Opposition Brief — Universal Health Servs., Inc. v. U.S. & Mass. ex rel. Escobar, 136 S. Ct. 582 (2015) (No. 15-7)

Aga OCT ~ 5 205:

TCT ORINE CLER

3n The

Supreme Court of the Anited States

. —

UNIVERSAL HEALTH SEi.vICES, INC.,

Petitioner,

v.

UNITED STATES and COMMONWEALTH

OF MASSACHUSETTS, ex rel.

JULIO ESCOBAR and CARMEN CORREA,

Respondents.

o

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The First Circuit

S

BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

+

THOMAS M. GREENE

Counsel of Record

MICHAEL TABB

ELIZABETH CHO

GREENE LLP

One Liberty Square

Suite 1200

Boston, MA 02109

(617) 261-0040

tgreene@greenellp.com

Counsel for Respondents

COCKLE LEGAL BRIEFS (800) 225-6864

WWW .COCKLELEGALBRIEFS.COM

i

QUESTIONS PRESENTED

Petitioner operated a licensed mental health clinic

in Massachusetts which treated Medicaid patients.

Petitioner staffed the clinic with unlicensed and un-

supervised counselors, unlicensed psychologists and

an unqualified psychiatrist in violation of a Massa-

chusetts Medicaid regulation setting forth minimum

qualifications and supervision requirements for treat-

ing therapists. The questions presented are:

Ae

Has an appellate court departed from an

acceptable and usual course of judicial pro-

ceedings when it has decided the issues pre-

sented by the parties based on a reading of

the relevant state regulations that was not

suggested in the parties’ briefs?

Where a state Medicaid regulation makes it

a condition of payment for a mental health

clinic’s clinical director to be responsible for

the overall supervision of the clinic’s staff

and to employ adequate psychiatric staff,

and a mental health clinic has treated Medi-

caid patients while knowingly failing to com-

ply with Medicaid regulations regarding

minimum supervision and qualifications re-

quirements for clinical staff, can the Medi-

caid claims for reimbursement filed by the

operator of the mental health clinic be found

to be “false claims” for the purposes of 31

U.S.C. § 3729(a)(1)?

li

QUESTIONS PRESENTED -— Continued

3. When 130 Mass. CopDE REGs. § 429.439(C) re-

quires the clinical director of a mental health

satellite clinic to meet all of the require-

ments in 130 MAss. CoDE REGs. § 429.423(B),

is a satellite clinic in compliance if the

clinical director meets the requirements of

130 Mass. Cope Recs. § 429.423(B)\1) but

does not meet the requirements of 130 Mass.

CovE REGS. § 429.423(B)(2)?

ili

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ........00.............ceeeeeeeeees i

Ne A terirestnctisictetstiabeciacevensenasntes iii

TABLE OF AUTHORITIES ...................c0000cceeseeees Vv

AN I le ERS ISI SDR Sel RD APL Pe l

RES RRR EEE RR RR RE Sle oe oe Oe 4

A. Fectenl RGRerOunn ............0.cccccceccecccccseccees 4

ee ESSE RRS ee 7

a I NN as seca ceeiiainnniosainiiamenian 8

REASONS FOR DENYING THE PETITION ....... 11

I. THIS COURT'S SUPERVISORY AUTHOR-

ITY SHOULD NOT BE INVOKED TO

LIMIT HOW COURTS OF APPEALS DE-

CIDE THE CONTROVERSIES BEFORE

i itieniecinceipiindninssumbautnuniidctnbiiaaiiaiioas 11

A. This Case Does Not Present One of the

Rare Occasions Meriting the Court’s Use

of Its Supervisory Powers in a Civil

Fie icicaitdinidlabanatseniaentetaetaibdanishinpsétinlgbios 12

B. The First Circuit’s Independent Analy-

sis of the MassHealth Regulations Was

Not a Departure from Accepted and

Usual Judicial Practice ......................... 15

Il. THE FIRST CIRCUIT'S DECISION DOES

NOT CONFLICT WITH THE DECISIONS

OF OTHER COURTS OF APPEALS .......... 18

iv

TABLE OF CONTENTS — Continued

Page

A. The First Circuit’s Ruling Conforms

to Well-Established Principles of FCA

a 19

B. The First and Seventh Circuits’ Deci-

sions Do Not Confflict............................. 24

C. This Case Presents No Conflict Between

Courts of Appeals Regarding Any Re-

quirement That a Condition of Pay-

ment Be Expressly Stated..................... 28

Ill. THE PETITION PRESENTS AN ISSUE

OF STATE LAW, NOT FEDERAL LAW,

ke REREEER RDP ee Aa e ere 32

A. This Court Should Not Devote Its Re-

sources to an Issue of State Law .......... 32

B. Recent Revisions of the Relevant Mas-

sachusetts Regulations Confirm That

the Case was Correctly Decided and

Leave No Question of Significance for

Caw CetmeE 00 TIO TIIW onc cccsccsescccccccccccccceess 34

IEE pethewiniriconstciancrinmnhintenstoeansnncninmioniecians 36

Vv

TABLE OF AUTHORITIES

Page

CASES

Allison Engine Co. v. United States ex rel.

Sanders, 553 U.S. 662 (2008) ....................cerccssesscceee 1

Anderson v. Harless, 459 U.S. 4 (1982)...............00000. 34

Arcadia v. Ohio Power Co., 498 U.S. 73 (1990)......... 16

Barnard v. Thorstenn, 489 U.S. 546 (1989)............... 13

Blonder-Tongue Labs., Inc. v. Univ. of Illinois

Fg Ge es Se CITED vcrncitseccicessnsnscenssincccenses 16

Chesbrough v. VPA, P.C., 655 F.3d 461 (6th Cir.

SEITEN is pacsceheinaatietaieuisehalintatanniiebleasieadiaatapdenssiinlensiionands 28, 31

City & Cnty. of San Francisco, Calif. v. Sheehan,

mee! eee EEE 33

Cleland v. Nat'l Coll. of Bus., 435 U.S. 213

ITTF isch te.cihes ibcanbesciuaceaiahacaanpannunadpaiipuinmionidasaaaasainandeaess 1

Davis v. United States, 512 U.S. 452 (1994).............. 16

Dixon v. Duffy, 344 U.S. 143 (1952)......0...0.. ee 32

Ebeid ex rel. United States v. Lungwitz, 616

eR es ences 22, 28

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).......... 16

Figueroa v. Dir. of Dep’t of Labor & Workforce

Dev., 763 N.E.2d 537 (Mass. App. Ct. 2002) .......... 36

Frazier v. Heebe, 482 U.S. 641 (1987).........000..00.0.. 13

Greenlaw v. United States, 554 U.S. 237

I ctassic sid hasdiescacrstealhcrlarascacead ta aeacobiauesiactensncteaisecdens 13, 17

vi

TABLE OF AUTHORITIES — Continued

Page

Hormel v. Helvering, 312 U.S. 552 (1941) ........0........ 16

Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90

a ciihintaiscschtieicehilasdnbiadebetabanbepmaiiiapdeehiineeemeininenshdiatis 16, 18

Leavitt v. Jane L., 518 U.S. 137 (1996)...................... 33

McNabb v. United States, 318 U.S. 332 (1943) ......... 12

Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001).....passim

New York v. Amgen, Inc., 652 F.3d 103 (1st Cir.

SI chedintic Dai asiabocadganihssianeeenntiianatanciaaibeeisasstanameieaindilp 23

Steele v. General Mills, Inc., 329 U.S. 433

I ceih calc chal ia acca oie les seestinte tis valedianapsiadioniechiamnaa oath 33

Supreme Court of New Hampshire v. Piper, 470

EID nin ncihi cistnscusticcdnbantehenphioneesibeniakesicnes 13

Town of Canton v. Bruno, 282 N.E.2d 87 (Mass.

