A-1 Ambulance v, State of California, A-1

• Decision Date: 07 February 2000
• Docket Number: A-1,No. 98-15200,98-15200
• Citation: 202 F.3d 1238
• Parties: (9th Cir. 2000) AMBULANCE SERVICE, INC., a corporation, aka Seal 1; DENNIS B. BARRETT, an individual, Plaintiffs-Appellants, v. STATE OF CALIFORNIA, a political subdivision, aka Seal A; DANIEL SMILEY, Deputy Director, California State Emergency Medical Services Authority; THE COUNTY OF FRESNO; K W P H ENTERPRISES, dba American Medical Services; SAM KARAS; OPINION TOM PERKINS; BRIAN SINNOTT, Defendants, and COUNTY OF SAN MATEO; MEDTRANS, dba Hartson Medical Services, dba Baystar; COUNTY OF MONTEREY, a political subdivision; PENINSULA PARAMEDIC SERVICES, INC., a corporation, Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1238

202 F.3d 1238 (9th Cir. 2000)

A-1 AMBULANCE SERVICE, INC., a corporation, aka Seal 1; DENNIS B. BARRETT, an individual, Plaintiffs-Appellants, v. STATE OF CALIFORNIA, a political subdivision, aka Seal A; DANIEL SMILEY, Deputy Director, California State Emergency Medical Services Authority; THE COUNTY OF FRESNO; K W P H ENTERPRISES, dba American Medical Services; SAM KARAS; OPINION TOM PERKINS; BRIAN SINNOTT, Defendants, and COUNTY OF SAN MATEO; MEDTRANS, dba Hartson Medical Services, dba Baystar; COUNTY OF MONTEREY, a political subdivision; PENINSULA PARAMEDIC SERVICES, INC., a corporation, Defendants-Appellees.

No. 98-15200

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted August 5, 1999

Decided February 7, 2000

[Copyrighted Material Omitted] COUNSEL: Mark D. Polston, Washington, D.C., and Eugene Dong, Palo Alto, California, Attorneys for A-1 Ambulance Services, Inc. and Dennis B. Barrett.

Douglas C. Holland and William K. Rentz, Deputy County Counsel, Salinas, California, Attorneys for County of Monterey.

Brenda Carlson, Deputy County Counsel, Redwood City, California, Attorneys for County of San Mateo.

R. Michael Scarano, Jr., Michael G. McCarty, and Diane M. Racicot, Foley & Lardner, Los Angeles, California, Attorneys for Med-Trans, Hartson Medical Services, BayStar Medical Services and Peninsula Paramedic Services, Inc.

Diana Younts, United States Department of Justice, Washington, D.C., Attorney for the United States.

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CV-96-20048-JW

Before: Alex Kozinski and Sidney R. Thomas, Circuit Judges, and Johnnie B. Rawlinson, ¹ District Judge.

THOMAS, Circuit Judge:

A-1 Ambulance Service, Inc. ("A-1") appeals the district court's dismissal of its qui tam action against the County of San Mateo, the County of Monterey, and two private ambulance companies for alleged violations of the False Claims Act, 31 U.S.C. SS 3729-3733. The district court dismissed A-1's action for lack of subject matter jurisdiction under the "public disclosure bar" of 31 U.S.C. S 3730(e)(4)(A) because A-1's action was based upon information publicly disclosed in local government administrative hearings. We have jurisdiction under 28 U.S.C. S 1291, and we affirm.

I

A-1 was an unsuccessful bidder for public contracts to provide exclusive ambulance services within certain California counties, including San Mateo and Monterey Counties (the "Counties"). Med-Trans and Peninsula Paramedic Services, Inc. ("Pen-Med") are the two private ambulance service providers that were awarded those exclusive contracts in San Mateo and Monterey Counties respectively. In its qui tam action, A-1 essentially alleges that the Counties, together with Med-Trans and Pen-Med, conspired to shift some of the costs of emergency ambulance services from the Counties to Medicare in violation of the anti-kickback provisions of the Medicare Act, 42 U.S.C. S 1320a-7b(b). To fully understand A-1's claim, however, some background information is required.

In California, pre-hospital emergency medical services ("EMS"), such as ambulance and paramedic services, are regulated by the Emergency Medical Services System and Prehospital Emergency Medical Care Personnel Act ("EMS Act"). See Cal. Health & Safety CodeSS 1797-1799.201 (West 1990 & Supp. 1999). Under the EMS Act, individual counties are authorized to designate local EMS agencies to administer emergency medical services programs within their respective jurisdictions. The EMS agencies are required to develop and administer a plan for providing emergency medical services to all of its county's residents, including ambulance services for the indigent population. Both Counties in this case designated their respective health departments as their local EMS agencies.

