Petition for Writ of Certiorari — Molina Healthcare of Illinois, Inc., et al., Petitioners v. Thomas Prose

NO. ______

In the

Supreme Court of the United States

________________

MOLINA HEALTHCARE OF ILLINOIS, INC.

and MOLINA HEALTHCARE, INC.,

Petitioners,

v.

THOMAS PROSE,

Respondent.

________________

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

________________

PETITION FOR WRIT OF CERTIORARI

________________

Kelly Perigoe

Albert Giang

KING & SPALDING LLP

633 West Fifth Street

Suite 1600

Los Angeles, CA 90071

(213) 443-4355

Anne M. Voigts

Counsel of Record

Quyen L. Ta

Matthew V.H. Noller

KING & SPALDING LLP

50 California Street

Suite 3300

San Francisco, CA 94111

(415) 318-1200

avoigts@kslaw.com

Jeffrey S. Bucholtz

Ashley C. Parrish

KING & SPALDING LLP

1700 Pennsylvania Ave. NW

Washington, DC 20006

(202) 737-0500

Counsel for Petitioners

February 14, 2022

QUESTIONS PRESENTED

This petition presents the same question as

Johnson v. Bethany Hospice & Palliative Care LLC,

No. 21-462, and United States ex rel. Owsley v. Fazzi

Assocs., Inc., No. 21-936, regarding Federal Rule of

Civil Procedure 9(b)’s application to False Claims Act

cases. Circuit courts are divided over whether FCA

plaintiffs must plead the element of a false claim with

particularity, or whether the existence of a false claim

can simply be inferred, as the Seventh Circuit held.

This petition also raises a second conflict.

Universal Health Services, Inc. v. United States ex rel.

Escobar held that a claim can be “false or fraudulent”

if (1) the claim makes representations about the goods

or services provided; and (2) the defendant’s failure to

disclose material statutory, regulatory, or contractual

noncompliance

makes

those

representations

misleading half-truths. 579 U.S. 176, 187, 190 (2016).

Circuit courts disagree over whether a claim that

makes no representations about the goods or services

at issue can be deemed “false or fraudulent” via an

“implied” certification of compliance with underlying

conditions, with the Seventh Circuit concluding that it

can.

The questions presented are:

1. Whether Rule 9(b) requires plaintiffs in False

Claims Act cases to plead details of the alleged false

claims.

2. Whether a request for payment that makes no

specific representations about the goods or services

provided can be actionable under an implied false

certification theory.

ii

CORPORATE DISCLOSURE STATEMENT

Petitioner Molina Healthcare of Illinois, Inc.’s

parent company is petitioner Molina Healthcare, Inc.,

which has no parent company.

No publicly held company owns 10% or more of

the stock of Molina Healthcare of Illinois, Inc. or

Molina Healthcare, Inc.

iii

RELATED PROCEEDINGS

United States ex rel. Prose v. Molina Healthcare of Ill.,

Inc., 17 F.4th 732 (7th Cir. 2021)

United States ex rel. Prose v. Molina Healthcare of Ill.,

Inc., 2021 WL 5296454 (7th Cir. Nov. 15, 2021)

United States ex rel. Prose v. Molina Healthcare of Ill.,

Inc., 10 F.4th 765 (7th Cir. 2021)

United States ex rel. Prose v. Molina Healthcare of Ill.,

Inc., 2020 WL 3050342 (N.D. Ill. June 8, 2020)

United States ex rel. Prose v. Molina Healthcare of Ill.,

Inc., 2019 WL 3555336 (N.D. Ill. July 31, 2019)

iv

TABLE OF CONTENTS

Questions Presented .................................................... i

Corporate Disclosure Statement ................................ ii

Related Proceedings .................................................. iii

Table of Authorities .................................................. vii

Petition for Writ of Certiorari .................................... 1

Opinions Below ........................................................... 3

Jurisdiction ................................................................. 3

Rule and Statutory Provision Involved .................... 4

Statement ................................................................... 4

A. Legal background ......................................... 4

B. Molina’s contract with the government ....... 7

C. Prose’s claims ............................................... 9

D. The decisions below .................................... 10

Reasons for Granting the Petition ........................... 12

I.

The circuits are split over both questions

presented. .......................................................... 13

A. The circuits are split over Rule 9(b)’s

applicability to the “false claim” element.

..................................................................... 13

B. The circuits are split over whether a

request for payment that contains no

specific representations can be a false

claim under the FCA. ................................. 18

II. The questions presented are important and

recurring. ........................................................... 21

v

III. This case is an excellent vehicle to decide the

questions presented. .......................................... 26

Conclusion................................................................. 29

Appendix

Appendix A

Amended Opinion of the U.S. Court of

Appeals for the Seventh Circuit,

United States ex rel. Prose v. Molina

Healthcare of Ill., Inc., No. 20-2243

(Nov. 15, 2021) ...................................... App-1

Appendix B

Original Opinion of the U.S. Court of

Appeals for the Seventh Circuit,

United States ex rel. Prose v. Molina

Healthcare of Ill., Inc., No. 20-2243

(Aug. 19, 2021) .................................... App-40

Appendix C

Memorandum Opinion & Order of the

U.S. District Court for the Northern

District of Illinois, United States ex

rel. Prose v. Molina Healthcare of Ill.,

Inc., No. 17 C 6638 (June 8, 2020)...... App-80

Appendix D

Memorandum Opinion & Order of the

U.S. District Court for the Northern

District of Illinois, United States ex

rel. Prose v. Molina Healthcare of Ill.,

Inc., No. 17 C 6638 (July 31, 2019) .. App-100

vi

Appendix E

Order of the U.S. Court of Appeals for

the

Seventh

Circuit

Denying

Rehearing and Rehearing En Banc,

United States ex rel. Prose v. Molina

Healthcare of Ill., Inc., No. 20-2243

(Nov. 15, 2021) .................................. App-109

Appendix F

Relevant Statutes & Rules

31 U.S.C. § 3729 ......................... App-112

Fed. R. Civ. P. 9(b) ...................... App-117

vii

TABLE OF AUTHORITIES

Cases

Allison Engine Co.