AEE RRS SEGRE Deon ted RCE es ee eee Pave RP NOPY Se Dee 36

U.S. Nat'l Bank of Oregon v. Indep. Ins. Agents

of Am., Inc., 508 U.S. 439 (1993)................ 16, 17, 18

United States ex rel. Absher v. Momence Mead-

ows Nursing Ctr., Inc., 764 F.3d 699 (7th Cir.

een do sausedanmonrmascioeinues 27

United States ex rel. Augustine v. Century

Health Servs., Inc., 289 F.3d 409 (6th Cir.

United States ex rel. Conner v. Salina Reg'l

Health Ctr, 543 F.3d 1211 (10th Cir.

SIE calc tncieditcbeadarsesneeabiiaecdinabinicesdelmiaeishaieunl 22, 27, 28

Vii

TABLE OF AUTHORITIES — Continued

Page

United States ex rel. Escobar v. Universal

Health Servs., Inc., 780 F.3d 504 (1st Cir.

United States ex rel. Escobar v. Universal

Health Servs., Inc., No. 11-11170-DPW, 2014

WL 1271757 (D. Mass. Mar. 26, 2014)..............000.... 8

United States ex rel. Hendow v. Univ. of Phx.,

461 F.3d 1166 (9th Cir. 2006).......................00secc0000 27

United States ex rel. Hutcheson v. Blackstone

Med., Inc., 647 F.3d 377 (1st Cir. 2011)......23, 28, 29

United States ex rel. Jones v. Brigham &

Women’s Hosp., 678 F.3d 72 (1st Cir. 2012)............ 23

United States ex rel. Lemmon v. Envirocare of

Utah, Inc., 614 F.3d 1163 (10th Cir. 2010)............. 29

United States ex rel. Steury v. Cardinal Health,

Inc., 625 F.3d 262 (Sth Cir. 2010) ........................... 27

United States ex rel. Steury v. Cardinal Health,

Inc., 735 F.3d 202 (5th Cir. 2013)..................... 26, 27

United States ex rel. Wilkins v. United Health

Grp., Inc., 659 F.3d 295 (3d Cir. 2011).......000.... 21, 28

United States v. Hasting, 461 U.S. 499 (1983) ....12, 13

United States v. Neifert-White Co., 390 U.S. 228

(RID vnssevenscsesceteinadiisedideseibesiesenemdadamia manne nanan 27

United States v. Sanford-Brown, Ltd., 788 F.3d

Se Cree CR, BRD vrccicccinccontiessenssnsactecarvenenl passim

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

626 F.3d 1257 (D.C. Cir. 2010)...............0000.000. 22, 28

viii

TABLE OF AUTHORITIES — Continued

Page

United States v. Triple Canopy, Inc., 775 F.3d

a ceoennnonnion 22

Wolf v. Weinstein, 372 U.S. 633 (1963).......0.0..000000000. 33

STATUTES

SIESTA passim

a scosunisinipeoneacindes 21

REGULATIONS

130 Mass. CoDE REGS. § 429.402....0............ccccccccceeeeeees 5

130 Mass. CopE REGs. § 429.423(B)................... passim

130 Mass. CoDE REGS. § 429.423(B)(1) ................0000 32

130 Mass. CopE REGS. § 429.423(B)(2) .................000. 32

130 Mass. CopDE REcs. § 429.423(B)\(2)(b).................. 30

130 Mass. CopE REGs. § 429.423(B\(2\e) .................. 30

130 Mass. CoDE REGS. § 429.424................000.. 3, 34, 35

130 Mass. CopE RgGs. § 429.424(A)(1).............. 6, 8, 35

130 Mass. Cope Ress. § 429.424(A)(1) (2011)........... 35

130 Mass. Cope Recs. § 429.424(E)\(1) (2011)........... 35

130 Mass. CopE REGS. § 429.424(F)...............cccccccccceees 7

130 Mass. Cope REGs. § 429.424(F)\(1) ...........000000000.. 35

130 Mass. CopDE REGS. § 429.439...................0000 passim

130 Mass. Cope Reas. § 429.439(C)........... 9, 15, 30, 32

ix

TABLE OF AUTHORITIES — Continued

1

INTRODUCTION

It is undisputed that a governmental body can

condition payments of public monies, such as Med-

icaid payments, on a recipient’s compliance with

regulations that establish minimum qualification re-

quirements for the services to be provided. Cf. Cle-

land v. Nat'l Coll. of Bus., 435 U.S. 213, 219 (1978)

(Congress could condition payment of G.I. Bill funds

upon institution’s compliance with regulations de-

signed to prevent charlatans from grabbing veterans’

education money); see also Hawker v. New York, 170

U.S. 189, 195 (1898) (holding that the state can

enforce laws to prevent quacks and pretenders from

attempting to practice medicine on patients). It is

also clear that when a recipient falsely claims com-

pliance with a governmental condition of payment,

knowing that the government will rely on the claim

to make payment, an actionable breach of the False

Claims Act, 31 U.S.C. § 3729 et seg. (“FCA”) has oc-

curred. See Allison Engine Co. v. United States ex rel.

Sanders, 553 U.S. 662, 672 (2008). Thus, when the

First Circuit Court of Appeals determined that the

Massachusetts Medicaid regulations allegedly violat-

ed by Petitioner United Health Services, Inc. were

conditions of payment in the case at bar, its conclu-

sion that the Respondents’ complaint stated action-

able claims under the FCA could not be found to be

surprising, much less worthy of certiorari review. See

United States ex rel. Escobar v. Universal Health

Servs., Inc., 780 F.3d 504 (1st Cir. 2015), Pet. App. 15,

17-22.

2

Petitioner masks the unsuitability of its petition

for discretionary review by dressing it up in the cos-

tume of conflict among the Courts of Appeals. It is a

poor fit. To the extent there is a meaningful distinc-

tion between the analyses employed by the various

courts to determine whether a claim presented to the

United States is “false” for the purposes of 31 U.S.C.

§ 3729 — a conflict this Court has failed to recognize

on previous occasions when other defendants have

made similar assertions — no such distinction played

a role in the Court of Appeals decision. Contrary to

Petitioner’s assertion, the First Circuit did not re-

verse because it deemed Petitioner to have “implicitly

certified” compliance with the Massachusetts Medi-

caid regulations at issue. Indeed, the Court explicitly

disclaimed reliance on the theory. Pet. App. 12. The

First Circuit’s reversal was premised on its finding

that compliance with the relevant regulations were

conditions of payment. As demonstrated below, every

Circuit that has examined the issue recognizes that a

knowing presentation of a claim in violation of a

condition of payment states a claim under the FCA.

Once the rhetoric is stripped away, it is evident

that the Petitioner has not raised a question worthy

of review. Petitioner’s real quarrel with the First Cir-

cuit, set forth in its petition at 26-29, is that it dis-

likes the Court of Appeals’ resolution of an issue of

arcane state law: whether the Medicaid regulations

at issue truly prohibit payment of claims when the

clinical director of a satellite clinic of a mental health

center fails to fulfill his regulatory duty, under 130

3

Mass. Cope Recs. § 429.423(B), to ensure overall

supervision of the staff. Pet. App. 60. The issue is

therefore not federal, nor important. And it no longer

has any legal significance, even within the Common-

wealth of Massachusetts. In 2014, the Massachusetts

Division of Medical Assistance, which administers

the Commonwealth’s Medicaid program, clarified one

of the critical regulations at issue. 130 Mass. CoDE

REGS. § 429.424, which sets forth the qualifications

for professional staff at mental health centers, was

revised to clarify that only persons with the specified

qualifications and supervision were eligible to bill the

Commonwealth’s Medicaid program for mental health

care treatment. No reason exists for this Court to de-

vote resources to a Massachusetts payment regula-

tion which has now been definitively clarified.