Pursuant to the EMS Act, each EMS agency may create one or more exclusive operating areas within its county for the delivery of emergency ambulance services. See id. SS 1797.85, 1797.224. The exclusive operating area contracts are awarded through a competitive bidding process in which the EMS agencies solicit bids from prospective ambulance service providers. The invitation for bids is commonly referred to as a Request for Proposal ("RFP"). The selection process requires several rounds of public administrative hearings, beginning with the dissemination of an RFP for public review and comment, and concluding with the actual selection of an EMS provider by each county's governing body, the Board of Supervisors. As they were legally required to do, both Counties utilized this competitive bidding process to select their respective EMS providers.

A

Beginning in 1994, Monterey County initiated efforts to redesign its EMS program. Between September and December of that year, Monterey County's four Regional Councils, which were advisory committees to Monterey County's EMS agency, conducted several public meetings to discuss draft RFPs. The Monterey County Board of Supervisors then considered these RFPs on December 6, 1994, at a public meeting attended by, among others, A-1. After holding additional hearings and receiving public comment, the Board approved a final RFP in March of 1995.

The final RFP, which became part of the official public record, provided for a single countywide exclusive operating area and described the primary terms and conditions of the ambulance service contract to be awarded, including the types and amounts of charges permitted to Medicare and other third-party payors. The final RFP also requested that bidders propose the amount of subsidy they believed they would require to cover the costs of non-chargeable or uncollectible ambulance services. After publicly noticing and circulating the final RFP, Monterey County held a bidders conference on April 19, 1995. At the public conference, potential bidders raised the issue of Medicare reimbursement and whether it would be sufficient at the maximum allowable rates specified in Monterey County's RFP. After the conference, three EMS providers, including A-1 and Pen-Med, responded to Monterey County's RFP.

Thereafter, a bid review committee recommended the selection of Pen-Med as Monterey County's EMS provider. The Board accepted the recommendation and ratified the contract with Pen-Med in two separate public hearings held in September of 1995. At both those hearings, the Board discussed the issues of Medicare reimbursement and a subsidy for uncollectible ambulance services. Ultimately, Monterey County agreed to provide a $450,000 subsidy to Pen-Med to help defray the costs of non-chargeable and uncollectible ambulance services.

B

San Mateo County began searching for a new EMS provider in 1990. In March of that year, the director of San Mateo County's EMS agency sent a proposed draft RFP to the Board of Supervisors. The proposed RFP stated that ambulance services would be supported by user fees only, without any county subsidy. It also set the maximum rates that the selected EMS provider would be permitted to bill Medicare and other third-party payors. The Board convened a public hearing on March 27, 1990, to consider the draft RFP. It approved the RFP, which became part of the official public record, and released it to the public for review and comment.

On May 9, 1990, San Mateo County conducted a public bidders conference. At the conference, San Mateo County representatives were asked whether San Mateo County would reimburse the costs of ambulance services for indigent patients. The San Mateo County officials indicated that there would be no reimbursement. On July 3, 1990, three ambulance companies submitted proposals to the RFP. The proposals were evaluated by a review committee and then discussed at three separate public Board meetings. The Board ultimately selected Med-Trans as its EMS provider, and the contract with Med-Trans was made part of the public record. Like the RFP, the contract stated that San Mateo County was providing no subsidy for any of the ambulance services rendered by Med-Trans.

C

A-1 alleges that the Counties' ambulance service contracts perpetrate a fraud upon the federal government in violation of the False Claims Act. In a nutshell, A-1 contends that the costs of providing ambulance services to county-responsible indigents are unlawfully shifted from the Counties to private and third-party payors, including the federal Medicare program. Such unlawful cost-shifting occurs, A-1 argues, because the Counties' ambulance service contracts offer little or no subsidy to cover the costs of ambulance services for their indigent populations. According to A-1, therefore, MedTrans and Pen-Med are forced to charge artificially inflated rates to Medicare-covered patients in order to offset the losses incurred when rendering ambulance services to indigent patients. As a result, A-1 claims that the Counties' ambulance service contracts effectively compel the federal government, in violation of the Medicare Act, to subsidize ambulance services at "exorbitant" rates for indigent patients who are otherwise ineligible for Medicare benefits.

The district court concluded that the False Claims Act's public disclosure bar deprived it of jurisdiction, and granted the Counties' motion to dismiss. We review that decision de novo. See United States ex rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516, 520 (9th Cir. 1999). We review the district court's findings of fact relevant to its determination of subject matter jurisdiction for clear error. See United States ex rel. Biddle v. Board of Trustees of Leland Stanford, Jr. Univ., 161 F.3d 533, 535 (9th Cir. 1998), cert. denied , 119 S. Ct. 1457 (1999). The question of whether a particular disclosure triggers the jurisdictional bar of S 3730(e)(4)(A) is a mixed question of law and fact, which we review de novo. See United States ex rel. Lindenthal v. General...