v. United States ex rel. Sanders,

553 U.S. 662 (2008).......................................... 26, 28

Carrel v. AIDS Healthcare Found., Inc.,

898 F.3d 1267 (11th Cir. 2018).............................. 14

Chiarella v. United States,

445 U.S. 222 (1980)................................................ 19

Corsello v. Lincare, Inc.,

428 F.3d 1008 (11th Cir. 2005)........................ 14, 24

Ebeid ex rel. United States v. Lungwitz,

616 F.3d 993 (9th Cir. 2010).................. 6, 13, 16, 17

Estate of Helmly v. Bethany Hospice &

Palliative Care of Coastal Ga., LLC,

853 F. App’x 496 (11th Cir. 2021) ................... 14, 15

Foglia v. Renal Ventures Mgmt., LLC,

754 F.3d 153 (3d Cir. 2014) ................... 6, 13, 16, 17

In re Baycol Prods. Litig.,

732 F.3d 869 (8th Cir. 2013).................................. 24

Order,

Johnson v. Bethany Hospice & Palliative

Care LLC, No. 21-462 (U.S. Jan. 18, 2022)............. 6

Rainwater v. United States,

356 U.S. 590 (1958)................................................ 26

Ruckh v. Salus Rehab., LLC,

963 F.3d 1089 (11th Cir. 2020).......................... 7, 20

Sanderson v. HCA-The Healthcare Co.,

447 F.3d 873 (6th Cir. 2006).................................. 13

viii

United States ex rel. Badr

v. Triple Canopy, Inc.,

857 F.3d 174 (4th Cir. 2017)........................ 7, 12, 21

United States ex rel. Benaissa

v. Trinity Health,

963 F.3d 733 (8th Cir. 2020).............................. 5, 14

United States ex rel. Campie

v. Gilead Scis., Inc.,

862 F.3d 890 (9th Cir. 2017).................................. 20

United States ex rel. Chorches

v. Am. Med. Response, Inc.,

865 F.3d 71 (2d Cir. 2017) ................................. 5, 16

United States ex rel. Clausen

v. Lab’y Corp. of Am., Inc.,

290 F.3d 1301 (11th Cir. 2002)...................... passim

United States ex rel. Colquitt

v. Abbott Labs.,

858 F.3d 365 (5th Cir. 2017)........................ 6, 16, 17

United States ex rel. Eberhard

v. Physicians Choice Lab. Servs., LLC,

642 F. App’x 547 (6th Cir. 2016) ........................... 13

United States ex rel. Grant

v. United Airlines, Inc.,

912 F.3d 190 (4th Cir. 2018).................................. 16

United States ex rel. Gray

v. UnitedHealthcare Ins. Co.,

2018 WL 2933674 (N.D. Ill. June 12, 2018)............ 9

United States ex rel. Grubbs v. Kanneganti,

565 F.3d 180 (5th Cir. 2009).................................. 17

ix

United States ex rel. Heath v. AT&T, Inc.,

791 F.3d 112 (D.C. Cir. 2015) ............................ 6, 16

United States ex rel. Karvelas

v. Melrose-Wakefield Hosp.,

360 F.3d 220 (1st Cir. 2004) .............................. 5, 14

United States ex rel. Kelly v. Serco, Inc.,

846 F.3d 325 (9th Cir. 2017).................................. 20

United States ex rel. Lemmon

v. Envirocare of Utah, Inc.,

614 F.3d 1163 (10th Cir. 2010).......................... 6, 17

United States ex rel. Marcus v. Hess,

317 U.S. 537 (1943)................................................ 24

United States ex rel. Nathan

v. Takeda Pharms. N. Am., Inc.,

707 F.3d 451 (4th Cir. 2013).............................. 5, 16

United States ex rel. Owsley

v. Fazzi Assocs., Inc.,

16 F.4th 192 (6th Cir. 2021) .................. 5, 14, 15, 27

United States ex rel. Presser

v. Acacia Mental Health Clinic, LLC,

836 F.3d 770 (7th Cir. 2016)........................ 6, 13, 17

United States ex rel. Rose v. Stephens Inst.,

909 F.3d 1012 (9th Cir. 2018),

as amended (Nov. 26, 2018)............................... 7, 20

United States ex rel. Sheldon

v. Kettering Health Network,

816 F.3d 399 (6th Cir. 2016).................................. 15

United States ex rel. Smith v. Wallace,

723 F. App’x 254 (5th Cir. 2018) ....................... 7, 20

x

United States ex rel. Totten

v. Bombardier Corp.,

380 F.3d 488 (D.C. Cir. 2004) ................................ 28

United States ex rel. Whatley

v. Eastwick Coll.,

657 F. App’x 89 (3d Cir. 2016) ........................... 7, 20

United States ex rel. Zemplenyi

v. Grp. Health Coop.,

2011 WL 814261

(W.D. Wash. Mar. 3, 2011) ...................................... 9

United States v. Dynamic Visions Inc.,

971 F.3d 330 (D.C. Cir. 2020) ................................ 21

United States v. DynCorp. Int’l, LLC,

253 F. Supp. 3d 89 (D.D.C. 2017) .......................... 21

United States v. Sci. Applications Int’l Corp.,

626 F.3d 1257 (D.C. Cir. 2010) .......................... 7, 21

United States v. Triple Canopy, Inc.,

775 F.3d 628 (4th Cir. 2015).................................. 21

Universal Health Servs., Inc.

v. United States ex rel. Escobar,

579 U.S. 176 (2016)........................................ passim

Vicom, Inc. v. Harbridge Merch. Servs., Inc.,

20 F.3d 771 (7th Cir. 1994).................................... 12

Vt. Agency of Nat. Res.

v. United States ex rel. Stevens,

529 U.S. 765 (2000)........................................ 2, 4, 22

Yuhasz v. Brush Wellman, Inc.,

341 F.3d 559 (6th Cir. 2003).................................. 13

xi

Statutes & Rules

31 U.S.C. § 3729(a) ....................................... 2, 4, 6, 24

31 U.S.C. § 3730 .................................................... 4, 23

42 U.S.C. § 1320a-7b(g) ............................................ 27

Fed. R. Civ. P. 9(b) ................................................ 5, 24

Other Authorities

5A Wright & Miller,

Federal Practice and Procedure

§ 1296 (4th ed.)......................................................... 5

Cert. Pet.,

Johnson v. Bethany Hospice

& Palliative Care LLC, No. 21-462

(U.S. Sept. 23, 2021) ...................................... passim

Cert. Pet.,

United States ex rel. Owsley

v. Fazzi Assocs., Inc., No. 21-936

(U.S. Dec. 21, 2021) ....................................... 1, 6, 23

Claire M. Sylvia,

The False Claims Act: Fraud Against the

Government § 10:59 (2021 update) ....................... 23

George B. Breen et al.,

DOJ False Claims Act Statistics 2020: Over

80% of all Recoveries Came from the Health

Care Industry, Nat’l L. Rev. (Jan. 21, 2021),

https://bit.ly/327ig4G ............................................. 22

Jeff Overley,

New FCA Stats Fuel Debate over

Health Enforcement Fixation, Law360

(Feb. 8, 2022), https://bit.ly/3GGtjjA ..................... 22

xii

Reply,

Johnson v. Bethany Hospice

& Palliative Care LLC, No. 21-462

(U.S. Dec. 28, 2021) ..................................... 1, 17, 26

Restatement (Second) of Torts

§ 551(1) (1977)........................................................ 19

U.S. Dep’t of Justice,

Fraud Statistics – Overview: Oct. 1, 1986 –

Sept. 30, 2020, https://bit.ly/3egHss4 .................... 22

U.S. Dep’t of Justice,

Fraud Statistics – Overview: Oct. 1, 1986 –

Sept. 30, 2021, https://bit.ly/34vxS2K ................... 22

W. Keeton, et al.,

Prosser and Keeton on Law of Torts

§ 106 (5th ed. 1984)................................................ 25

PETITION FOR WRIT OF CERTIORARI

False Claims Act defendants, plaintiffs, and the

lower courts alike need to know how Rule 9(b) applies

in FCA cases. In addition to this petition, two other

pending petitions present the same question,

including one in which the Court has called for the

views of the Solicitor General. See Cert. Pet., Johnson

v. Bethany Hospice & Palliative Care LLC, No. 21-462

(U.S. Sept. 23, 2021) (Bethany Hospice Pet.); Cert.

