains relator (discussing of re ten-year statute limited ing, accompanying the Report The Senate 3731(b)(2). §in pose legislation, stated: unpub- an interpretation, from (b) The third 3731 of title of section Subsection Utah, court opinion by bill, district lished by section 3 of the as amended the statute does literal text of held that the explicit tolling provi- an would include 3731(b)(2) to rela- inapplicable §make not of limitations sion on the statute 3731(b)(2) such tors, interpreted The statute of False Act. Claims years after a has until 3 run until begin that a relator not limitations does a violation to official learns of known an offi- government material facts are ex rel. Department claim. United States of Justice file cial within the Inc., authority act in the circum- Colunga v. Hercules WL 89-CV-954B, 1998 U.S. Dist. LEXIS No. stances. 1998). (D.Utah Mar.6, Under this (1986), 99-345, reprint- at S.Rep. No. Sikkenga would have us which
approach, Addi- in 1986 U.S.C.C.A.N. ed if there interpretation, the correct declare Senate, debating when tionally, the government ever indication that is no Act the False Claims amendments to the statute of wrongdoing, knew of stated: years. is ten
limitations tolling provi- committee has added Act False Claims acknowledge [sic ] sions examining the text we directly from 28 U.S.C. adopted The text ambiguous. the statute 2416(c) 2416(c). ais section While applicability limit the explicitly does general applicability, provision of gov- to cases which that the False Claims intervened; however, committee intends ernment has liberally con- tolling provision Act of the United States “the official term conduct addressed because the act in the strued responsibility to charged with and care- inherently deceptive here is so specific more than is also circumstances” Thus, courts should be fully concealed. States or to the United a reference *21 § leary finding that the Government Congress intended to knowledge apply only government, had of the of a to the qui existence and not relators, possible merely they cause of action based tam do not conclusively re- upon discovery irregularities the that solve the issue before us. suspicion
fall short of a concrete
legislative
Both the text and
history of
fraud has occurred. Some corroborative
the
the
“government,”
FCA use
terms
support
suspicion
information to
brought
“United States” to refer to suits
Similarly,
required.
should be
care
Attorney
either the
qui
General or
tam
should
taken to assure that the infor-
See,
3731(c) (“In
§
e.g.,
relators.
ac-
in posi-
mation has reached an official
a
3730,
brought
tion
under section
the Unit-
recognize
tion both to
the existence of a
ed
required
prove
States shall be
to
all
possible violation of this act and to take
action,
essential elements of the cause of
steps to address it.
including damages, by
preponderance
(1986) (Senator
S11,238
evidence.”);
Cong.
99-345,
Rec.
S.Rep.
the
No.
at 6-7
(1986),
Grassley’s
explaining
statement
amendm
reprinted
as
in 1986 U.S.C.C.A.N.
ents).31
2416(c)
Section
establishes a
(discussing
5271-72
the scienter re-
tolling period applicable to the various lim quirement
referring
to evidence that
offer).
periods
§
itations
in
“government”
described
when
the
must
Assuredly
brought by
action is
report points
Depart-
the Senate
to the
monetary
damages,
recover
and also ment of
authority
Justice official “with the
by an
uses the term “known
official of the
to act in the circumstances” as the relevant
charged
responsibility
3731(b),
§
with
States
official under
report’s
but the
to act in
Although
the circumstances.”
usefulness is limited
the fact that Con-
portions
legislative history
these
gress
general
chose to use a more
term in
directly support
conclusion that
the FCA’s text.32 This
in
troubling
light
testimony
Additionally,
tolling period
before the
vide this limited
where the
31.
concealed,
Judiciary
concerning pro-
House
Committee
fraudulent conduct has been
as
Act,
is,
Government,
posed changes
frequently
to the False Claims
Mr.
from the
Willard,
Attorney
we don't find out
Richard K.
Assistant
Gener-
about it until later.