Equally vain is Petitioner’s effort to convince this

Court that an appellate court should not apply inde-

pendent analysis to the issues brought before it. Pe-

titioner complains that the First Circuit based its

reversal on an interpretation of the principal regula-

tions that was not suggested by any of the parties. In

other words, Petitioner contends, Pet. 14, that the

First Circuit’s exercise of independent judgment is a

“departure from settled norms of judicial decision-

making.” No. Independent appellate analysis, unfet-

tered by the limitations of the parties’ arguments, is a

hallmark of federal judicial review, not an anomaly.

This court has never accepted that it is straitjacketed

by the arguments formally presented in the parties’

4

briefs, and it is inconceivable it would apply such

restraints on the Courts of Appeals.

The fundamental principles outlined above — that

states can properly condition Medicaid reimbursement

on a provider’s compliance with qualification and su-

pervision requirements, and that the FCA applies to

providers who knowingly skirt such regulations but

nonetheless present claims to Medicaid officials — in-

evitably leads to the conclusion that nothing worthy

of review has been presented by the Petitioner. Its

petition for certiorari should be denied.

S

STATEMENT

A. Factual Background.

Shortly after their teenage daughter, Yarushka

Rivera, died of a seizure in October 2009, Julio Escobar

and Carmen Correa (“the Relators”) initiated an in-

vestigation of the treatment Yarushka had received

at Arbour Counseling Services (“Arbour”), a mental

health care provider owned and operated by the

Petitioner. From 2007 through 2009 Yarushka had

received mental health counseling, psychological

counseling and psychiatric services from Arbour at its

clinic in Lawrence, Massachusetts. Pet. App. 4-6. The

Lawrence clinic was not separately licensed by the

Commonwealth of Massachusetts; it was considered a

satellite clinic of another, larger, facility that Arbour

5

operated in Malden, Massachusetts.’ 130 Mass. CoDE

Recs. § 429.402. Pet. App. 4. Yarushka’s mental

healthcare was covered by the Massachusetts Medi-

caid program, MassHealth. /d.

Yarushka received mental health care services

for two years from numerous Arbour employees at the

Lawrence clinic, but almost all of the practitioners

had insufficient qualifications to provide services to

MassHealth members. Among the ersatz therapists

who treated her were the following:

* Two mental health counselors who had no

professional licenses to provide mental health

therapy. Neither of these counselors were

supervised as required by Massachusetts

law. Pet. App. 5.

* A“psychologist” who held herself out as hold-

ing a Ph.D. Her degree, however, was from

an unaccredited online school, and her appli-

cation for a professional license had been re-

jected. Pet. App. 5.

¢ A therapist who held herself out as a psy-

chiatrist and who prescribed psychiatric

drugs. This “doctor” was in fact a nurse, and

she was not supervised by a psychiatrist — a

' Under the Massachusetts licensing regulations, a satellite

facility is a “mental health center program at a different location

from the parent center that operates under the license of and

falls under the fiscal, administrative, and personnel manage-

ment of the parent center.”

6

prerequisite for any nurse practitioner to

prescribe medication. Pet. App. 5-6.

Even if Yarushka’s “doctor” had been supervised,

nurse practitioners may only prescribe psychiatric

medication under Massachusetts law if they are su-

pervised by a staff psychiatrist who is board certified

or eligible for board certification. 130 Mass. CopDE

Recs. § 429.424(A)(1). The staff psychiatrist at the

Lawrence clinic had failed her clinical board exami-

nation years ago and had no intention of reapplying.

Pet. App. 6.

After Yarushka’s death, one of the social workers

at the Lawrence clinic informed Yarushka’s step-

father that many of the therapists who had treated

Yarushka were not licensed or sufficiently supervised

to provide the services she had received. Pet. App.

6-7. The Relators followed up on this information and

identified 23 unlicensed counselors at Petitioner’s

Lawrence clinic. They turned their information over

to various state agencies and a number of investi-

gations were undertaken. Ultimately, the Massachu-

setts Department of Public Health (DPH) determined

that Petitioner, through Arbour, had violated fourteen

different regulations relating to staff supervision and

licensure, including failing to retain a sufficiently

qualified psychiatrist to supervise nurses prescrib-

ing psychiatric medication, failing to supervise men-

tal health counselors, and retaining “23 therapists

[who] were not licensed for independent practice and

also . were not licensed in their discipline.” Pet.

App. 7-8. DPH found no evidence that the unlicensed

7

counselors were supervised. Jd. Indeed the Lawrence

Clinic’s clinical director admitted that he was “un-

aware that supervision was required to be provided

on a regular and ongoing bases [sic].” Pet. App. 18. In

a separate disciplinary proceeding, the clinical direc-

tor admitted that he had authorized one of Yarushka’s

counselors to engage in the unlicensed practice of

social work. In a different disciplinary proceeding,

the unqualified psychologist admitted that she im-

properly claimed to be a psychologist despite the lack

of a license. Pet. App. 8.

B. Proceedings Below.

Based on these facts, the Relators filed a complaint

under the FCA and Massachusetts False Claims Act,

alleging that Petitioner had presented false claims to

Medicaid, a joint federal-state program, by seeking

payments for mental health care services provided by

unlicensed and unsupervised Arbour employees. In

particular, the Relators alleged that Petitioner violat-

ed the MassHealth regulations that define the mini-

mum qualifications for persons billing for mental

health care services. The lowest level of providers,

mental health counselors, may be unlicensed; but

such staff “must be under the direct and continuous

supervision of a fully qualified professional staff

member trained in one of the core disciplines.” 130

Mass. CoDE REGs. § 429.424(F).

Additionally, the Relators alleged that Peti-

tioner violated federal and state false claims acts

8

by misrepresenting its compliance with regulations

that required mental health clinics to employ at

least one board-certified psychiatrist at all times. 130

Mass. Cope Recs. § 429.424(A)(1) requires every

mental health clinic to have a staff psychiatrist

who is either board-certified or is eligible and apply-

ing for such certification. The Relators alleged that

numerous Medicaid claims filed by the Petitioner for

services rendered by unlicensed, unsupervised coun-

selors, and any claims which required the supervision

of a qualified staff psychiatrist were false claims

because Medicaid did not pay for mental health ser-

vices delivered by persons without the minimum

qualifications set forth in the regulations.

Petitioner moved to dismiss the Relators’ Second

Amended Complaint on the ground that the Relators

had not sufficiently pled the falsity of the claims

submitted by Arbour, and that the Relators’ complaint

did not allege its claims in sufficient detail to comply

with FED. R. Civ. P. 9(b). The District Court granted

the motion, finding that none of the regulations relied

upon by the Relators were conditions of payment;

they only constituted conditions of participation.

United States ex rel. Escobar v. Universal Health

Servs., Inc., No. 11-11170-DPW, 2014 WL 1271757 (D.

Mass. Mar. 26, 2014), Pet. App. 39-43.

C. Decision Below.

The First Circuit reversed, finding that the

District Court had not sufficiently analyzed the

9

Massachusetts regulatory scheme. The District Court

did recognize that one of the regulations cited by the

Relators, 130 Mass. CopE REGs. § 429.439, set forth a

condition of payment for mental health centers, like

the Lawrence clinic, that were satellites of independ-

ent mental health clinics.” Pet. App. 43, 56. The

District Court, however, found that none of the prac-

tices complained of by the Relators fell within the

four subsections of § 429.439. It read subsection (C) of

the regulation, which concerns the satellite clinic’s

clinical director, to only require the parent center to

designate a clinical director for the satellite clinic

who had certain qualifications and responsibilities.