Pet., United States ex rel. Owsley v. Fazzi Assocs., Inc.,

No. 21-936 (U.S. Dec. 21, 2021) (Owsley Pet.). All three

petitions urge the Court to clarify an important issue

over which circuit courts are deeply divided: Whether

Rule 9(b) requires an FCA plaintiff to plead the

statute’s false claim element with particularity. Under

this mature and widely acknowledged split, the

viability of a frequently invoked federal cause of action

depends largely on the circuit in which it is brought.

The Seventh Circuit’s divided decision in this case

joins those circuits that have improperly loosened

Rule 9(b)’s requirements. The petitioners in Bethany

Hospice and Owsley—who are represented by counsel

for respondent here—tout this decision as one of the

“strongest cases embodying” the relaxed approach to

Rule 9(b), Reply 4, Bethany Hospice, No. 21-462 (U.S.

Dec. 28, 2021) (Bethany Hospice Reply), and marking

an “especially acute” conflict with the Eleventh and

Sixth Circuits, Bethany Hospice Pet. 24; Owsley Pet.

20. Here, as Chief Judge Sykes observed in dissent,

the panel majority “accept[ed] [respondent’s]

invitation to deviate from Rule 9(b)” by not requiring

the relator to “describ[e] the ‘who, what, when, where,

and how’ of the fraud.” App.28-29. The panel majority

2

thus gave respondent a free pass to circumvent Rule

9(b), holding that he pleaded a valid FCA claim

despite never identifying any specific false claim (or

misleading statement) by petitioners Molina

Healthcare of Illinois, Inc., and Molina Healthcare,

Inc. (collectively, Molina).

The consequences of that lax approach are costly.

The FCA’s “bounty” system, Vt. Agency of Nat. Res. v.

United States ex rel. Stevens, 529 U.S. 765, 772 (2000),

already creates a powerful incentive for plaintiffs (and

plaintiffs’ lawyers) to file qui tam suits. Rule 9(b)’s

gatekeeping function serves as a critical check against

abuse, but only if faithfully applied. That three

petitions (by both relators and defendants) present the

same question regarding Rule 9(b) underscores the

need for this Court to resolve the split now.

In addition, this petition presents a second certworthy issue over which circuits have also split:

Whether under Universal Health Servs., Inc. v. United

States ex rel. Escobar, a claim can be deemed “false or

fraudulent,” 31 U.S.C. § 3729(a), based on a pure

implied certification theory—i.e., even if the claim

“merely request[s] payment” and makes no “specific

representations” about the goods or services provided

and therefore contains no “half-truths.” 579 U.S. 176,

190 (2016). The Seventh Circuit’s conclusion that a

request for payment is by itself sufficient reads the

false claim element out of the FCA, deepens an

existing split in the lower courts, and runs afoul of this

Court’s admonition that the FCA is not “an all-purpose

antifraud statute,” let alone “a vehicle for punishing

garden-variety breaches of contract or regulatory

violations.” Id. at 194 (cleaned up). Treating a claim

3

as implicitly certifying compliance with an underlying

condition it does not mention expands the FCA beyond

its proper bounds to encompass virtually any

statutory, regulatory, or contractual violation.

The Court should grant this petition because it

provides an excellent vehicle to resolve two important

issues over which the circuits are irremediably split.

At a minimum, the Court should grant at least one of

the petitions presenting the Rule 9(b) issue. If the

Court believes that Bethany Hospice or Owsley is a

preferable vehicle on the Rule 9(b) issue and opts not

to grant this petition on the implied certification issue,

the Court should hold this petition pending its

decision on the Rule 9(b) issue.

OPINIONS BELOW

The Seventh Circuit’s initial opinion (App.40-79)

is reported at 10 F.4th 765. The order amending that

opinion and denying Molina’s petition for rehearing

(App.109-11) is unpublished but available at 2021 WL

5296454. The amended published opinion (App.1-39)

is reported at 17 F.4th 732.

The opinions of the U.S. District Court for the

Northern District of Illinois (App.80-99, 100-08) are

unpublished but available at 2020 WL 3050342 and

2019 WL 3555336.

JURISDICTION

The Seventh Circuit denied rehearing and issued

its amended opinion on November 15, 2021. This

Court has jurisdiction under 28 U.S.C. § 1254.

4

RULE AND STATUTORY

PROVISION INVOLVED

Federal Rule of Civil Procedure 9(b) and 31 U.S.C.

§ 3729 are reproduced at App.112-17.

STATEMENT

A. Legal background

1. The FCA imposes liability for knowingly

presenting to the government “a false or fraudulent

claim for payment.” 31 U.S.C. § 3729(a). While the

government can bring FCA claims directly, private

individuals, acting as “relators,” can also prosecute qui

tam actions on the government’s behalf. 31 U.S.C.

§ 3730. Relators can obtain treble damages, per-claim

penalties, and attorney’s fees and expenses, id.

§§ 3729(a), 3730(d)(1)–(2), and are entitled to a share of

any recovery, id. § 3730(d). That liability is, as this

Court has observed, “punitive.” Stevens, 529 U.S. at

784.

2. As one would expect given the draconian

nature of the FCA’s remedies and its unusual

provision for private enforcement, the conduct it

prohibits and penalizes is narrow and specific. In

particular, the Court has repeatedly emphasized that

the FCA is not “a vehicle for punishing garden-variety

breaches of contract or regulatory violations.” Escobar,

579 U.S. at 194. Private parties and the government

have all manner of judicial and administrative

remedies to address contractual and regulatory issues;

the FCA, in contrast, addresses fraud. And even with

respect to fraud, the FCA is not “an all-purpose

antifraud statute,” but rather one concerned with a

specific type of fraud—namely, “false or fraudulent

5

claim[s] for payment.” But federal courts are

fundamentally divided on how to apply the FCA’s

limitation to claims that are false.

a. One key practical check on relator-driven FCA

litigation arises from Federal Rule of Civil Procedure

9(b), which requires plaintiffs alleging any fraudbased claim to “state with particularity the

circumstances constituting fraud.” Fed. R. Civ. P. 9(b).

The rule is intended to “deter[] the filing of suits solely

for discovery purposes” and “guard[] against the

institution of a fraud-based action in order to discover

whether unknown wrongs actually have occurred.” 5A

Wright & Miller, Federal Practice and Procedure

§ 1296 (4th ed.).

The circuits are deeply divided on whether Rule

9(b)’s particularity requirement applies to the FCA’s

false claim element. Six circuits—the First, Second,

Fourth, Sixth, Eighth, and Eleventh—require

particularity for the false claim element. United States

ex rel. Owsley v. Fazzi Assocs., Inc., 16 F.4th 192, 196

(6th Cir. 2021); United States ex rel. Benaissa v.

Trinity Health, 963 F.3d 733, 739 (8th Cir. 2020);

United States ex rel. Chorches v. Am. Med. Response,

Inc., 865 F.3d 71, 86 (2d Cir. 2017); United States ex

rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d

451, 456 (4th Cir. 2013); United States ex rel. Karvelas

v. Melrose-Wakefield Hosp., 360 F.3d 220, 232-33 (1st

Cir. 2004); and United States ex rel. Clausen v. Lab’y

Corp. of Am., Inc., 290 F.3d 1301, 1311-12 (11th Cir.