I can
Chairman,
al,
Justice,
Division,
say
Department
frequently
Mr.
that I
Civil
stat-
see
requests
right
ed
to sue come in
on the
that:
brink
limitations,
of the statute of
and sometimes
[T]he bill modifies the statute of limitations
beyond, causing us to miss out on some
rule,
discovery
to include a
to address the
bring
we
could otherwise
because it
situations where the Government does not
just
long
has
taken that
to discover the
falsity
learn about the
of the claim at the
get
ready
pursue.
fraud and
a case
This
response
time it was
....
[and
submitted
give
amendment would
us a little more
query by
asking
to a
Chairman Glickman
if
flexibility
bringing
some cases that other-
precedent
there was a
law
Federal
wise would be barred.
limitations, replied]
such
statute of
Actu-
Hearings
False Claims Act Amendments:
Be
Chairman,
ally,
general
Mr.
there is. The
the H. Subcomm. on Admin. Law and
fore
statute of limitations for the Federal Gov-
Governmental Relations
the H. Comm. on
ernment,
2416(c)
§
28 U.S.C.
does include
Judiciary,
Cong.
99th
tolling provision.
problem
is the
(Statement
Willard,
of Mr. Richard K.
Assis
Act,
least,
False Claims
as I understand it at
General,
Justice).
Attorney
Dep't
tant
has its own statute of
limitations
is not
subject
general provision.
language may
So what
32. The choice of
arise from a
proposing
align
statutory language
to do is to conform the
desire to
with
general
2416(c),
False Claims Act
rule under
that used in 28 U.S.C.
from which
States,
Congress
tolling provision
common law in most
and for that
obtained the
as de-
matter,
Government,
pro-
Federal
scribed above.
Emphasizing
5266-67.
the stat-
“Attorney
of the term
use
Congress’s
FCA,
remedial,
report
the Senate
re-
ute was
in other sections
General”
(instructing
qui tam
history
§ 3730
of the FCA’s
See
viewed
such
investigate a
Black:
quoting
Justice
“Attorney
provisions,
General”
3729).
why
It is unclear
violation
protect
is intended
FCA]
[The
“At
refer to the
explicitly
Congress would
un-
Treasury against
hungry
sole
person
torney General”
encompass
it on
scrupulous host
*22
certain functions
perform
to
power
side,
construed ac-
every
and should be
on the
FCA,
“yet leave unclear
theory,
passed
It was
on the
cordingly.
‘the official of
whether
face of the statute
experience as old as modern
based
responsi
charged
the United States
civilization,
expen-
of the least
that one
Attorney
only the
act’ is in fact
bility to
pre-
of
and most effective means
sive
Park,
v. Island
States
General.” United
to
Treasury
on the
venting frauds
(E.D.N.Y.1992);
see
F.Supp.
of them liable to
perpetrators
make the
v. Nor
Hyatt
ex rel.
States
also United
if
acting,
you
by private persons
actions
1211, 1214-15
throp Corp.,
strong
per-
of
please, under the
stimulus
Cir.1996). However,
the Senate’s
when
gain.
of
Prose-
hope
ill will or the
sonal
3731(b)
di
§
is borrowed
explanation that
means com-
cutions conducted
such
2416(c)
is added to
rectly
28 U.S.C.
from
ordinary methods as the
pare with the
of
mix,
clear and resolution
the clouds
privateer does to the slow-
enterprising
Although
focus:
comes into
the matter
going public vessel.
liberally construed as to
to
intended
be
reprinted
at
as
Id.
of
tolling provision
government,
(quoting
U.S.C.C.A.N.
3731(b)
to
apply
intended to
was not
(D.Ore.1885)).
Griswold,
F.361,
Rather,
in
it was
tam suits.
private qui
Thus,
tam
Congress
qui
prosecu-
viewed
Department
Jus
provide
tended
rap-
to achieve
providing a means
tions as
bring
flexibility
more
“a little
tice with
public
against
of fraud
exposure
id
would be
cases that otherwise
ing some
re-
fisc,
by the lack of
unencumbered
Amendments:
Claims Act
False
barred.”
bureaucracy inherent
or the
sources
on Ad
the H.
