[00:00:29] Speaker 00:
adding anything of value of their own and seeking an unearned bounty.

[00:00:34] Speaker 00:
The text of the rule fits neatly with that purpose.

[00:00:37] Speaker 00:
But that is not this case, Your Honors.

[00:00:41] Speaker 00:
Relators' allegations do not derive from an Army Times article or a comment within an administrative rulemaking.

[00:00:48] Speaker 00:
They derive instead from information learned independent of those sources.

[00:01:11] Speaker 00:
That was not disclosed to the public sources, neither that there was a deliberate scheme, nor that there were flagrant and persistent over-refills.

[00:01:21] Speaker 00:
In short, as this court said in Miteski, quoting the Supreme Court in Graham County, this is a case where the relator is one of those whistleblowing insiders with genuinely valuable information, rather than an opportunistic plaintiff.

[00:02:07] Speaker 00:
whether there might be waste in the program that's the title of the

[00:02:34] Speaker 00:
every twenty days for thirty day scripts that's right

[00:03:06] Speaker 00:
as an anecdote of one retired sergeant who did report that his scripts were being refilled on that cadence.

[00:03:13] Speaker 00:
But nothing in that source indicated that this was pervasive.

[00:03:17] Speaker 01:
I was going to say, reading beneficiaries, plural, with up to a year's worth of drugs piled in medicine cabinets and linen closets.

[00:03:26] Speaker 01:
So I certainly get your point that they cite one person who complains about the particular every 60 days.

[00:03:42] Speaker 01:
are the beneficiaries that have lots of extra drugs in their capital?

[00:03:45] Speaker 00:
Perhaps.

[00:03:46] Speaker 00:
The article is not specific.

[00:03:48] Speaker 00:
In an article about waste, it's not even an article about this particular kind of waste.

[00:03:52] Speaker 00:
In fact, the very first sentence of the article seems to have nothing to do with this issue.

[00:03:57] Speaker 00:
It reads, a Pentagon report says the contractor that manages Tricare's pharmacy benefit may be wasting money by continuing to ship drugs to beneficiaries who no longer need them or dispensing 90-day instead of 30-day prescriptions.

[00:04:26] Speaker 00:
next three months we'll give you 90-day supply.

[00:04:28] Speaker 00:
It's understandable that they make that choice and it's also understandable that there might be

[00:04:59] Speaker 00:
Not only was it flagrant persistent, it was hard-coded into the algorithm of the system to do this every time, for every beneficiary, and there were 90... What's hard-coded specifically into the code?

[00:05:15] Speaker 00:
That every 90 days,

[00:05:45] Speaker 00:
back before very long at all you have an extra refill that hasn't even been opened yet and then you'll have two refills that haven't been opened yet because it'll catch up it never catches up you would continually aggregate falling behind each time that's right over and over for millions of beneficiaries and tens of millions of prescriptions and you know that's

[00:06:22] Speaker 00:
in an opportunity to reset the algorithm.

[00:06:24] Speaker 00:
And our client's principal, the pharmacist in charge, said this would be an opportunity to change the algorithm.

[00:06:31] Speaker 00:
They didn't.

[00:06:31] Speaker 00:
They kept it exactly that way.

[00:06:33] Speaker 00:
They ignored it.

[00:07:15] Speaker 00:
did not have the data to report on it.

[00:07:18] Speaker 00:
And it's not just the algorithm, Your Honors, that differentiates our complaint from the Army Times article and the DOD rule.

[00:07:27] Speaker 00:
It is the fact that Express Scripts knew it was wrong.

[00:07:32] Speaker 00:
They knew it was wrong because they did it differently when they were on the hook for the money.

[00:07:37] Speaker 00:
They only did it this way for the government when they were dealing with private payers and obligated to avoid waste in this particular way.

[00:07:46] Speaker 00:
They did it differently.

[00:07:47] Speaker 00:
They didn't refill on this cadence and were the only ones to allege that was nowhere in the article.

[00:08:22] Speaker 02:
first paragraph, like, first sentence, the lead of the Army Times article says, Tricare's pharmacy benefit may be wasting money by continuing to ship drugs to beneficiaries who no longer need them or dispensing 90-day instead of 30-day prescriptions.

[00:08:37] Speaker 02:
I mean, the whole gist of it seems to be there.