2002). Six others—the Third, Fifth, Seventh, Ninth,

Tenth, and D.C.—relax Rule 9(b) by allowing the

submission of a false claim to be inferred. United

States ex rel. Colquitt v. Abbott Labs., 858 F.3d 365,

6

372 (5th Cir. 2017); United States ex rel. Presser v.

Acacia Mental Health Clinic, LLC, 836 F.3d 770, 777

(7th Cir. 2016); United States ex rel. Heath v. AT&T,

Inc., 791 F.3d 112, 126-27 (D.C. Cir. 2015); Foglia v.

Renal Ventures Mgmt., LLC, 754 F.3d 153, 155-56 (3d

Cir. 2014); United States ex rel. Lemmon v. Envirocare

of Utah, Inc., 614 F.3d 1163, 1172 (10th Cir. 2010); and

Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993,

998-99 (9th Cir. 2010).

This Court is currently considering two petitions

for certiorari presenting the same Rule 9(b) question

based on the same split. Bethany Hospice Pet.; Owsley

Pet. Both were filed by counsel for respondent here.

The Court called for a response in both cases and for

the Solicitor General’s views in Bethany Hospice.

Order, No. 21-462 (U.S. Jan. 18, 2022).

b. A second critical limit in the FCA is the Act’s

falsity element—its requirement that a defendant’s

“claim for payment” be “false or fraudulent.” 31 U.S.C.

§ 3729(a). Claims for payment can be “false or

fraudulent” under the “well-settled meaning” of those

terms if they “contain[] express falsehoods.” Escobar,

579 U.S. at 187-88. In Escobar, the Court held that

claims can also be “false or fraudulent” if they make

“misrepresentations by omission[s].” Id. Relying on

the common law of fraud, Escobar held that omissions

can render a claim false or fraudulent “at least where

two conditions are satisfied: first, the claim does not

merely request payment, but also makes specific

representations about the goods or services provided;

and second, the defendant’s failure to disclose

noncompliance with material statutory, regulatory, or

7

contractual requirements makes those representations

misleading half-truths.” Id. at 190 (emphasis added).

Escobar, however, left open “whether all claims

for payment implicitly represent that the billing party

is legally entitled to payment.” Id. at 188 (emphasis

added). On this theory, a claim can be deemed “false

or fraudulent” even when it is truthful within its four

corners and “merely request[s] payment” without

making any “specific representations” that could be

“misleading half-truths,” id. at 188-90, if the party

submitting the claim has not complied with all

underlying regulatory and contractual conditions.

Federal courts have split over whether to recognize

this theory. The Third, Fifth, Ninth, and Eleventh

Circuits are on one side, and the Fourth, D.C., and

now Seventh Circuits are on the other. Compare

Ruckh v. Salus Rehab., LLC, 963 F.3d 1089, 1099

(11th Cir. 2020); United States ex rel. Rose v. Stephens

Inst., 909 F.3d 1012, 1018 (9th Cir. 2018), as amended

(Nov. 26, 2018); United States ex rel. Smith v. Wallace,

723 F. App’x 254, 256 (5th Cir. 2018) (per curiam);

United States ex rel. Whatley v. Eastwick Coll., 657 F.

App’x 89, 94 (3d Cir. 2016); with United States ex rel.

Badr v. Triple Canopy, Inc., 857 F.3d 174, 178 n.3 (4th

Cir. 2017); United States v. Sci. Applications Int’l

Corp., 626 F.3d 1257, 1269 (D.C. Cir. 2010).

B. Molina’s contract with the government

Molina is a managed care organization that

contracted with Illinois in 2013 to offer, deliver, and

manage health care services to Medicaid beneficiaries.

CA7-App.A33, A41 (FAC ¶¶ 2, 30). Illinois repeatedly

extended its contract with Molina, including after

learning of the allegations in this suit. CA7-App.A41,

8

A61 (FAC ¶¶ 31, 116). That contract, which is still in

effect, is based on a capitation payment model. Under

that model, the government pays Molina not per

service, but per patient using a fixed monthly fee that

covers “all services” irrespective of how many or how

few services a patient actually uses. App.2; CA7App.A47 (FAC ¶ 52).

As part of its “Care Delivery Requirements,”

Molina’s contract required it to provide the services of

a “SNFist,” a medical professional who “provide[s]

Care Management and care coordination activities”

for enrollees residing in nursing facilities (often

referred to as “SNFs,” for skilled nursing facilities).

CA7-App.A85-87. As defined by contract, “Care

Management” refers to “[s]ervices that assist

Enrollees in gaining access to needed services,

including medical, social, educational and other

services.” CA7-App.A80, A87, A96.

“SNFist services” are not the same as “Skilled

Nursing,” which refers to the nursing services

provided by licensed nurses. CA7-App.A83. Nor does

the term refer to all care an enrollee residing at a

nursing facility receives or to an enrollee’s access to a

“Skilled Nursing Facility” itself. Rather, it is limited

to care coordination services performed by a SNFist,

which are separate from the direct provision of

medical care, personal care, or social services to

nursing-home residents. CA7-App.A80, A85-87. A

failure to provide care coordination services

specifically through a SNFist would not mean that any

patient lacked access to a skilled nursing facility or to

“needed . . . medical, social, educational and other

services,” or even that a patient could not or did not

9

receive Care Management from other types of medical

professionals. CA7-App.A80, A86-87.

Molina’s contract creates five risk pools called

“rate cells” that correspond to age, geographic area,

and setting-of-care. App.4-5. It fixes capitation

payments by cell, with higher rates for rate cells

whose enrollees are likely to require more intensive

care. App.5. As in any other capitation payment

contract, those rates are “fixed . . . regardless of the

number or type of services provided to the enrolled

member.” United States ex rel. Zemplenyi v. Grp.

Health Coop., 2011 WL 814261, at *2 (W.D. Wash.

Mar. 3, 2011); see United States ex rel. Gray v.

UnitedHealthcare Ins. Co., 2018 WL 2933674, at *7

(N.D. Ill. June 12, 2018).

To receive payment, Molina submits a form to the

government “enroll[ing] a beneficiary” in the

appropriate “rate cell,” and the government “pays

Molina the corresponding amount.” App.25 (Sykes,

C.J., dissenting). Molina’s submissions do not request

payment for specified services or make any specific

representation about what goods or services have been

or will be provided.

C.

Prose’s claims

This qui tam action was brought by respondent

Thomas Prose, the founder of GenMed, a company

that once contracted with Molina. App.2-3; CA7App.A35-37 (FAC ¶¶ 9, 13–18). Prose alleged that

after GenMed terminated that contract, Molina

sought capitation payments for enrollees in the

nursing facility rate cell without disclosing that it no

10

longer provided SNFist services. App.10-11; App.25

(Sykes, C.J., dissenting).

Despite asserting at least three different theories

of fraud—factual falsity, implied false certification,

and fraudulent inducement, App.9—Prose:

•

Did not describe any specific false claim that

Molina allegedly submitted to the government.

•

Identified no express

enrollment forms.

•

Alleged only “on information and belief” that

Molina represented to the government that it

would provide SNFist services when it “did not

intend to do so.”

•

Did not allege any specific misleading

statement made by an identified Molina

representative, let alone specify the “time,

place, and content” of such a statement.

falsehoods

in

the

The government declined to intervene in Prose’s

action. App.81. In fact, even after learning of Prose’s

allegations, the government continued to pay Molina’s

claims without discount and extended the contract.