Pet. App. 44. Since the Relators made no claims

regarding the designation of the clinical director, the

court ruled, there were no alleged violations of the

only regulation cited by the Relators that imposed a

condition of payment. Id.

The First Circuit examined § 429.439 more

closely. It recognized that subsection (C) did not just

require a parent clinic to designate a clinical director

whose resume contained the minimum qualifications

and who was given certain responsibilities — it re-

quired the clinical director to “meet all of the re-

quirements of 130 CMR 429.423(B).” Pet. App. 57.

The District Court never examined what the clinical

* The relevant portion of 130 Mass. Cope Recs. § 429.439

states: “[sJervices provided by a satellite program are reimburs-

able only if the program meets the standards described below.”

Pet. App. 56.

10

director was required to do under § 429.423(B), but

the Court of Appeals did. It observed that the regula-

tion made the clinical director responsible for “overall

supervision of staff performance.” Pet. App. 16. Thus

“the MassHealth regulations explicitly condition the

reimbursement of satellites’ claims on the clinical

director’s fulfillment of his or her regulatory duties,”

one of which was the duty of ensuring appropriate

supervision. Id. Given that the crux of most of the

Relators’ claims was that “supervision at Arbour was

either grossly inadequate or entirely lacking,” the

First Circuit found that “[iJnsofar as Relators have

alleged noncompliance with regulations pertaining to

supervision, they have provided sufficient allegations

of falsity to survive a motion to dismiss.” Id.”

In its discussion of whether the Relators’ com-

plaint sufficiently alleged the falsity of the claims, the

First Circuit acknowledged that other courts had dis-

tinguished between factually false claims and legally

false claims, as well as theories of express or implied

certification of compliance with conditions of pay-

ment. Consistent with its earlier precedent, the Court

declined to make use of such categories in its analy-

sis, finding that such extra-statutory terms created

* The First Circuit performed separate analyses as to whether

the false claims alleged by the Relators were material and whether

the allegation set forth the fraudulent conduct in sufficient de-

tail to comply with the requirements of FED. R. Civ. P. 9b). The

Court found the allegations in the Relators’ complaint sufficient

to meet these requirements as well. Pet. App. 17-23. Petitioner

does not seek review of these findings by the First Circuit.

1]

unnecessary and artificial barriers. Pet. App. 12-13.

Moreover, it ultimately determined that such abstract

analysis was unnecessary; when the regulations at

issue were properly examined they “clearly” imposed

conditions of payment. Pet. App. 15.

Petitioner sought en banc review of the First

Circuit panel decision on the ground that the panel’s

interpretation of § 429.439 was not raised in the

briefs filed by the Relators or the Commonwealth of

Massachusetts, which had filed an amicus brief and

had been permitted to present oral argument. The

First Circuit declined to grant en banc review. Pet.

App. 54-55.

+

REASONS FOR DENYING THE PETITION

I. THIS COURTS SUPERVISORY AUTHORITY

SHOULD NOT BE INVOKED TO LIMIT

HOW COURTS OF APPEALS DECIDE THE

CONTROVERSIES BEFORE THEM

The first question for review presented by Peti-

tioner is extraordinary — it asks this Court to invoke

its supervisory authority to require Courts of Appeals

to only decide cases on the grounds presented by the

parties in their briefs. Essentially it asks this Court

to explicitly limit how federal appellate courts reach

their decisions, precluding them from arriving at a

correct answer if the appellant lacked the reviewing

court’s breadth of experience or wisdom. Moreover,

Petitioner makes such a request without reviewing

12

the proper use (and limits) of this Court’s invocation

of supervisory authority, particularly in civil actions,

or whether the practice of deciding cases on grounds

not explicitly argued by the parties is desirable

or problematic. All appellate courts, including this

Court, periodically decide cases on grounds not raised

by the parties. That federal appellate courts inde-

pendently analyze the legal issues brought before

them, unconstrained by the parties’ theories of the

case, is a virtue of our legal system; one that makes it

more likely, not less likely, that justice will be served.

A. This Case Does Not Present One of the

Rare Occasions Meriting the Court’s Use

of Its Supervisory Powers in a Civil Ac-

tion

Petitioner asks this Court to invoke its supervi-

sory powers without discussing what those powers

entail and when it is appropriate to exercise them.

In fact, this Court’s jurisprudence defines the scope

of federal courts’ supervisory powers as well as the

rare occasions such powers should be exercised.

Guided by “considerations of justice,” federal courts

may exercise supervisory powers to review or formu-

late procedural rules not specifically required by the

Constitution or the Congress. United States v. Hast-

ing, 461 U.S. 499, 505 (1983) (citing McNabb uv.

United States, 318 U.S. 332, 341 (1943)). Supervisory

powers are invoked for three purposes: to implement

a remedy for recognized rights; to preserve judicial in-

tegrity in criminal cases by ensuring that convictions

13

rest on appropriate considerations validly placed be-

fore a jury; and as a remedy designed to deter illegal

conduct. Hasting, 461 U.S. at 505.

Two of the reasons for exercise of this Court’s

supervisory powers only arise in criminal cases. This

certainly explains why, in modern times, the Court

has rarely considered its exercise of supervisory

power in non-criminal cases.‘ Certainly, Petitioner

does not cite to any instances.”

* The Relators’ research has only uncovered one instance

where this Court invoked its supervisory powers in a non-

criminal matter in the last forty years, Frazier v. Heebe, 482

U.S. 641, 646-50 (1987), which struck down a local rule of the

United States District Court for the Eastern District of Louisi-

ana that limited bar admission to residents of Louisiana.

This exception illustrates why supervisory powers cannot be

appropriately exercised here. In Frazier, the infirmity of the

challenged rule was evident — this Court had found comparable

state bar restrictions to be unconstitutional under the Privileges

and Immunities Clause. See Supreme Court of New Hampshire

v. Piper, 470 U.S. 274 (1985); see also Barnard v. Thorstenn, 489

U.S. 546, 551-52, 553-58 (1989) (holding Virgin Island bar resi-

dency requirement unconstitutional and inappropriate to review

under Court’s supervisory powers). Unlike Frazier, here there is

no body of law or precedent that establishes that the practice

which is the subject of Petitioner’s complaint - independent

analysis of the relevant legal issues — is a clear abuse of Peti-

tioner’s rights.

* Greenlaw v. United States, 554 U.S. 237 (2008) is the only

authority from this Court cited by Petitioner in support of its ar-

gument that the First Circuit’s independent analysis of the legal

issues was such a fundamental violation of its procedural rights

that it merits an exercise of the Court’s supervisory powers. Not

only is Greenlaw a criminal case, but this Court never considered

(Continued on following page)

14

Nor does the third possible ground for the exer-

cise of supervisory power — implementing a remedy

for a recognized right — apply here. If one of Peti-

tioner’s recognized rights was imperiled, a sufficient

remedy already exists and was indeed utilized by

Petitioner: en banc review by the full First Circuit.

En banc review provided Petitioner two important

procedural safeguards. First, it allowed the entire

Court of Appeals to determine whether Petitioner’s

rights were infringed by the panel’s decision to re-

solve the case on a basis Petitioner allegedly had no

prior ability to refute. Second, it also allowed Peti-

tioner to describe why the panel’s reasoning was

incorrect and to provide a rebuttal to the panel’s

allegedly erroneous analysis. The en banc review

process gave Petitioner the forum which it claims it

was denied, as well as the ability to correct any

departure by the panel from the “accepted and usual

course of judicial proceedings.” Sup. Ct. R. 10. There

is no reason to provide yet another forum when

Petitioner’s claim was already rejected by the persons

best situated to determine if there was indeed a

serious departure from the norm.

employing its supervisory powers in that action. The case was

taken because of a split between the Courts of Appeals as to

whether an appellate court could increase a criminal sentence in

the absence of a government appeal! from a sentencing decision.