[00:08:39] Speaker 02:
I mean, I don't – they don't use the word fraud, but, you know, we've said we don't need to expressly use the word

[00:08:53] Speaker 00:
of that appears to deal with a 90-60 issue.

[00:08:56] Speaker 00:
Instead, it's dealing with 90-30.

[00:08:58] Speaker 00:
That's not a refill cadence.

[00:08:59] Speaker 00:
That has to do with whether you come in – sometimes you come in and you want your 30-day

[00:09:48] Speaker 00:
sources that have grains of the allegations, but do not sort of put them together.

[00:09:54] Speaker 00:
Only the relator does that.

[00:09:56] Speaker 00:
And that's what's happened here, Your Honors.

[00:09:59] Speaker 00:
Do you want to address your alternative argument on original source?

[00:10:02] Speaker 00:
I do, Your Honor.

[00:10:03] Speaker 00:
And actually, I think we think that that's the even more grievous error by the district court here.

[00:10:08] Speaker 00:
District court ruled

[00:10:23] Speaker 00:
by the district court as being material, but they include the intent, the cienter element of the False Claims Act, which courts have recognized to be the grave amendment of a False Claims Act case.

[00:10:34] Speaker 00:
There's nothing in the Army Times article or the DOD rule that goes to that.

[00:10:41] Speaker 00:
They also include, as I mentioned, the fact that they do it differently when they're dealing with private payers.

[00:10:53] Speaker 00:
about the internal complaints raised.

[00:12:04] Speaker 00:
I think if Congress had intended to make it impossible for a corporate relator to be an original source, it would have said it quite clearly.

[00:12:12] Speaker 01:
And we don't think that that is a clear demonstration of that.

[00:12:16] Speaker 01:
The case law from the Supreme Court is very clear that individual means natural person, unless in the rare case where it would be truly absurd not to include them.

[00:12:33] Speaker 01:
is quite striking in knowing the difference

[00:13:07] Speaker 01:
are the fact they decided to use the word individual.

[00:14:03] Speaker 00:
But even if information is attributed to our ultimate relay, or the corporation, as of the time it was formed, that independent knowledge transfers to it, and there's no temporal requirement, certainly under

[00:14:34] Speaker 00:
simply indicate, in our view, that you can establish independence if you learned it.

[00:14:39] Speaker 00:
Certainly, it's an easy way to do it.

[00:14:41] Speaker 00:
You can establish independent knowledge if you learned it before the public sources.

[00:14:45] Speaker 00:
Because, of course, if you learned it before, you couldn't have been informed by the sources.

[00:14:49] Speaker 00:
But an alternative way would be through an insider's knowledge.

[00:14:52] Speaker 00:
And that's what we have here, an insider who saw it independently.

[00:15:07] Speaker 01:
for Evernorth Express Scripts.

[00:15:11] Speaker 01:
The grovelment of the latest complaint, and it's right there beginning on page three, paragraph three, is that in administering the TRICARE mail order pharmacy program, Express Scripts shipped 90-day prescriptions every 90 days, and that resulted in

[00:15:37] Speaker 01:
90 days every 60 days.

[00:15:39] Speaker 01:
90 days every 60 days.

[00:15:40] Speaker 01:
I'm sorry, I misspoke there.

[00:15:41] Speaker 01:
90 days every 60 days.

[00:16:43] Speaker 01:
accounts, and they've done that precisely in order to churn out excess drugs and get the big billings.

[00:16:52] Speaker 01:
So let me address that in pieces, Your Honor, with respect to the first piece, what the Army Times article says.

[00:16:58] Speaker 01:
I think that one has to look at the entirety of the Army Times article and what that reporter did and then said, not what may have been behind the scenes, and what that reporter did and then said as the article explains is.

[00:17:11] Speaker 01:
information from a community pharmacy association, to get information from that DODIG report, talk to a number of beneficiaries.

[00:17:20] Speaker 01:
And the conclusions that that reporter reached from what looks from the face of the article to be some very extensive work was that express scripts was overfilling for beneficiaries, plural.

[00:17:33] Speaker 01:
That beneficiaries were piling up nine months worth of prescriptions in their medicine cabinets.

[00:17:48] Speaker 01:
You do not, Your Honor, although then I would say this, which is, the way the article phrases this, this is an example.

[00:17:56] Speaker 01:
This isn't a legal brief or complaint.

[00:18:28] Speaker 01:
getting a lot of drugs.