App.81; CA7-App.A41 (FAC ¶ 31).

D. The decisions below

The district court twice dismissed Prose’s

complaint under Rule 9(b). It first rejected Prose’s

attempt “to cast all submitted reports as false claims”

because Prose did not “clearly point to any falsified

claim in his Complaint,” making it “indiscernible how

and whether any fraud occurred.” App.105.

11

The district court dismissed Prose’s amended

complaint because he “plead[ed] almost no

information about the content of” Molina’s enrollment

forms and “pointed to no express falsehoods in the

enrollment forms.” App.86. The court suggested that

Molina’s enrollment forms could be false even though

they merely requested payment without making any

representations about compliance, but dismissed

Prose’s claims because he had not adequately alleged

that Molina knew that its alleged failure to provide

SNFist-specific care coordination was material.

App.94 n.1, App.98.

A divided panel of the Seventh Circuit reversed,

with Chief Judge Sykes dissenting. The majority held

that Prose’s allegations satisfied Rule 9(b), concluding

that “Prose cannot be expected to provide . . . factual

particulars at the pleading stage.” App.11-13; App.29

(Sykes, C.J., dissenting). Instead, it held that the

contents of allegedly false claims are a “granular

detail” that Rule 9(b) does not require. App.13. It also

held that each “request for payment . . . was impliedly

false because it requested payment of the [nursingfacility] capitation rate,” and that “by submitting

enrollment forms . . . Molina implicitly falsely certified

that Nursing Facility enrollees had access to SNF

services.” App.17-18 (quoting App.94). But it never

identified—because Prose never alleged—any specific

representation about the goods or services provided in

any of Molina’s enrollment forms. Instead, it allowed

Prose to rely on generic allegations based on

information and belief to “plausibly support[] the

inference that Molina included false information

about the pertinent services for new enrollees” in its

claims for payment. App.51. The majority also allowed

12

Prose to proceed on his fraudulent inducement claim

even though he did not allege “any details about the

contract-renewal negotiations” during which he

claimed Molina made false representations. App.51.

Because courts “are not at liberty to loosen

pleading standards under circumstances where a

specific false statement is hard to identify,” the dissent

would have held that Prose did not “satisfy [Rule

9(b)]’s heightened pleading standard under any of

[his] theories.” App.27, 29 (Sykes, C.J., dissenting). By

“loosen[ing] pleading standards,” the dissent wrote,

the majority had blessed “the very ‘fishing expedition’

that Rule 9(b) is meant to avoid.” App.29 (Sykes, C.J.,

dissenting) (quoting Vicom, Inc. v. Harbridge Merch.

Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994)).

Moreover, under the majority’s approach, “any claim

for payment while in material noncompliance with a

contract or governing law is an actionable violation of

the FCA.” App.39 (Sykes, C.J., dissenting). As Chief

Judge Sykes explained, that approach was in tension

with Escobar, App.30-35 (Sykes, C.J., dissenting), and

put the Seventh Circuit in the minority of circuits

holding that a mere request for payment can be false

without any specific representation about the goods or

services provided. E.g., Triple Canopy, 857 F.3d at 178

n.3.

After issuing an amended opinion making minor

changes, the Seventh Circuit denied Molina’s petition

for rehearing and rehearing en banc. App.110.

REASONS FOR GRANTING THE PETITION

This petition presents two important, recurring

questions of federal law that have divided the lower

13

courts. This case is an ideal vehicle for efficiently

addressing both. If the Court does not grant this

petition, it should at a minimum grant review in either

Bethany Hospice or Owsley and hold this petition

pending a decision on the Rule 9(b) issue raised in all

three petitions.

I.

The circuits are split over both questions

presented.

A. The circuits are split over Rule 9(b)’s

applicability to the “false claim”

element.

The circuits are deeply divided over whether Rule

9(b) requires FCA plaintiffs to plead with particularity

the allegedly false claims that form the basis of their

FCA actions. Courts on both sides of the split have

acknowledged this disagreement. E.g., United States

ex rel. Eberhard v. Physicians Choice Lab. Servs., LLC,

642 F. App’x 547, 550-51 (6th Cir. 2016); Foglia, 754

F.3d at 155-56; Ebeid, 616 F.3d at 998-99. Half of the

circuits recognize that because what the FCA

prohibits is the submission of a false claim, Rule 9(b)

requires (with rare exceptions) that FCA plaintiffs

plead with particularity the details of at least one

actual claim—its “time, place, and content”—to

adequately allege that element. Sanderson v. HCAThe Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006)

(quoting Yuhasz v. Brush Wellman, Inc., 341 F.3d 559,

563 (6th Cir. 2003)). The other half—including the

Seventh Circuit here—do not require plaintiffs to

plead any details about actual claims submitted. E.g.,

Presser, 836 F.3d at 777; Ebeid, 616 F.3d at 998-99.

14

1. The First, Sixth, Eighth, and Eleventh Circuits

all hold that “[b]ecause it is the submission of a

fraudulent claim that gives rise to liability under the

[FCA], that submission must be pleaded with

particularity

and

not

inferred

from

the

circumstances.” Corsello v. Lincare, Inc., 428 F.3d

1008, 1013 (11th Cir. 2005) (per curiam); see also

Owsley, 16 F.4th at 196; United States ex rel. Benaissa

v. Trinity Health, 963 F.3d 733, 739 (8th Cir. 2020);

Karvelas, 360 F.3d at 232-33. Accordingly, courts on

this side of the split have held that, under Rule 9(b),

FCA plaintiffs cannot “rely on mathematical

probability to conclude that the [defendant] surely

must have submitted a false claim at some point,” or

contend that “a pattern of improper practices of the

defendants leads to the inference that fraudulent

claims were submitted to the government.” Carrel v.

AIDS Healthcare Found., Inc., 898 F.3d 1267, 1277

(11th Cir. 2018); Corsello, 428 F.3d at 1013. Instead,

FCA plaintiffs must identify “actual, and not merely

possible or likely, claims,” Clausen, 290 F.3d at 1313,

and plead “specific details” that explain “when, where,

and what” false claims were submitted, Carrel, 898

F.3d at 1275-76; Corsello, 428 F.3d at 1013.

As the relators’ petition in Bethany Hospice

explains, the Eleventh Circuit’s decision in that case

presents an “especially acute” conflict with the

Seventh Circuit’s decision here. Bethany Hospice Pet.

24. The relators in Bethany Hospice alleged that the

defendant “operated an illegal kickback referral

scheme” to “pa[y] doctors in exchange for referring

Medicare beneficiaries.” Estate of Helmly v. Bethany

Hospice & Palliative Care of Coastal Ga., LLC, 853 F.

App’x 496, 497 (11th Cir. 2021) (per curiam). The

15

Eleventh Circuit held that the relators did not satisfy

Rule 9(b) because they did not “identify even a single,

concrete example of a false claim” or “provide any

specific details regarding either the dates on or the

frequency with which the defendants submitted false

claims, the amounts of those claims, or the patients

whose treatment served as the basis for the claims.”

Id. at 501-02 (cleaned up). The court refused to

“infer[]” the submission of a false claim “from the

circumstances” because “such an assumption would

strip all meaning from Rule 9(b)’s requirements of

specificity.” Id. at 502-03 (cleaned up).