Hearings
Subcomm.
Before
authorities.
public
enforcement
Relations
and Governmental
min. Law
Judiciary, 99th
on the
the H. Comm.
Accordingly, we
hold
(Statement
Rich
of Mr.
Cong. 159
3731(b)(2)
apply
intended to
was not
Willard,
Attorney Gener
K
Assistant
ard
recog
at all.
tam relators
We
private qui
Justice).
al,
Dep’t
creates the
interpretation
nize that
this
learns of
relator who
possibility
underlying the
Statutory purposes
it oc
activity
years after
seven
fraudulent
support
interpreta-
this
amendments
bringing suit.33
from
would be barred
the FCA curs
amending
purpose
tion. The
However,
in accord with
result is more
this
the Government’s
only
provide
“not
encouraging
purpose
tools,
the FCA’s stated
but
effective
law enforcers with more
part of relators
action on the
prompt
knowing
encourage any individual
chose
those relators who
discourage
would
bring that informa-
fraud to
Government
claim, or
bringing an FCA
99-345,
delay on
at 2 to
No.
S.Rep.
tion forward.”
government
informing the
refrain
(1986),
in 1986 U.S.C.C.A.N.
reprinted
tolling provision
however,
States,
able to avail itself
in-
could still
33. The
3731(b)(2).
§of
bring
as it would
dependently
an FCA claim
fraud,
increasing damages
processing
to allow
claims ARUP had resubmitted
Congress
adjust-
accrue.
cannot have intended
after
initial denial as
such a
ments rather than as
Sikkenga
result.
reviews.
presents
support
two theories to
her claim.
contrary
that a
We are also concerned
First,
argues
by engaging
she
in these
interpretation,
along the lines of that
actions, Regence “knowingly
two
failed to
courts,
adopted by
Hyatt
Downy
perform properly under the Contract but
six-year
would result in evisceration of the
submitted claims for administrative costs
§in
in the
statute of limitations
though
conforming services had been
majority
It
vast
of cases.
cardinal
Second,
provided.”
she contends that
that our
principle
statutory
construction
avoiding
CPEP score reductions
effect,
duty
every
if
“give
possible,
is to
obtained renewals of its Medicare Part B
clause and word of a statute rather than to
contract, which HCFA would have other-
Lamb v.
emasculate
entire section.”
terminated,
wise
and that each claim for
*23
(10th
1038, 1051
IV
mistake,
ments of fraud or
the circum
Sikkenga’s third
cause of ac
constituting
stances
the fraud or mistake
alleges
Regence fraudulently
tion
shall be
particularity.”
stated with
Fed.
9(b).
heightened
avoided CPEP score reductions
back R.Civ.P.
Its
pleading re
dating a
physician
part
quirements apply
letter to
to actions under the
Review,
Comprehensive
minimum,
supra,
Medical
FCA. See
note 19. “At a
fraud and
constituting
mistake’
9(b)
forth
cumstances
plaintiff
that a
set
requires
Rule
when,
particularity
with
what,
pled
and how1 of
that must be
‘who,
where
9(b).” Karvelas,
nal
constituting fraud and mistake
stances
theory
her first
supporting
particularity’
does
shall be stated
claims for services
fraudulently submitted
plaintiff
Act
permit
not
a False Claims
the contract. She
performed
not
private
scheme
merely to describe
claim made
identify any specific
fails to
simply and
allege
then to
under its
detail but
administrative costs
Regence for
identify
any stated reason for his belief
without
Similarly she does
contract.
requesting illegal payment
presented
any claims that were
submitted,
likely
were
theory
must have been
her second
support
government
have been submit-
have
submitted
should
HCFA would
liability
of FCA
—that
*24
ted to the Government.
contract but
Regence’s
terminated
that her failure to
insists
their fraud. She
Clausen,
conclude
ing Regence’s contract.” alle- y gations theory under her second In her fourth and final FCA cause many respects.