15

B. The First Circuit’s Independent Analy-

sis of the MassHealth Regulations Was

Not a Departure from Accepted and

Usual Judicial Practice

There is no reason to even consider exercising

supervisory powers if the practice at issue is not a

departure from conventional judicial practice. Sup.

Cr. R. 10. Here, the alleged offense was the First

Circuit’s finding that the supervision requirements

contained in a MassHealth regulation that the Rela-

tors had not expressly identified, 130 Mass. CoDE

Recs. § 429.423(B), was a condition of payment,

which was enforceable through the FCA if violated."

Pet. 13-14. Petitioner argues that the First Circuit's

independent review of relevant regulations is an

improper expansion of the issues the parties had

selected for judicial review.

To claim an appellate court’s independent analy-

sis of the relevant arguments and regulations is an

abusive practice is wholly at odds with this Court’s

jurisprudence. The Court has repeatedly found that

when an issue is properly before it, an appellate court

is not limited to the particular legal theories ad-

vanced by the parties, but rather retains the in-

dependent power to identify and apply the proper

* There is no question that the regulation that expressly

incorporated § 429.423(B) by reference, 130 Mass. Cope REGs.

§ 429.439 C) was put before the lower courts. In its decision, the

District Court specifically considered the possibility that it was a

condition of payment. Pet. App. 44.

16

construction of governing law. Kamen v. Kemper Fin.

Servs., Inc., 500 U.S. 90, 99 (1991) (citing Arcadia uv.

Ohio Power Co., 498 U.S. 73, 77 (1990)); see also

Hormel v. Helvering, 312 U.S. 552, 557 (1941) (“Rules

of practice and procedure are devised to promote the

ends of justice, not to defeat them. A rigid and un-

deviating judicially declared practice under which

courts of review would invariably and under all cir-

cumstances decline to consider all questions which

had not previously been specifically urged would be

out of harmony with this policy.”).

To the extent that the Court is disinclined to

decide a case on a ground not argued by the parties,

such a rule is prudential, not mandatory, and there

are times when prudence dictates that this custom

not be observed in order to dispense justice. Davis v.

United States, 512 U.S. 452, 464 (1994) (Scalia, J.,

concurring). Indeed, apparently some of this Court’s

most important precedents were derived when the

Court decided a case on grounds not urged by either

party in their briefs. See Erie R.R. Co. v. Tompkins,

304 U.S. 64 (1938); see also Blonder-Tongue Labs.,

Inc. v. Univ. of Illinois Found., 402 U.S. 313, 320

(1971) (discussing how this Court overturned years of

precedent in Erie although neither party’s briefs

sought such a result). Such practice is also appropri-

ate when the reviewing court is a Court of Appeals.

See U.S. Natl Bank of Oregon v. Indep. Ins. Agents of

Am., Inc., 508 U.S. 439, 448 (1993).

While it is often desirable for a court to consider

each party’s views on the arguments it ultimately

17

finds determinative, no appellate court can be strait-

jacketed into only considering the specific grounds

brought forward by the parties. As this Court has

recognized, such a rule could result in the issuance of

advisory opinions if the parties colluded to restrict

the arguments before the Court. See id. at 447. More-

over, while the parties’ advocates may have mastery

over the specific issues surrounding their controversy,

the appellate court will frequently have a breadth of

knowledge and a base of experience unmatched by

the parties’ advocates. In short, the appellate judges

may view the relevant issues through a different

perspective, which allows them to recognize that the

best resolution is one unanticipated by the litigants.

The independent review undertaken in such cases

does not deter justice, but facilitates it.

The only precedent from this Court which Peti-

tioner cites in support of its position is Greenlaw v.

United States, 554 U.S. 237 (2008). Greenlaw con-

cerns whether an appellate court can increase a

criminal defendant’s sentence on its own initiative,

when the government has not cross appealed or

otherwise sought an increase. Thus, the issue before

the Court was not whether a reviewing court can

correct a legal error properly brought before it on a

different ground than the one suggested by the appel-

lant, but whether an appellate court can grant relief

to a party which it never sought. Greenlaw and the

other cases cited by Petitioner concern the propriety

of a court attempting to decide issues that were never

brought to its attention. But nothing in those cases

18

contradict the principles of Kamen and U.S. National

Bank of Oregon that once an issue has been properly

brought to the court’s attention, it can analyze the

issue in the manner it sees fit.

Here, there is no question that the Relators

properly appealed the District Court’s determination

that the MassHealth regulations did not set forth

conditions of payment. Nor can there be any doubt

that the Relators identified the specific regulation

that made the condition of payment express, 130

Mass. CopE REGs. § 429.439, and argued that the Dis-

trict Court had misinterpreted the regulation. Pet.

App. at 43-44. At that point, the First Circuit was

entitled to view the regulatory scheme for itself and

correct all parties’ misconceptions about how the reg-

ulatory scheme worked.

Ii. THE FIRST CIRCUIT’S DECISION DOES

NOT CONFLICT WITH THE DECISIONS OF

OTHER COURTS OF APPEALS

In addition to seeking to invoke this Court’s su-

pervisory powers, Petitioner seeks to place before the

Court two asserted conflicts between the First Circuit

and other Courts of Appeals. First, it claims that the

First Circuit’s decision conflicts with a recent Seventh

Circuit decision, United States v. Sanford-Brown,

Ltd., 788 F.3d 696 (7th Cir. 2015), where the Seventh

Circuit refused to apply the “so-called doctrine of im-

plied false certification” to find that the claims filed

by the defendants in that action were false. Given

19

that the First Circuit also expressly declined to apply

the same doctrine, Pet. App. 12-13, no conflict exists.

Second, and more generally, while Petitioner

agrees that a violation of a condition of payment is an

appropriate basis for FCA liability, it claims there is

disagreement between the various Courts of Appeals

as to whether such a condition must be expressly

identified as such. The Petitioner points to language

in other cases which may be inconsistent with each

other. But if a conflict exists on this point that is

worthy of review, that dispute is not presented by the

case at bar. Here, the First Circuit determined that

the conditions of payment were express, ruling that:

“the provisions at issue in this case clearly impose

conditions of payment.” Pet. App. 15. Any discussion

of whether conditions of payment suffice to give rise

to an FCA violation if they are not expressly stated

would be an advisory opinion.

A. The First Circuit’s Ruling Conforms to

Well-Established Principles of FCA Law

To determine whether this case actually presents

the conflicts identified by Petitioner, it is important

to review how the case was framed and what the

First Circuit actually decided. The Relators’ com-

plaint assembled extensive evidence that the Peti-

tioner’s mental health clinic routinely and regularly

violated MassHealth and Department of Public Health

staffing and supervision regulations relating to per-

sons who could provide mental health counseling to

20

MassHealth members and the public at large. The

allegations were supported by an independent state

investigation that found that at least 23 unlicensed

“therapists” provided mental health therapy without

proper supervision. Pet. App. 7-8, 24. The Relators

asserted that all claims submitted by Petitioner for

the services of the unlicensed and improperly super-

vised therapists were false claims because Petitioner

knew those persons should not have treated

MassHealth members or billed for their services.