Similarly, in Owsley, the Sixth Circuit held that

Rule 9(b) “imposed a ‘clear and unequivocal

requirement that a relator allege specific false claims.”

Owsley, 16 F.4th at 196 (quoting United States ex rel.

Sheldon v. Kettering Health Network, 816 F.3d 399,

411 (6th Cir. 2016)). Accordingly, a relator cannot

plead “a private scheme in detail” and then simply

infer “that claims requesting illegal payments must

have been submitted.” Id. (cleaned up). The relator

must instead “identif[y] at least one false claim with

specificity.” Id. The Owsley relator “describe[d], in

detail, a fraudulent scheme,” alleging with

particularity that the defendant fraudulently

overstated the care it provided to increase its perpatient Medicare payments. Id. at 194-97. She also

provided sample forms identifying the type of

information that would be included in a claim for

payment. Id. But that was not enough to satisfy Rule

9(b) because although she pleaded a fraudulent

scheme with specificity, she “did not allege facts that

identify any specific fraudulent claims.” Id. at 196-97

(emphasis added).

16

2. The Second and Fourth Circuit also generally

require FCA plaintiffs to plead details of specific

claims. In the Second Circuit, a plaintiff “who can

identify examples of actual claims must do so at the

pleading stage.” Chorches, 865 F.3d at 86. That rule

may be relaxed only if “the information that would

permit further identification of those claims is

peculiarly within the opposing party’s knowledge.” Id.

For its part, the Fourth Circuit has held that there are

only two ways a relator can satisfy Rule 9(b): (1)

describing specific false claims; or (2) “alleg[ing] a

pattern of conduct that would necessarily”—not

possibly or even probably—“have led to submission of

false claims to the government.” United States ex rel.

Grant v. United Airlines, Inc., 912 F.3d 190, 197 (4th

Cir. 2018) (cleaned up; emphasis in original); see also

Nathan, 707 F.3d at 456. 1

3. In stark contrast, the Third, Fifth, Seventh,

Ninth, Tenth, and D.C. Circuits do not require FCA

plaintiffs to “identify a specific claim for payment at

the pleading stage.” Foglia, 754 F.3d at 156 (cleaned

up); Colquitt, 858 F.3d at 372; Ebeid, 616 F.3d at 998;

Heath, 791 F.3d at 126. Taking a “flexible” approach

to Rule 9(b) “to achieve the remedial purpose of the”

FCA, Colquitt, 858 F.3d at 372 (cleaned up), the Third,

Fifth, Ninth, and D.C. Circuits have held it “sufficient

for a plaintiff to allege ‘particular details of a scheme

to submit false claims paired with reliable indicia that

1 Whether the Second and Fourth Circuits are classified as on

one side of a binary split or falling somewhere in between, the

fact is that twelve circuits—all but the Federal Circuit—have

spoken on the issue and their respective approaches are settled

and inconsistent.

17

lead to a strong inference that claims were actually

submitted.’” Foglia, 754 F.3d at 156 (quoting United

States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190

(5th Cir. 2009)); see Colquitt, 858 F.3d at 372; Ebeid,

616 F.3d at 998. The Tenth Circuit has taken an

especially relaxed view, holding that relators “need

only show the specifics of a fraudulent scheme and

provide an adequate basis for a reasonable inference

that false claims were submitted as part of that

scheme.” Lemmon, 614 F.3d at 1172 (emphasis added).

As counsel for respondent in this case explained

when seeking review in Bethany Hospice, the Seventh

Circuit’s decision here is one of the “strongest cases

embodying” the relaxed approach to Rule 9(b).

Bethany Hospice Reply 4. According to the Seventh

Circuit, even though respondent here has not

identified a single false claim, respondent’s suit may

nonetheless proceed based on allegations that

“plausibly support[] the inference that [the defendant]

included false information” in its communications

with the government. App.12. Under that lax

standard, “a plaintiff does not need to present, or even

include allegations about, a specific document or bill

that the defendants submitted to the Government.”

Presser, 836 F.3d at 777 (emphasis added). Likewise,

the Seventh Circuit allowed respondent to proceed on

a fraudulent inducement theory of FCA liability based

on nothing more than “circumstantial evidence of

promissory fraud in contract negotiations.” App.12. In

so holding, the Seventh Circuit not only sided with the

circuits that do not require pleading information

regarding the allegedly false claims, but took that lax

view of Rule 9(b) even further by dispensing with

particularity regarding the alleged fraudulent

18

inducement itself. Yet, in a fraudulent inducement

FCA claim, no less than any other FCA claim, the

submission of a false claim is the sine qua non of

liability. Clausen, 290 F.3d at 1311. The Rule 9(b) split

thus applies to all three of respondent’s theories.

B. The circuits are split over whether a

request for payment that contains no

specific representations can be a false

claim under the FCA.

Escobar held that a claim for payment can be

“false or fraudulent” “at least where two conditions are

satisfied: first, the claim does not merely request

payment, but also makes specific representations

about the goods or services provided; and second, the

defendant’s failure to disclose noncompliance with

material statutory, regulatory, or contractual

requirements

makes

those

representations

misleading half-truths.” 579 U.S. at 190. It left open

the question whether a claim that does “merely

request payment” can be deemed false based on

noncompliance with an underlying regulatory or

contractual condition that the claim does not mention,

on the theory that “all claims for payment implicitly

represent that the billing party is legally entitled to

payment.” Id. at 188, 190.

Although Escobar did not formally reach that

question, Escobar’s logic dictates the answer: a mere

request for payment that contains neither an express

false statement nor a misleading half-truth is not

“false or fraudulent” within the meaning of the FCA.

To interpret the term “false or fraudulent,” Escobar

looked to the common law of fraud. At common law,

there is no duty to speak absent a fiduciary or other

19

special relationship. Id. at 188 n.3. If, however, a party

chooses to speak, “he must disclose enough to prevent

his words from being misleading.” Id.; Chiarella v.

United States, 445 U.S. 222, 235 (1980); see also, e.g.,

Restatement (Second) of Torts § 551(1) (1977)

(limiting liability for nondisclosure to situations in

which one “is under a duty to [another] to exercise

reasonable care to disclose the matter in question”).

Under this well-established common law, a party has

no duty to volunteer information in a claim for

payment. If the government believes it needs certain

information to determine whether to pay a claim, it

can (and regularly does) ask for that information in

the claim form. But where the government does not

ask about compliance with an underlying regulatory

or contractual condition and the claim says nothing

about that condition, there is nothing in the claim that

can be deemed a “misleading half-truth.” Escobar, 579

U.S. at 190. Escobar’s own reasoning thus requires

rejecting such pure “implied” certification as a theory

of FCA liability.

Despite the force of Escobar’s reasoning, circuits

have divided over whether a mere request for payment

absent a false statement or half-truth can be deemed

false or fraudulent. Unless this Court grants certiorari

and holds that a request for payment that makes no

specific representations cannot be treated as if it

contains an implied false certification, the FCA will

become precisely what this Court has warned against:

“a vehicle for punishing garden-variety breaches of

contract or regulatory violations.” Escobar, 579 U.S. at

194.