[00:18:30] Speaker 01:
Your Honor, I wouldn't say that the DOD failed to catch it.

[00:18:34] Speaker 01:
The DOD had this Army Times article.

[00:18:36] Speaker 01:
Where in the IG report is there a reference to this, you know, the cadence issue?

[00:18:44] Speaker 01:
It's not in the IG report, Your Honor, but there are references under the record to the fact that the DOD gets these billings.

[00:18:52] Speaker 01:
They understand how many prescriptions are being billed at what cadence, and they did not voice any objections to that.

[00:18:59] Speaker 01:
It's out in public.

[00:19:00] Speaker 01:
The IG report says nothing about it.

[00:19:02] Speaker 01:
The IG report says, actually, the overall program is a good deal and is, you know, less than it might have been, although they said they didn't take some costs into account.

[00:19:13] Speaker 01:
But so the IG report has none of this in it.

[00:19:16] Speaker 01:
And then you just have one quote, and the whole fraudulent practice is out in the public to bar a false claims act based on the one quote.

[00:19:23] Speaker 01:
Well, it's one quote based on a beneficiary who's cited in the article as an example.

[00:20:03] Speaker 02:
it over, you know, we can knock over water jugs, so, you know, it's easy to knock down pills.

[00:20:08] Speaker 02:
It's actually, so maybe a little bit more benign motive, um, and that'd be wasteful.

[00:20:14] Speaker 02:
But I guess they're alleging something a little bit more nefarious of a fraud.

[00:20:17] Speaker 01:
The, the Public Disclosure Board is very clear that it is based on either public disclosures of allegations of fraud or transactions from which the – Allegation of fraud.

[00:20:27] Speaker 01:
You're acknowledging it doesn't – so on to the second part.

[00:20:30] Speaker 01:
We're on the transaction problem there.

[00:20:33] Speaker 01:
This is based on an IG report, which is in the record at 326 or something.

[00:20:39] Speaker 01:
Yeah.

[00:20:39] Speaker 01:
And the title of that is the Tricare mail order pharmacy program was cost-efficient and adequate dispensing controls were in place.

[00:20:48] Speaker 01:
And that's certainly not, and indeed, in your answering brief, one of your arguments is that the complaint doesn't adequately allege Sienta because Sienta is required.

[00:21:00] Speaker 01:
And I look at that Army Times article.

[00:21:10] Speaker 01:
deliberate, intentional program by your client.

[00:21:14] Speaker 01:
That's the allegation we have in front of us here, and I don't see where that's been previously disclosed.

[00:21:20] Speaker 01:
Please point me to what you think previously discloses that there was the enter that, in fact, this was conscious, deliberate conduct.

[00:21:28] Speaker 01:
Where is it?

[00:21:40] Speaker 01:
transactions that you can get there, and I don't say it.

[00:21:45] Speaker 01:
You do get there, particularly when you compare this to the complaint, because this is not a complaint that alleges evidence of CNTA, such as a bunch of executives sitting around talking about how we're not allowed to fill this way, we know it's wrong,

[00:22:13] Speaker 01:
90 days, every single day.

[00:22:14] Speaker 01:
It was different from what they were doing with other customers.

[00:22:17] Speaker 01:
Other customers?

[00:22:18] Speaker 01:
This was a specific pattern for this customer, the government, and not done for other customers.

[00:22:24] Speaker 01:
That's not hard to infer, see, enter.

[00:22:27] Speaker 01:
It was a deliberate act.

[00:22:29] Speaker 01:
And that's, as I read the complaint, I don't think it was anything in there that said, oh, they did this by accident.

[00:22:36] Speaker 01:
They're saying it was deliberate conduct.

[00:22:40] Speaker 01:
in the Army Times article or anything else you've identified that comes close to that level of explicit allegation of Sienta.

[00:22:49] Speaker 01:
The question is, does the Army Times article create an inference of Sienta, an inference of fraud?

[00:22:55] Speaker 01:
And I think it clearly does, because as you read this- That one retiree, that could just be one individual screw-up.

[00:23:01] Speaker 01:
And then the later things you talk about, you can't get through to the customer service, you know,

[00:23:11] Speaker 01:
practice without any facts in which you could infer that it was a general practice.

[00:23:18] Speaker 01:
The article talks about beneficiaries in the plural.

[00:23:22] Speaker 01:
So the reporter, unless he's making it up, but we don't want to take that.