Petitioner claimed that any regulatory violations

were irrelevant. It asserted that the regulations re-

lied upon by the Relators were conditions of par-

ticipation, as opposed to conditions of payment, and

that only violations of the latter could be actionable

under the FCA. Pet. App. 35. The Relators responded

that violations of conditions of participation could be

actionable if compliance could be deemed material to

MassHealth’s decision to pay. Jd. The District Court

rejected this ground. Pet. App. 36-38. The Relators

also argued that that one of the relevant MassHealth

regulations, 130 Mass. CoDE REGs. § 429.439, estab-

lished a condition of payment for satellite mental

health programs, such as Petitioner’s Lawrence clinic,

by requiring the clinic to meet the standards set out

in the regulation’s four subsections. Pet. App. 43. The

District Court acknowledged that the regulation was

a condition of payment, but found that the violations

alleged by the Relators did not fall within the regula-

tion’s four subsections. Pet. App. 43-44.

21

Before the First Circuit, the Relators raised the

same two arguments: (1) that some conditions of partic-

ipation may be the basis of FCA liability, and (2) that

the conduct they faulted fell within the parameters of

the regulation which contained the express condition

of payment, 130 Mass. CopE Recs. § 429.439. In its

decision, the Court of Appeals only examined the

second ground. It agreed that the regulation was a

condition of payment, but it disagreed with the Dis-

trict Court (and Petitioner) that the supervision and

qualifications violations identified by the Relators did

not fall within the regulation’s four subsections. Pet.

App. 15-16. To make that determination, the First

Circuit relied exclusively on state law. Id. It is telling

that in this part of its opinion, the First Circuit did

not cite a single federal citation or statute. Nor did

the First Circuit suggest that its analysis conflicted

with any other court ruling, federal or state. Jd.

Thus, the First Circuit decided the case on a

well-established axiom of FCA jurisprudence: that a

claim can be found to be “false” for the purpose of 31

U.S.C. §3729(aX1) if the claimant at the time of

presentation was not in compliance with an expressly

stated condition of payment. Virtually every Court of

Appeals that has had this theory of liability before it

has recognized it. See Mikes v. Straus, 274 F.3d 687,

697 (2d Cir. 2001) (holding that FCA liability may

exist where a party falsely “certifies compliance with

a statute or regulation that is a condition to govern-

mental payment”); United States ex rel. Wilkins v.

United Health Grp., Inc., 659 F.3d 295, 307 (3d Cir.

22

2011) (holding that FCA liability arises where a

plaintiff shows that “if the Government had been

aware of the defendant’s violations of the Medicare

laws and regulations that are the bases of a plain-

tiff’s FCA claims, it would not have paid the defen-

dant’s claims”); United States ex rel. Augustine v.

Century Health Servs., Inc., 289 F.3d 409, 415 (6th

Cir. 2002) (holding that FCA “liability can attach

if the claimant violates its continuing duty to com-

ply with the regulations on which payment is con-

ditioned”); Ebeid ex rel. United States v. Lungwitz,

616 F.3d 993, 998 (9th Cir. 2010) (holding that

“lilmplied false certification occurs when an entity

has previously undertaken to expressly comply with a

law, rule, or regulation, and that obligation is impli-

cated by submitting a claim for payment”); United

States ex rel. Conner v. Salina Reg’l Health Ctr., 543

F.3d 1211, 1217 (10th Cir. 2008) (holding that FCA

liability arises where the relator has demonstrated

that the defendant has “certifie[d] compliance with a

statute or regulation as a condition to government

payment, yet knowingly failed to comply with such

statute or regulation”) (emphasis in original) (quoting

Mikes, 274 F.3d at 697); see also United States v.

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

(holding that a contractual requirement may be

material to the government’s decision to pay even if it

is not explicitly a condition of payment); United

States v. Sci. Applications Int'l Corp., 626 F.3d 1257,

1261 (D.C. Cir. 2010) (holding that payment requests

may be false under the FCA “when submitted by a

contractor that has violated contractual requirements

23

material to the government’s decision to pay re-

gardless of whether the contract expressly designates

those requirements as conditions of payment”).

Indeed, Petitioner concedes “there is universal

recognition of the condition of payment requirement.”

Pet. at 18. Given this admission, and the fact that the

doctrine is the basis of the First Circuit decision, any

conflict with decisions from other Courts of Appeals is

difficult to imagine.

To be sure, in its discussion of falsity under the

FCA, the Court observed that the FCA does not

define what constitutes a false claim, and that differ-

ent Courts of Appeals had applied different types of

analysis to make that determination. It also acknowl-

edged in prior decisions it had eschewed distinctions

that some of its sister courts had considered in their

decisions. Pet. App. 13. But these comments were

made in a paragraph summarizing how the court had

examined falsity in its earlier precedents, United

States ex rel. Hutcheson v. Blackstone Medical, Inc.,

647 F3d 377 (1st Cir. 2011), United States ex rel.

Jones v. Brigham & Women’s Hospital, 678 F.3d 72

(1st Cir. 2012), and New York v. Amgen, Inc., 652 F.3d

103 (1st Cir. 2011).’ The First Circuit did not propose

any new modes of falsity analysis in its opinion here.

’ This Court had the opportunity to review two of those

cases, Hutcheson and Amgen, but elected to not do so. See Black-

stone Medical, Inc. v. U.S. ex rel. Hutcheson, ___ U.S. ___., 132

S. Ct. 815 (2011) (denial of certiorari); Amgen, Inc. v. New York,

__ U.S. __, 132 S. Ct. 993 (2011) (denial of certiorari).

24

Theoretical differences in analysis that might result

in a conflict in a different case at a different time are

not a basis for granting certiorari.

B. The First and Seventh Circuits’ Deci-

sions Do Not Conflict

Petitioner asserts a conflict. with United States v.

Sanford-Brown, Ltd., 788 F.3d 696 (7th Cir. 2015).

Pet. 14-17. Sanford-Brown is not a Medicaid case; it

involves a completely different regulatory scheme.

The defendants were private colleges which received

federal education subsidies. Unlike the specific regu-

lation at issue here, which expressly conditioned

payment for services on compliance, in Sanford-

Brown, a panoply of rules, statutes, regulations and

contractual requirements were incorporated by

reference in the program’s Program Participation

Agreement which every participant had to execute.

788 F.3d at 701. The participation agreement refer-

enced “thousands of pages of federal statutes and

regulations.” 788 F.3d at 711.

The Seventh Circuit affirmed the grant of sum-

mary judgment for the defendants because the United

States and the Relators could not articulate which of

the multitude of regulations, statutory references and

rules referenced in the Program Participation Agree-

ment were mandatory prerequisites for payment.

Id. In other words, the Title IV restrictions sought

to be enforced were conditions of participation, not

25

conditions of payment. The FCA, the Court ruled, was

not the proper mechanism to enforce conditions of

participation, because under the statute, “evidence

that an entity has violated conditions of participation

after good-faith entry into its agreement with the

agency is for the agency — not a court — to evaluate

and adjudicate.” Jd. at 712.

There is no basis to Petitioner’s speculation that

the result here would have been different under the

Seventh Circuit’s analysis. The Sanford-Brown court

distinguished its result from a situation where a de-

fendant had violated a condition of payment. it found

the plethora of regulations and statutes incorporated

by reference in the participation agreement could not

reasonably be construed as “conditions of payment.”

Id. at 711. And it concluded its analysis by noting

that it had before it a “Program Participation Agree-

ment,” not a “Program Payment Agreement,” high-

lighting that the agreement “memorializes conditions

of participation (not conditions of payment).” Jd. at

712 (emphases in original).

Sanford-Brown does include dicta® that the Sev-

enth Circuit declines to adopt the “so-called doctrine

* The court did not need to disclaim the possibility of FCA

falsity due to a violation of an implied certification to reach its

result. Its determination that the Title IV restrictions were con-

ditions of participation, unenforceable through the FCA, rather

than conditions of payment was sufficient to affirm the District

Court. Moreover, the decision includes no analysis at all of the

reasons why every other Court of Appeals has recognized viola-

tions of implied certification as a basis for FCA liability, see cases

(Continued on following page)

26

of impli i false certification.” Jd. at 711-12. But so

does the First Circuit’s decision, which specifically

states: “[t]his circuit recently has eschewed distinc-

tions between factually and legally false claims, and

those between implied and express certification theories,

reasoning that they ‘create artificial barriers that ob-

scure and distort [the statute’s] requirements.’” Pet.