flawed The chain of *25 action, Sikkenga alleges that the Re required Regence’s alleged causation to tie gence defendants against retaliated her in misrepresentations possible to a contract 3730(h), violation of 31 U.S.C. the FCA’s attenuated, termination is and lacks suffi- provision. Whistleblower Protection Sec allegations anything cient factual to be 3730(h) tion states: conjecture.34 more than 9(b)’s Any employee discharged who is [or] Sikkenga claims that Rule re- demoted ... employer his or her quirements should be relaxed because the because of information lawful acts done the em- exclusively within the con- ployee ... trol of the furtherance of an action Regence Although defendants. section, acknowledge including investiga- we that courts have some- this for, of, for, times tion initiation requirements testimony relaxed the of Rule or 9(b), agree we with the Fifth in an action Circuit’s assistance filed or to be filed section, caution that exception “this must not be under this shall be entitled to all Sikkenga's theory, poral proximity misrepresentation, To follow one must ac- reductions, cept alleges Regence possible that the two acts she score aor time when the lowering considering committed would have in a resulted HCFA was the renewal of Re- score, Regence’s gence’s any specif- CPEP and that the lower- contract. Nor does she tie ing score alone would have resulted in ic claim thereafter to this series of events. Regence's generalized daisy the HCFA’s decision to not renew Such a chain of causation 9(b). provides requirements contract. She no detail on the tem- does not meet the of Rule they employee sumption merely acting that necessary to make the relief with obli- employment accordance their whole. case, at gations. 90 F.3d 1523 n. 7. In this 3730(h). claim was dis- This 31 U.S.C. Ramseyer, included Sikkenga’s duties Rule district court under by the missed monitoring compliance with Medicare re- allege failed to Sikkenga because quirements. Sikkenga communicated on no- defendants were that the superiors company her within the and to of a in furtherance acting that she was tice internal divi- Regenee’s fraud abuse ac- government or FCA private qui tarn sion, her belief that violations of these Ramseyer States ex rel. tion. requirements occurring. were On the that, held Corp., Healthcare we Century complaint, district court determined retalia- seeking legal redress for [w]hen “only Sikkenga took actions that she FCA, plaintiff tory discharge part to take as claims she was authorized pleading facts which the burden has employment Regence,” of her had that defendants would demonstrate failed to that she allege that she either plaintiff on notice that was put been superiors informed her of her intention action in furtherance of taking either going action was bring an FCA or that she in an FCA assisting tarn action qui report Regence’s noncompliance gov- brought government. action officials. court also ernment The district (10th Cir.1996). This Sikkenga alleged found that had the con- is in full accord with requirement to Regence had indicated that she was she 3730(h): gressional purpose passing contemplating private tarn action or qui brought by in an assisting was FCA action [3730(h) if provides only relief ] Section government. by prepon- the whistleblower can show employ- that the derance of evidence Sikkenga’s complaint, our review of On retaliatory ‘because’ actions resulted er’s allege agree fails to in a participation the whistleblower’s on no- put defendants had been activity. other Federal protected Under in furtherance of a acting that she was tice statutes, the ‘because’ whistleblower ac- qui government tarn private has into a two- developed standard necessary to allegation tion. Such One, the whistle- pronged approach. termination was establish that had employer must show the blower protected activity. her Be- “because” of engaged in knowledge employee *26 starkly allege to this causal cause she fails two, and, activity” the retalia- “protected dis- link, AFFIRM court’s we the district motivated, by part, in tion was at least whistleblower her FCA retalia- of missal protected in ac- employee’s engaging tion claim. tivity. 99-345, (1986), reprint- No. at S.Rep. VI 5266, 5300. ed in 1986 U.S.C.C.A.N. Ruling that had failed to Sikkenga em- Ramseyer,
In we held that where public policy allege a clear substantial investiga- regular include ployees’ duties Regence’s of her offended termination fraud, persons clearly of such must tion law, of Utah employment violation to their of their plead employers notice law claim court dismissed her state bringing assisting of an intentions district this deci- pre- Sikkenga argues that action in order to overcome the as well. a 1027. a clear and substantial prove order to Whether sion was in error.35 law, discharge under Utah wrongful public policy support employ- to tort of exists “(1) prove that her em plaintiff a must wrongful ques- ee’s termination claim is a (2) terminated, a clear and ployment was of law. at tion Id. (3) existed, policy public
substantial
The district
court determined
clear
implicated
conduct
that
plaintiffs
“[wjithout
that,
a valid False Claims Act
(4)
public policy,
and substantial
...