[00:23:25] Speaker 01:
We have to take the article in its face.

[00:23:28] Speaker 01:
The article in its face talks about beneficiaries who are receiving wasteful amounts of medication.

[00:23:38] Speaker 01:
the question.

[00:23:39] Speaker 01:
And I have trouble seeing how that tells me there's a universal problem that this is the practice of your client to automatically send out 90 days supply every 60 days.

[00:23:51] Speaker 01:
If this happens to more than one person, that's not the same.

[00:23:54] Speaker 01:
There is nothing in this article that suggests this was a whoops.

[00:23:57] Speaker 01:
That somebody called out to the reporter and said this is a mistake.

[00:24:01] Speaker 01:
This was based on the IG report which

[00:24:09] Speaker 01:
by an association of independent pharmacies who have every motivation to try to shake this loose from a big company like Express Scripts.

[00:26:04] Speaker 01:
medication that they needed, beneficiaries having medication piling up in their file cabinets.

[00:26:09] Speaker 01:
The fact that it says 90-60 is an added level of granularity, but it's not a level of granularity that the case law requires for it to be either substantially similar or under the material ads, because what you have here is, in its essence, a fraud case that's saying,

[00:26:33] Speaker 01:
The government is paying for it.

[00:26:35] Speaker 01:
That's the gravamen of the fraud.

[00:26:37] Speaker 01:
That's what this article says in a multitude of ways.

[00:26:40] Speaker 01:
When it gets to the 90s, 60s, if that wasn't there and it just said it was excessively filling prescriptions, that would be good enough.

[00:26:47] Speaker 01:
That would get you your substantial similarity in your material ads issues.

[00:26:52] Speaker 01:
So our position, Your Honor, is that the gravamen of the complaint is excessive filling that the government is paying for, beyond what the beneficiaries need.

[00:27:02] Speaker 01:
And this article says that in a variety of ways, and it uses an example, which articles do, they'll use examples, of one way in which that happened, and not only once with respect to that example, 14 medications,

[00:27:21] Speaker 01:
and purposeful overfilling is really all the complaints suggest.

[00:27:50] Speaker 02:
That's what editors want, so you're saying these couple of anecdotes really reflects a broader trend.

[00:27:57] Speaker 02:
That's exactly right, Your Honor.

[00:27:59] Speaker 02:
Is there any case law that says that?

[00:28:00] Speaker 01:
I haven't seen any case law that says that, but there is ample case law that talks about public disclosure.

[00:28:21] Speaker 01:
I put them on notice, there could be a problem.

[00:28:24] Speaker 01:
If we think this is an issue, we ought to take a look at it.

[00:28:27] Speaker 01:
You're in an opposition forced by the law that you're busy arguing that the world was told years ago that your client was defrauding the government.

[00:28:36] Speaker 01:
You don't need to acknowledge that that fact was true, but you're stuck saying it was sufficiently disclosed.

[00:28:43] Speaker 01:
My problem is that if the reporter for this article, Army Times,

[00:28:53] Speaker 01:
inducted that in fact your client was defrauding the government as a matter of intent to the tune of millions of dollars a year.

[00:29:02] Speaker 01:
That probably would have been the lead of the article and that wasn't the lead of the article and it's never explicitly stated in the article.

[00:29:08] Speaker 01:
So why should we make the leap the urging is to make when in fact that's not what the article would have revealed and if they had that scoop I think that's would have been right on top front

[00:29:23] Speaker 01:
the application of public disclosure bar.

[00:29:25] Speaker 01:
All that is required for the application of the public disclosure bar is enough of the material facts to be out there in the public domain to put the government on notice that there's an issue here it may want to investigate.

[00:29:36] Speaker 01:
My law clerk decided to survey everybody else in her office to see how they read this.

[00:29:42] Speaker 01:
Nobody read it with the allegation that this was an intentional plan and barked on by your client to sell a lot more pills

[00:29:53] Speaker 01:
Maybe you can read the tea leaves in a certain way to reach that conclusion, but I don't think many people are going to read it that way, and so I don't think you had a good argument for saying it satisfies public disclosure.

[00:30:06] Speaker 01:
I think the question is, Your Honor, is there a reasonable inference that can be drawn from this that this was purposeful?

[00:30:12] Speaker 01:
And given the way that the article describes its sources well beyond the IG report, anecdotal examples of what happened, and waste in sweeping terms,

[00:30:27] Speaker 01:
that puts the government on notice, that meets the substantially, that meets the substantially similar test, that makes it a public disclosure.