App. 12-13 (citations omitted, brackets in original).

More important is the fact that their conclusions —

that express conditions of payment can be the basis

of successful FCA causes of action — are completely

consistent.

Petitioner suggests that a conflict exists because

it never expressly certified compliance with the

MassHealth regulations identified by the First Cir-

cuit, but Sanford-Brown purportedly limits liability

under the FCA to false express certifications. Pet.

17 The Seventh Circuit, however, did not expressly

announce any such limitation of FCA liability in

Sanford-Brown. Indeed, what it meant when it stated

in dicta that it was declining to apply “the so-called

doctrine of implied certification” is unclear. The

Seventh Circuit stated that it intended to join the

Fifth Circuit, 788 F.3d at 712, but as Petitioner

concedes, Pet. 15, n.7, the Fifth Circuit has not

set forth in footnote 10, infra, or in the case of the Fifth Circuit,

has refused to reject the theory, United States ex rel. Steury v.

Cardinal Health, Inc., 735 F.3d 202, 207 (5th Cir. 2013) (ac-

knowledging that the Fifth Circuit has not ruled on whether

implied certification claims will be recognized).

27

rejected liability premised on implied certifications,

refusing to rule either way. United States ex rel.

Steury v. Cardinal Health, Inc., 735 F.3d 202, 207

(5th Cir. 2013); United States ex rel. Steury v. Cardi-

nal Health, Inc., 625 F.3d 262, 268 (5th Cir. 2010).

Given that no Court of Appeals has outright refused

to consider implied certification liability under the

FCA, and that Sanford-Brown itself recognizes that

violations of statutory or regulatory conditions of

payment can be actionable, the Seventh Circuit may

have only intended to reject the doctrine in the case

before it.” Otherwise, the Court’s position is impossible

to square with this Court’s pronouncement that the

FCA “was intended to reach all types of fraud, without

qualification, that might result in financial loss to the

Government.” United States v. Neifert-White Co., 390

U.S. 228, 232 (1968). The Seventh Circuit’s obscure

intent and holding is not a reason to issue a writ of

certiorari to the First Circuit in the pending case.

Indisputably, Sanford-Brown conflicts with many

decisions of the various Courts of Appeals. The Sev-

enth Circuit acknowledged conflicts with the Ninth

Circuit’s decision in United States ex rel. Hendow v.

Univ. of Phx., 461 F.3d 1166 (9th Cir. 2006) and the

seven decisions (from seven different circuits) set

forth in footnote 13 of its prior decision in United

* It also explains why, at 788 F.3d 712, the court favorably

cited Mikes, 274 F.3d at 699 and Conner, 543 F.3d at 1220, two

cases which recognize FCA liability premised on implied certifi-

cation.

28

States ex rel. Absher v. Momence Meadows Nursing

Ctr., Inc., 764 F.3d 699, 711, n.13 (7th Cir. 2014).”°

Sanford-Brown, 788 F.3d at 711 and n.5. But al-

though Sanford-Brown was decided after the case

under review was released, the Seventh Circuit does

not express any disagreement with the First Circuit’s

opinion here. While Sanford-Brown’s conflict with the

opinions of almost all of its sister Courts of Appeals

may be an excellent reason to grant review in that

case, it is not a reason to grant review here, where no

conflict has been identified.

C. This Case Presents No Conflict Between

Courts of Appeals Regarding Any Re-

quirement That a Condition of Payment

Be Expressly Stated

Petitioner also seeks to have this Court review

an asserted conflict among the Courts of Appeals

regarding how conditions of payment are identified.

Petitioner asserts that some courts only recognize

compliance requirements expressly identified in

statutes or regulations as conditions of payment. See

Mikes, 274 F.3d at 700-02; Chesbrough v. VPA, PC.,

655 F.3d 461, 468 (6th Cir. 2011). Others are more

flexible. See Sci. Applications, 626 F.3d at 1268-69

° The seven decisions are Wilkins, 659 F.3d 295; Hutcheson,

647 F.3d 377; Sci. Applications, 626 F.3d 1257; Ebeid, 616 F.3d

993; Conner, 543 F.3d 1211; Augustine, 289 F.3d 409; Mikes, 274

F.3d 687. Curiously, after declining to follow Conner and Mikes,

the Seventh Circuit in Sanford-Brown cites those decisions fa-

vorably in the very next paragraph of its opinion.

29

(limiting conditions of payment to those expressly

designated as preconditions of payment is not con-

sistent with statute’s language and would foreclose

FCA liability in situations Congress intended to fall

within the statute’s scope); United States ex rel.

Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163,

1170 (10th Cir. 2010) (holding that relator was not

required to establish that state or federal regulations

expressly conditioned payment on compliance when

demonstrating that government would not have paid

had it known of defendants’ regulatory violations). In

earlier decisions, the First Circuit has indicated its

agreement with the latter approach. See Hutcheson,

647 F.3d at 388. At the same time it has also taken

pains to explain its belief that the Second Circuit's

rule is not as rigid as claimed by the Petitioner. Jd. at

388 and n.11."

Yet the academic dispute as to whether condi-

tions of payment should be recognized which are not

explicitly expressed as such in a statute or regulation

is not in issue in this case. In a passage from the

opinion the Petitioner declined to quote in its brief,

" Petitioner contends that in footnote 11 of its opinion, the

First Circuit expressly acknowledged a conflict between its posi-

tion and those of the Second and Sixth Circuits. Pet. 20. That is

not a fair characterization. In its discussion of its analysis of

falsity disputes under the FCA, it cites to Mikes, 274 F.3d 687

with a “but see” citation, but notes no express disagreement or

any difference of opinion with the Sixth Circuit. Further in

Hutcheson, as described above, the court examined Mikes in

depth and concluded there likely was not a conflict between the

courts’ analyses. 647 F.3d at 388.

30

the First Circuit stated: “[T]he provisions at issue in

this case clearly imposed conditions of payment.” Pet.

App. 15.

The First Circuit’s conclusion is irrefutable. The

relevant regulation, 130 Mass. CopE REGs. § 429.439,

expressly provides that “[slervices provided by a sat-

ellite program are reimbursable only if the program

meets the standards described below.” Pet. App. 56. A

plainer statement that the subsections of that regula-

tion are prerequisites to payment is hard to imagine.

One of those subsections, (C), establishes the re-

quirements of each mental health center’s clinical

director. “The clinical director must be employed on a

full-time basis and meet all of the requirements in

130 [Mass. CoDE REGs.] 429.423(B).” Pet. App. 57.

Thus, by reference the Massachusetts regulatory

scheme also made compliance with § 429.423(B) a

condition of payment. And within the latter regula-

tion, the First Circuit observed, are requirements of

“overall supervision of staff performance” and “em-

ploying adequate psychiatric staff to meet the psy-

chopharmacological needs of clients.” Pet. App. 16, 21,

60; 130 Mass. CopE REas. § 429.423(B\(2)(b) and (e).

The First Circuit also recognized that the duties of

supervision and employing adequate psychiatric staff

were the precise violations described at length in the

Relators’ complaint. Accordingly, “[iJnsofar as Re-

lators have alleged noncompliance with regulations

pertaining to supervision, they have provided suf-

ficient allegations of falsity to survive a motion to

dismiss.” Pet. App. 16.