against Regence,
Sikkenga
claim
has
conduct in furtherance of
termination and
a
causally connected.” not demonstrated
clear and substantial
public policy
Ctrs., Inc.,
public policy
wrongful
Care
for her
termination
Rackley v. Fairview
2001).
(Utah
1022, 1026
P.3d
against Regence.”
claim
As discussed
supra,
II.B and II.C
the district court
dismissed
This claim was
Sikkenga’s
it dismissed
erred when
Sikkenga
because
failed
the district court
complaint
under Rule
her
because
public
allege
a clear and substantial
adequately alleged
Regence
caused
prima
a
facie element
her
policy as
present
false or
fraudulent
ARUP
wrongful
termination. Under
for
claims to the United States
violation
law,
public policy exception to
Utah
“[t]he
FCA—actions for which
is
employment
presumption
at will
not immune.36 Because the district court’s
than traditional notions of
much narrower
Sikkenga
determination that
had failed to
narrowly
to be
con
public policy,”
allege wrongful
termination in violation
public
at
A “clear”
strued.
Id.
1026-27.
public policy
premised
on its conclu
policy
plainly
defined
one of
must be
sion that
was immune under
(1)
enactments,
legislative
three sources:
1395u(e),
(3)
dependent
U.S.C.
its
determi
standards,
judicial
constitutional
allege
nation that Sikkenga has failed to
decisions,
only if it is
and is “substantial”
public policy
clear and substantial
neces
“overreaching importance
public,
Thus,
only.”
parties
sarily
Id. at
fails as well.37
we
opposed
REVERSE
supplemental
Sikkenga
appeal
35. The district court exercised
also note that
did not
jurisdiction
Sikkenga’s
against
over
state law causes
district court's dismissal of her claim
1367, finding
of action under 28 U.S.C.
individually,
defendant Mitchell
based on its
against Regence
her state law claims
provide
determination that Utah law did not
wrongful
factually
were
related
termination
liability against
supervisor
wrongful
enough
against
FCA claim
ARUP that
ruling
Our
termination.
does not disturb that
fairness,
economy,
principles
judicial
determination as the law of the case.
by allowing
and convenience would be served
Sikkenga’s
in the
state law claims
remain
37.Sikkenga
argues
wrongful
also
that her
same action. The exercise of this discretion
allegation
public
termination
identified the
appealed,
has not been
nor has the district
policy
encouraging employees
to resist
disposition
Sikkenga’s remaining
court’s
in, facilitate,
pressure
engage
or conceal
state law causes of action.
illegal activity
Supreme
as established in Utah
court, however,
Court case law.
district
emphasize again
posi-
36. We
take no
allege any
held that she had failed to
criminal
allegations,
tion on whether
*27
complaint, only
wrongs,
conduct
her
civil
pre-
to
"caused” the false claims
accordingly
held that this claim did not
supra,
II.C
sented as discussed in
meet
pleading
amount to
a clear and substantial
alleging
requirements
adequately
a viola-
of
public policy, refusing
9(b).
to allow her to over-
under Rule
Because
tion of the FCA
stating
by
come deficiencies in
a claim "mak-
dependent
Sikkenga’s
law claim is
on a
state
arguments
against Regence,
ing
beyond
allega-
FCA
such a
that extend
"valid
claim”
Chavez,
Jojola
complaint.”
will also be relevant to resolu-
tions in the
v.
determination
488,
(10th Cir.1995) ("It
tion of the state law claim on remand. We
F.3d
is well-
liability arising from its
of claims.
payment
court’s dismissal
the district
claim to the
wrongful termination
try
explain,
state law
I shall
I think that the
As
public
that the clear and substantial
1395u(e)(3)
extent
reading of
most reasonable
FCA,
of the
alleges
is a violation
policy
that it immunizes the carrier from liabil-
is
proceedings
REMAND for further
ity
employee’s
employ-
for an
act when the
this decision.
consistent with
liability
immunized from
for that act
ee is
1395u(e).