20

1. The Third, Fifth, Ninth, and Eleventh Circuits

have held that a request for payment cannot be false

merely because it fails to disclose noncompliance with

a material statutory, regulatory, or contractual

requirement. Rather, to be false, the claim must either

explicitly misrepresent compliance or make specific

representations that are rendered misleading by the

undisclosed noncompliance. See Ruckh, 963 F.3d at

1109 (affirming dismissal of FCA claims that did not

identify “specific representations regarding the

services provided”); Wallace, 723 F. App’x at 255-56

(affirming summary judgment because the relator

proved neither that the defendant’s “claims

themselves [were] explicitly false” nor that they

“included ‘specific representations’ that were

‘misleading half-truths’”); United States ex rel. Kelly v.

Serco, Inc., 846 F.3d 325, 332-33 (9th Cir. 2017)

(affirming dismissal of FCA claim because the

contractor’s requests did not “contain[] any false or

inaccurate statements” or “ma[k]e any specific

representations about [its] performance” (citing

Escobar, 579 U.S. at 190)); accord Rose, 909 F.3d at

1018; United States ex rel. Campie v. Gilead Scis., Inc.,

862 F.3d 890, 901 (9th Cir. 2017); Eastwick Coll., 657

F. App’x at 94.

2. On the other side of the split, the Fourth, D.C.,

and Seventh Circuits have held that a mere request

for payment is “false or fraudulent” under Escobar any

time it fails to disclose a material breach of contract.

For example, the Fourth Circuit held after

Escobar that “all claims for payment implicitly

represent that the billing party is legally entitled to

payment” and that, as a result, a plaintiff “pleads a

21

false claim” any time “it alleges a request for payment

under a contract where the contractor withheld

information about its noncompliance with material

contractual requirements.” Triple Canopy, 857 F.3d at

178 n.3 (emphasis added); see United States v. Triple

Canopy, Inc., 775 F.3d 628, 636 (4th Cir. 2015).

And both before and after Escobar, the D.C.

Circuit likewise has held that a claim for payment is

false any time a “contractor withheld information

about its noncompliance with material contractual

requirements.” Sci. Applications Int’l Corp., 626 F.3d

at 1269; see United States v. DynCorp. Int’l, LLC, 253

F. Supp. 3d 89, 99-100 (D.D.C. 2017). The D.C. Circuit

thus held in United States v. Dynamic Visions Inc.

that the defendant violated the FCA by “knowingly

requesting reimbursement for home health care

services while omitting” a violation of D.C. law,

without requiring any specific representation about

the services provided that could have constituted a

misleading half-truth. 971 F.3d 330, 337 (D.C. Cir.

2020) (cleaned up).

Here, the Seventh Circuit followed the Fourth and

D.C. Circuits’ approach. The majority relied on

Molina’s mere request for payment coupled with

alleged material noncompliance with a contract

provision to hold that Prose had stated a cognizable

FCA violation under an implied false certification

theory. App.10.

II. The questions presented are important and

recurring.

The Court should not wait to address these issues.

The FCA is one of the most frequently litigated

22

statutes in the U.S. Code. See U.S. Dep’t of Justice,

Fraud Statistics – Overview: Oct. 1, 1986 – Sept. 30,

2020, https://bit.ly/3egHss4. Since 2010, relators have

filed more than 600 qui tam actions each year. See

U.S. Dep’t of Justice, Fraud Statistics – Overview: Oct.

1, 1986 – Sept. 30, 2021, https://bit.ly/34vxS2K.

Health care providers are an especially popular target.

Of the 672 new qui tam actions filed in 2020, 68% were

related to health care—the equivalent of more than

one health care-related qui tam action being filed

every day. George B. Breen et al., DOJ False Claims

Act Statistics 2020: Over 80% of all Recoveries Came

from the Health Care Industry, Nat’l L. Rev. (Jan. 21,

2021), https://bit.ly/327ig4G. In 2021, around 90% of

all FCA recoveries came from health care-related

defendants. Jeff Overley, New FCA Stats Fuel Debate

over Health Enforcement Fixation, Law360 (Feb. 8,

2022), https://bit.ly/3GGtjjA.

In every one of those cases, the FCA’s “punitive”

remedies offer relators a chance at a massive windfall

and expose defendants to potentially catastrophic

liability. Stevens, 529 U.S. at 784-85. Even in cases

that result in no recovery for relators, defendants face

substantial litigation costs, particularly in circuits

that have thrown the pleading gates wide open.

Clarifying what constitutes an actionable “false or

fraudulent” claim and what a relator must allege is

thus critical.

1. Because Rule 9(b) applies to every FCA

complaint, Escobar, 579 U.S. at 195 n.6, motions to

dismiss under Rule 9(b) “have become standard

practice” in FCA litigation, Claire M. Sylvia, The False

Claims Act: Fraud Against the Government § 10:59

23

(2021 update). Whether courts apply Rule 9(b) to

require particularity for the false claim element will

often make the difference between a speculative FCA

claim being dismissed on the pleadings or proceeding

into burdensome discovery. Claims brought in one

circuit will survive when they would have failed in

another. It is telling that both sides—the relators in

two cases from the strict side of the split, and the

defendant in this case from a circuit on the loose side

of the split—agree that the Court’s intervention is

needed. Owsley Pet. 26-27; Bethany Hospice Pet. 2829.

As the Eleventh Circuit has explained, “the ‘true

essence’” of FCA fraud “involves an actual claim for

payment and not just a preparatory scheme.” Clausen,

290 F.3d at 1312 n.21. Thus, circuits—like the

Seventh—that do not require relators to plead the core

element of an FCA claim with particularity “strip[] all

meaning from Rule 9(b)’s requirement of specificity.”

Id. This extra-textual exemption from Rule 9(b)’s

strictures is particularly problematic given the FCA’s

“first-to-file” and public disclosure bars, which

preclude qui tam suits “based on the facts underlying

[a] pending action,” 31 U.S.C. § 3730(b)(5), or

information previously disclosed to the public, and

thus give potential relators every reason to file first

and figure out the merit of their claims later.

Allowing FCA plaintiffs to satisfy Rule 9(b)

despite failing to detail an actual false claim mistakes

the FCA’s focus. The FCA “does not create liability

merely for a health care provider’s disregard of

Government regulations or improper internal

policies,” standing alone, but rather for the submission

24

of a false or fraudulent claim. Clausen, 290 F.3d at

1311. So no matter how specifically a plaintiff pleads

the “improper practices” that allegedly led to the

submission of false claims, that is not equivalent to

“alleg[ing] . . . the ‘who,’ ‘what,’ ‘where,’ ‘when,’ and

‘how’” of the element of an actual fraudulent

submission to the government, as Rule 9(b) requires.

Corsello, 428 F.3d at 1014. Put differently, “the

circumstances constituting fraud,” Fed. R. Civ. P. 9(b),

in an FCA case by definition include the submission of

the allegedly false or fraudulent claims. 2

2. The meaning of the FCA’s core requirement of

a “false or fraudulent claim” is just as important. This

Court recognized as much when granting review in

Escobar. 579 U.S. at 186. Because all FCA cases

involve claims that request payment, the question

presented here—whether claims that “merely request

payment” without “mak[ing] specific representations

about the goods or services provided” can be deemed

impliedly false has the potential to arise in every FCA

2 This is equally true in an FCA case based on a fraudulent

inducement theory. While fraudulent inducement of a contract

can render “false or fraudulent” claims for payment subsequently

submitted under the contract, it is still the submission of the

claims that violates the FCA. See United States ex rel. Marcus v.