31

Contrary to Petitioner’s assertions, this is not a

case where the defendant did not get advance notice

of the conduct it was expected to maintain in order to

avoid FCA liability. At all relevant times, the respon-

sibilities it was required to meet were set out in the

MassHealth regulations and they were identified as

conditions of payment. Thus, the policy issues which

Petitioner seeks to place before the Court, Pet. 20-25,

are irrelevant. Petitioner got all of the protection it

claims it was entitled to receive, yet still engaged in a

comprehensive scheme to treat mentally ill Medicaid

patients with unlicensed, unqualified, uncredentialed

and unsupervised counselors.

As with Petitioner’s prior claim of conflict, there

is no basis for any assertion that the result would

have been different if the case was heard in a differ-

ent Court of Appeals. In the two cases cited by Peti-

tioner, Mikes and Chesbrough, Pet. 25-26, the

statutes and regulations at issue plainly failed to

include language conditioning payment on compli-

ance. In contrast, such language is plainly present

here — Petitioner merely disagrees with the scope of

regulations as construed by the First Circuit. Wheth-

er the First Circuit interpreted Massachusetts Medi-

caid regulations correctly or not is an issue of state

law, and not a basis for granting a petition for certio-

rari.

32

il. THE PETITION PRESENTS AN ISSUE OF

STATE LAW, NOT FEDERAL LAW, FOR RE-

VIEW

A. This Court Should Not Devote Its Re-

sources to an Issue of State Law

More than 25 pages into its petition, Petitioner

sets out its analysis of why the First Circuit erred.

According to Petitioner, when the First Circuit exam-

ined 130 Mass. CopE REGs. § 429.423(B) to determine

the extent of the condition of payment established by

130 Mass. CopE Recs. § 429.439, the court should have

only considered the provisions under § 429.423(B)(1)

and ignored the provisions of § 429.423(B)(2) because

the responsibilities identified in § 429.423(B)(2) are

not “requirements” for the purposes of § 429.439(C).

Pet. 26.

Regardless of the merits of this argument,” it is

clear this is an issue of state law. Petitioner’s disa-

greement is with the First Circuit’s interpretation of

a state Medicaid regulation. This Court does not sit to

determine matters of state law. Dixon v. Duffy, 344

U.S. 143, 144 (1952). Such a matter is not proper for

* The merits, however, appear dubious. When the Common-

wealth stated that as a condition of payment a clinical director

“must meet all the requirements in” § 429.423(B), it has to be

assumed that the Commonwealth intended to refer to the entire

regulation and not a single subsection. If the Commonwealth

only intended subsection (1) to constitute the condition of pay-

ment, § 429.439(C) would have likely only referenced § 429.423(BX 1)

instead of the broader regulation.

33

this Court’s review. See Wolf v. Weinstein, 372 U.S.

633, 636 (1963) (dismissing writ of certiorari as im-

providently granted where controversy primarily im-

plicated questions of state law and presented no

federal question of substance).

Although this Court is not jurisdictionally barred

from reviewing a Court of Appeals decision that

interprets state law, such cases are only taken in

extraordinary circumstances. Leavitt v. Jane L., 518

U.S. 137, 144-45 (1996). For example, in Steele v.

General Mills, Inc., 329 U.S. 433, 438 (1947), this

Court granted certiorari because the lower court’s

judgment “undermine[d] the transportation policy of

Texas” and thus created a question of great impor-

tance. Almost half a century passed before this Court

concluded that another state law case met this stan-

dard. In Leavitt, this Court granted a petition for

certiorari in an abortion case because “the alternative

{[wa]s allowing the blatant federal-court nullification

of state law” where the underlying substantive issue

was controversial. Leavitt, 518 U.S. at 144-45.

No such issues are present here. The Court has

before it a matter requiring analysis and interpreta-

tion of an arcane state regulation. It is not a contro-

versial matter and does not appear to raise issues

that would be of concern anywhere but Massachu-

setts. The Massachusetts Medicaid regulations here

are merely an example of the routine regulations that

each of the fifty states promulgate to administer the

Medicaid program as partners to the federal govern-

ment. This is not a court of error correction. City &

34

Cnty. of San Francisco, Calif. v. Sheehan, __ U.S.

__., 1385 S. Ct. 1765, 1779-80 (2015) (Scalia, J., con-

curring in part and dissenting in part). It is not

appropriate for this Court to expend its scarce re-

sources crafting opinions that correct technical errors

in cases of only local importance where the correction

in no way promotes the development of the law.

Anderson v. Harless, 459 U.S. 4, 12 (1982) (Stevens,

J., dissenting).

B. Recent Revisions of the Relevant Mas-

sachusetts Regulations Confirm That the

Case was Correctly Decided and Leave

No Question of Significance for the Court

to Review

Moreover, to the extent that there is some con-

troversy as to whether MassHealth can condition re-

imbursement to a mental health clinic on the facility's

compliance with regulations relating to minimum

qualifications and supervision, that question has been

definitively answered. At the time the underlying

action was instituted, the Medicaid regulation that

set minimum qualifications for therapists in mental

health facilities, 130 Mass. Cope Recs. § 429.424,

was entitled “Qualifications of Staff by Core Dis-

cipline.” In 2014, Massachusetts clarified the regu-

lation to make it evident that compliance with

the minimum qualifications requirements was a con-

dition of payment. The title of the regulation was

changed to “Qualifications of Professional Staff Au-

thorized to Render Billable Mental Health Center

35

Services by Core Discipline.” 130 Mass. CoDE REGs.

§ 429.424 (2014) (emphasis added). As the Massachu-

setts Medicaid Director explained in her transmittal

letter to mental health centers participating in

MassHealth, “[t]hese changes include clarification . . .

and specifying the types of staff members ... who

are authorized to provide mental health services for

which mental health centers may bill.” MassHealth

Transmittal Letter MHC-47, April 2014.”

Although the title of 130 Mass. Cope REGs

§ 429.424 was revised, the content of the relevant

regulations was not. The regulation still states “[alll

counselors and unlicensed staff included in the center

must be under the direct and continuous supervision

of a fully qualified professional staff member trained

in one of the core disciplines” and “[a]t least one staff

psychiatrist must either currently be certified by the

American Board of Psychiatry and Neurology, or

be eligible and applying for such certification.” 130

Mass. Cope Recs. §§ 429.424(A)\(1), 429.424(F)(1)

(2014); cf. 1830 Mass. Cope ReEGs. §§ 429.424(A)\(1),

429.424(E (1) (2011).

The 2014 revisiens put to bed aay question as to

whether the failure to comply with the regulatory

qualification and supervision requirements for men-

tal health therapists are conditions of payment — only

persons meeting the criteria in the regulations may

’ A copy of this letter may be found at http://www.mass.

gov/eohhs/docs/masshealth/transletters-2014/mhc-47.pdf.

36

bill for their services. Indeed, the fact that the Com-

monwealth changed only the title of the regulation

but did not change its substance indicates that the

2014 revisions were not amendments that took effect

upon promulgation, but clarifications of MassHealth’s

existing rules. Under Massachusetts law, remedial

changes to a state regulation that are intended to clarify

rather than change the law have retroactive effect.

Town of Canton v. Bruno, 282 N.E.2d 87, 94 (Mass.

1972); Figueroa v. Dir. of Dep’t of Labor & Workforce

Dev., 763 N.E.2d 537, 541-42 (Mass. App. Ct. 2002).

The revisions confirm that the First Circuit correctly

decided the action — the minimum qualification and

supervision regulations were always intended to be

conditions of payment. Nothing of substance remains

for this Court to review.

*

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted,

THOMAS M. GREENE

Counsel of Record

MICHAEL TABB

ELIZABETH CHO

GREENE LLP

One Liberty Square

Suite 1200

Boston, MA 02109

(617) 261-0040

tgreene@greenellp.ccm