(1)
(2)
paragraph
VII
1395u(e)
Section
states:
of the FCA Claim
Accordingly, dismissal
1,
against
claim
ARUP
“presenting”
(1)
designated pursuant
No individual
claim
“causing
presented”
and the
to be
under this section as a
to a contract
12(b)(6)
Rule
is
Regence, against
shall,
officer
in the absence of
certifying
REVERSED;
dismissal of Claim
or intent to defraud the
gross negligence
budget
involving
claim
the 1992 false
States,
respect to
be liable with
by Regence,
request submitted
Rule
certified
him under
any payments
12(b)(6)
AFFIRMED;
dismissal
this section.
manipulations
score
Claim the CPEP
claim, under Rule
renewal
contract
(2)
shall,
disbursing officer
in the
No
9(b) AFFIRMED;
of Claim
dismissal
intent to
gross negligence
absence of
Retaliation
the FCA Whistleblower
States,
defraud thé United
be liable
12(b)(6) is
Regence, under Rule
against
by him under
respect
any payment
AFFIRMED;
state
and dismissal
if it
a vouch-
upon
this section
was based
termination in viola-
wrongful
law claim of
signed by
certifying
desig-
er
officer
un-
policy against Regence,
public
tion of
(1)
paragraph
provided
nated as
is REVERSED.38
der Rule
this subsection.
proceed-
REMANDED for further
case is
05-4088,
opinion.
this
ings
(3)
consistent with
No such carrier shall be liable
Regence.
Sikkenga
ex rel.
any payments
re-
the United States
(2).
(1) or
paragraph
ferred to in
HARTZ,
Judge
Circuit
(e) is to eliminate
The thrust of subsection
concurring/dissenting.
errors committed without
suits based on
11(A), 11(C)(1), 11(C)(3),
I,
join
I
Parts
intent.
negligence or
fraudulent
gross
TV,
II(D),
Judge
opin-
Lucero’s
and VI
(1)
certifying
that the
offi-
Paragraph
says
11(B)
in Parts
I concur in the result
ion.
certifying
payment
cer is not liable for
11(C)(2).
III.
I
from Part
dissent
negli-
gross
acted with
unless the officer
Regarding
Special
Part
I.
Concurrence
Paragraph
fraudulent intent.
gence or
11(B)
Immunity)
(Regence
disbursing
is not
officer
states
un-
making
payment
a certified
liable for
is not immunized
agree
I
1395u(e) (1994)
negligence
gross
the officer acted with
from all
less
U.S.C.
established, however,
allegation
partici-
determining
pleadings
to an
amount
dismiss,
Jojota,
Relying
we also
pating
a crime.
grant a
whether to
motion
arguments
court,
Sikkenga
court,
allow
to advance
will not
consequently
this
district
allegations
beyond
us that extend
before
sufficiency
assessing
legal
limited
complaint.
in her amended
allegations
corners
contained within the four
agree that
com-
complaint.”). We
her
pending
before this
allege
Any further
motions
plaint
a criminal violation. On
fails to
are denied.
attempts
argue
her factual
court
appeal,
she
*28
immune,
Then,
why
to avoid suits which an officer is
include
intent.
or fraudulent
(2)”
quoted phrase?