Hess, 317 U.S. 537, 542-44 (1943); 31 U.S.C. § 3729(a)(1)-(2) (FCA

liability is based on presentment of a “false or fraudulent claim”).

As a result, while Rule 9(b) requires that the alleged fraudulent

inducement be pleaded with particularity, it also requires that

the alleged false claims in a fraudulent inducement case be

pleaded with particularity just as in any other FCA case. Cf. In

re Baycol Prods. Litig., 732 F.3d 869, 876-77 (8th Cir. 2013)

(requiring that the alleged fraudulent inducement be pleaded

with particularity). The decision below doubly erred by declining

to require particularity as to either element.

25

case. Id. at 190. Moreover, the lack of a clear answer

to that question from this Court will encourage a flood

of FCA cases, given that thousands of requests for

payment are made under countless government

programs and contracts every day, and every

government program or contract involves a myriad of

often detailed and technical conditions and

requirements. If every request for payment impliedly

certifies compliance with every underlying condition

and requirement, the lure of an FCA bounty will leave

courts swamped with qui tam actions. Finally, the

majority of circuits have weighed in on that question,

making further percolation unnecessary. This Court

should step in now because as long as that split exists,

it will only encourage relators to file in the forums

friendliest to their claims.

The “falsity” rule applied in the relator-friendly

forums is also wrong. It is divorced from the reasoning

of Escobar—that, under the common law, omissions

are not actionable as fraud absent a duty of disclosure,

but that if one does speak, one “must disclose enough

to prevent his words from being misleading.” Id. at

187-88 & nn.2 & 3 (quoting W. Keeton et al., Prosser

and Keeton on Law of Torts § 106, p. 738 (5th ed.

1984)). Accordingly, “representations that state the

truth only so far as it goes, while omitting critical

qualifying information,” may fairly be deemed false or

fraudulent. Id. (emphasis added). But if “all claims for

payment implicitly represent that the billing party is

legally entitled to payment,” id., then FCA liability

turns not on any actual falsity in a claim to the

government, but on the mere existence of an

underlying regulatory or contractual breach. That

would transform the FCA from a statute about claims

26

that are false into an all-purpose regulatory and

contractual compliance enforcement mechanism, with

draconian remedies suited to fraud and enforcement

largely in the hands of private citizens. It thus directly

implicates this Court’s warnings against “expand[ing]

the FCA well beyond its intended role of combating

‘fraud against the Government.’” Allison Engine Co. v.

United States ex rel. Sanders, 553 U.S. 662, 669 (2008)

(quoting Rainwater v. United States, 356 U.S. 590, 592

(1958)).

III. This case is an excellent vehicle to decide

the questions presented.

This case provides an ideal vehicle to resolve the

questions presented because both are cleanly

presented and thoroughly debated by the majority and

dissenting opinions.

1. The decision below squarely conflicts with Rule

9(b) decisions of other circuits—as counsel for

respondent has conceded. See supra at 1. The

allegations that the Seventh Circuit found sufficient

here would not have survived in the circuits on the

other side of the divide.

Like the Bethany Hospice plaintiffs, Prose “did not

allege details of claims.” Bethany Hospice Reply 3. He

did not identify any individual false claim, describe its

contents, or allege when it was submitted. App.51-52.

But because he alleged that Molina did not provide one

of the means of care coordination required by its

contract, the majority was willing to “infer[] that

Molina included false information” in those claims.

App.12, 51-52.

27

If anything, the inferences that the majority

below held sufficient are even more attenuated than

those Bethany Hospice rejected. The alleged scheme

there was to pay kickbacks for particular services.

Bethany Hospice Pet. 5-12. By statute, a

reimbursement request for services resulting from a

kickback is automatically false under the FCA. 42

U.S.C. § 1320a-7b(g). But here, Molina received

monthly capitation payments that were fixed and thus

did not reimburse for particular services, and no

statute makes Molina’s alleged contractual breach a

per se FCA violation.

Nor would Prose’s action have survived in any

circuit on the other side of the split. Prose provided

less detail in his complaint than the Owsley relator.

Like her, he did not “identify any specific fraudulent

claim” or plead “the dates of any . . . claims for

payments.” Owsley, 16 F.4th at 196-97. But unlike

her, he did not identify any patient for whom Molina

allegedly submitted a false claim. He did not describe

or provide examples of the content of Molina’s

requests. And unlike the payments in Owsley,

Molina’s capitation payments did not reimburse it for

particular services and so could not be linked to the

specific SNFist service Molina allegedly did not

provide. Prose’s allegations thus fell far short of

satisfying Rule 9(b)’s requirement of sufficient

particularity to “provide[] [Molina] with notice of a

specific representative claim that [he] thinks was

fraudulent,” as the Sixth Circuit interprets the rule.

Id. at 197.

2. Granting this petition along with or instead of

Bethany Hospice or Owsley will allow the Court to

28

simultaneously consider the second question

presented here: whether a mere request for payment

from the government, coupled with material

noncompliance with a contractual condition, is a “false

or fraudulent claim” absent any specific false or

misleading representation about the goods or services

provided.

If some representation about the goods or services

is required, Prose’s implied certification claim fails.

Molina’s enrollment forms do not request payment for

specified services or make any specific representation

about what goods or services have been or will be

provided. They simply enroll beneficiaries by rate cell,

which designates the monthly amount paid for a given

enrollee. Those rates are fixed regardless of the

number or type of services provided to the enrolled

member. In any of the circuits on the other side of the

split, a mere request for payment like that would not

be a “false or fraudulent claim.” Under the Seventh

Circuit’s approach, though, any claim for payment can

be deemed “false or fraudulent” by “implying” a

certification about matters the claim does not

mention. That radical approach “expand[s] the FCA

well beyond its intended role” and makes the FCA’s

reach “‘almost boundless.’” Sanders, 553 U.S. at 669

(quoting United States ex rel. Totten v. Bombardier

Corp., 380 F.3d 488, 496 (D.C. Cir. 2004) (Roberts, J.)).

While Bethany Hospice and Owsley appear to be

suitable vehicles to decide the Rule 9(b) issue, this

case is an even better vehicle because it allows the

Court to resolve both the Rule 9(b) split and the postEscobar split regarding “implied” falsity. Deciding

what the statute’s “false or fraudulent claim” element

29

means may inform the Court’s consideration of what

an FCA plaintiff must plead regarding that element.

In all events, however, the Court should at least hold

this petition if it grants review in Bethany Hospice or

Owsley.

CONCLUSION

The Court should grant the petition for certiorari.

In the alternative, the Court should hold the petition

pending a decision in Bethany Hospice or Owsley if it

grants review in one or both of those cases.

Respectfully submitted,

Kelly Perigoe

Albert Giang

KING & SPALDING LLP

633 West Fifth Street

Suite 1600

Los Angeles, CA 90071

(213) 443-4355

Anne M. Voigts

Counsel of Record

Quyen L. Ta

Matthew V.H. Noller

KING & SPALDING LLP

50 California Street

Suite 3300

San Francisco, CA 94111

(415) 318-1200

avoigts@kslaw.com

Jeffrey S. Bucholtz

Ashley C. Parrish

KING & SPALDING LLP

1700 Pennsylvania Ave. NW

Washington, DC 20006

(202) 737-0500

Counsel for Petitioners

February 14, 2022