[00:30:36] Speaker 01:
There's nothing more in the complaint that materially adds to that, but I'd like, if I could, to use my last 30 seconds to talk about the independent question that was raised.

[00:30:44] Speaker 01:
You're actually over, but I'll let you.

[00:30:46] Speaker ?:
Oh, thank you.

[00:30:48] Speaker ?:
So one way in which, and we were now into the original source exception, one way in which the original source exception

[00:31:07] Speaker 01:
independent of the public disclosure itself.

[00:31:10] Speaker 01:
The case law in this circuit is clear.

[00:31:12] Speaker 01:
In order for that independence pronged to be met, the knowledge of the relator has to exist, the relator has to have the knowledge before the public disclosure.

[00:31:23] Speaker 01:
Devlin, Anthasar, case after case says that.

[00:31:27] Speaker 01:
Here, the relator did not have that knowledge before the public disclosure because the relator did not even exist before the public disclosure.

[00:31:43] Speaker 01:
who are in the LOC, attributable to the LOC for those purposes.

[00:31:51] Speaker 01:
Only if they gain that knowledge while they're acting in the course and scope of their employment, and we cite cases for that proposition.

[00:31:58] Speaker 01:
It's black letter California agency law.

[00:32:01] Speaker 01:
And in addition, even the restatement, which I think goes broader than

[00:32:14] Speaker 01:
this company only exists after the public disclosure.

[00:32:17] Speaker 01:
It only becomes its knowledge at that time, and that's after the public disclosure.

[00:32:41] Speaker 01:
public disclosure.

[00:32:42] Speaker 02:
This court has drawn a bright line, therefore it has to be before the public disclosure.

[00:32:53] Speaker 02:
Thank you.

[00:33:11] Speaker 02:
started this.

[00:33:13] Speaker 01:
And if he had brought this suit at an earlier time, he could have met the other problem of the original source exception, and we wouldn't even be here.

[00:33:23] Speaker 01:
But they chose to wait, and they chose to do it this way, and that means the knowledge only existed as of the time of formation.

[00:33:30] Speaker 01:
And because the knowledge only existed as of the time of formation, it couldn't have existed before the public disclosure.

[00:34:25] Speaker 00:
seen the same thing.

[00:34:26] Speaker 00:
The complaint alleges that Express Scripts senior management decided to obfuscate and not to divulge the existence of this algorithm and how they were over refilling scripts.

[00:34:42] Speaker 00:
We certainly agree with Your Honor's observations about waste being fundamentally different from fraud.

[00:34:47] Speaker 00:
There's waste

[00:34:59] Speaker 00:
investigations going at every level of government way too much to make any sense.

[00:35:08] Speaker 00:
That's right.

[00:35:09] Speaker 00:
That was one once as well.

[00:35:11] Speaker 00:
I did want to ask the issue of the knowledge point that he, your client, closed with.

[00:35:19] Speaker 00:
Yes.

[00:35:20] Speaker 00:
And I also want to address, Your Honor, a very interesting point about individual and person before I leave.

[00:35:27] Speaker 00:
With respect to

[00:35:34] Speaker 00:
the corporate law actually provides at one of the restatement sections that the corporation is vested with the knowledge of its employees that are within the scope of its employment, even if that knowledge was acquired before those employees became associated with the corporation.

[00:35:51] Speaker 00:
So within the scope of

[00:36:25] Speaker 00:
court's attention by express scripts.

[00:36:28] Speaker 00:
I don't know whether it's a waiver or not, but we'll address it.

[00:36:32] Speaker 00:
The lead-in to the paragraph defining original source states that the court shall dismiss an action unless opposed by the government if substantially the same allegations or transactions as alleged were publicly disclosed unless the action is brought by the Attorney General

[00:36:57] Speaker 00:
original source separately and uses the word individual at that point and we don't know if that's

[00:37:27] Speaker 00:
It could be that it means within the context of a corporate, obviously an individual has knowledge.

[00:37:34] Speaker 00:
Even a corporation's knowledge is derived from its individuals.

[00:37:37] Speaker 00:
So to the extent that there's a corporation

[00:37:59] Speaker 01:
Ninth Circuit?

[00:38:01] Speaker 01:
Yes.

[00:38:01] Speaker 01:
I don't know off the top of my head.