“or
at the end of the
go directly
the middleman and
skip
(3)
Nothing
by saying merely
would be lost
carrier,
immu-
against
paragraph
“any
to in
payment
paragraph
referred
liability when its
from
nizes the carrier
(1),”
says
para-
because—if one
that each
employee is immune.
which
graph
payments
“refers to”
for
(3)’s
sure,
language
paragraph
To be
liability
may
payments
there
be
as well as
it
un-
thing,
For one
is
poses difficulties.
immunity'
same
for which there is
—-the
in the
clear
the antecedent
such is
what
payments
para-
are “referred to”
both
impor-
Much more
phrase “such carrier.”
(2).
(1)
graphs
Each
un-
paragraph,
“any
tantly,
phrase
payments
referred
Regence’s reading,
der
addresses all certi-
(1)
(2)”
ambiguous.
or
paragraph
payments:
payment,
For each
fied
phrase
have us read the
Regence would
subject to
certifying officer is either
liabili-
or at least all
encompassing
payments,
all
immune,
ty
goes
or
and the same
for the
by
certifying
a
officer.
payments certified
(1)
officer;
disbursing
paragraph
address-
all,
reading.
para-
After
possible
This is a
payments
the certified
for which certi-
es
(1)
(2)
payments
certi-
graphs
describe
fying
may
officers are immune or
be liable
by
certifying
fied
a
officer for which a
(that is,
payments),
all certified
and para-
may
certifying
disbursing
or
officer
be lia-
(2)
graph
payments
addresses certified
for
(when
certifying
disbursing
ble
or
offi-
disbursing
officers are
or
immune
or
gross negligence
cer acts with
intent to
(that is,
may
pay-
be liable
all certified
defraud)
payments
by
certified
a certi- ments). Thus, in
phrase “payments
certifying
fying
for which the
or
officer
(1)
(2),”
to in paragraph
referred
or
liability
from
disbursing officer is immune
(2)”
surplusage. Ordinarily,
words “or
are
(when
gross negligence
is no such
or
there
a
a
we should avoid construction of
statute
intent).
(1)
Thus, paragraphs
fraudulent
portions
statutory
that renders
lan-
(2) can
said to “refer to” certified
guage superfluous.
Arlington
See
Cent.
im-
payments for which the officers are
—
Murphy,
Sch. Dist. Bd.
Educ. v.
payments for
mune and certified
which U.S. -, - n.
126 S.Ct.
is,
not—that
all
they
pay-
are
certified
(2006) (but
noting
n.
I should that doubt have not period; limitation it did six-year be but causation could shown evidence Judge Ben- only accept agree I with District say said it would so. (that is no to resolve. may may legitimate) ambiguity not that there son Colunga ex v. Her- adequate substanti- States rel. without documentation See United Inc., 89-CV-954B, cules, In cir- No. 1998 WL ating they proper. (D.Utah 1998). Mar.6, cumstance, The ma- the claims is *5 submitter of claims, absurdity doc- being jority’s advised to false invocation submit being attempt to do so. makes no to establish only that trusted not trine extremely strict condi- satisfaction of the of that doctrine set application
tions for banc
forth in our recent unanimous en subject. Robbins.
opinion on the See event, Judge explained, Benson 3731(b) meaning of is not absurd.
plain have decided that a
Congress could well if not be time-barred
relator should not. To bar the relator but
government is government may accomplish noth-
not the
ing preventing than the relator from more just in bringing her reward
securing *32 foreclose, I
matter to court. would
however, equitable that an possibility implicitly incorporated in the stat-
doctrine delays,
ute a relator who could bar reasons,
improper reporting fraud to the States, Young
Government. v. United Cf. 43, 49,
535 U.S. S.Ct. (2002) (noting equitable
L.Ed.2d 79
tolling background principle generally is a construing of limita-
applied statutes
tions). McGOWAN, Plaintiff-Appellant,
Jean EUFALA, municipal corpo
CITY OF Mayor Day,
ration, Billy Ray in his capacities,
official and individual French,
Chad in his individual Defendants-Appel capacities,
official
lees.
No. 04-7083. Appeals,
United States Court of
Tenth Circuit.
Dec.