759 F.3d 1112 (9th Cir. 2014), 12-56352, Gonzalez v. Planned Parenthood of Los Angeles

Docket Nº:12-56352
Citation:759 F.3d 1112
Opinion Judge:GOULD, Circuit Judge:
Party Name:P. VICTOR GONZALEZ, Qui Tam Plaintiff, on behalf of the United States and State of California, Plaintiff-Appellant, v. PLANNED PARENTHOOD OF LOS ANGELES; PLANNED PARENTHOOD SHASTA-DIABLO, AKA Seal B; PLANNED PARENTHOOD GOLDEN GATE; PLANNED PARENTHOOD MAR MONTE, AKA Seal D; PLANNED PARENTHOOD RIVERSIDE AND SAN DIEGO COUNTIES, INC., AKA Seal E; PLANN
Attorney:Walter M. Weber (argued), Jay Alan Sekulow, Stuart J. Roth & Tiffany N. Barrans, American Center for Law & Justice, Washington, D.C.; Jack M. Schuler & Sam D. Ekizian, Schuler, Brown & Ekizian, Van Nuys, California; Edward L. White III, American Center for Law & Justice, Ann Arbor, Michigan, for ...
Judge Panel:Before: Ronald M. Gould and N. Randy Smith, Circuit Judges, and Morrison C. England, Jr., Chief District Judge.[*] Opinion by Judge Gould.
Case Date:July 22, 2014
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1112

759 F.3d 1112 (9th Cir. 2014)

P. VICTOR GONZALEZ, Qui Tam Plaintiff, on behalf of the United States and State of California, Plaintiff-Appellant,

v.

PLANNED PARENTHOOD OF LOS ANGELES; PLANNED PARENTHOOD SHASTA-DIABLO, AKA Seal B; PLANNED PARENTHOOD GOLDEN GATE; PLANNED PARENTHOOD MAR MONTE, AKA Seal D; PLANNED PARENTHOOD RIVERSIDE AND SAN DIEGO COUNTIES, INC., AKA Seal E; PLANNED PARENTHOOD ORANGE AND SAN BERNARDINO COUNTIES, INC., AKA Seal F; PLANNED PARENTHOOD PASADENA AND SAN GABRIEL VALLEY, INC., AKA Seal G; PLANNED PARENTHOOD SANTA BARBARA, VENTURA AND SAN LUIS OBISPO COUNTIES, INC., AKA Seal H; PLANNED PARENTHOOD SIX RIVERS, AKA Seal I; PLANNED PARENTHOOD AFFILIATES OF CALIFORNIA, AKA Seal J; MARY JANE WAGLE, AKA Seal K; MARTHA SWILLER, AKA Seal L; KATHY KNEER, AKA Seal M, Defendants-Appellees

No. 12-56352

United States Court of Appeals, Ninth Circuit

July 22, 2014

Argued and Submitted, Pasadena, California: June 5, 2014.

Appeal from the United States District Court for the Central District of California. D.C. No. 2:05-cv-08818-AHM-FMO. A. Howard Matz, District Judge, Presiding.

AFFIRMED.

False Claims Act

The panel affirmed the district court's dismissal of a complaint alleging that, in violation of the False Claims Act and the California False Claims Act, Planned Parenthood of Los Angeles knowingly and falsely overbilled state and federal governments for contraceptives supplied to low-income individuals.

The district court dismissed the FCA claims for failure sufficiently to plead falsity under Federal Rule of Civil Procedure 9(b). The panel affirmed on the alternate ground that the plaintiff's third amended complaint did not state a plausible claim that Planned Parenthood knowingly made false claims, with the statutory scienter, as required by Fed.R.Civ.P. 8(a). The panel concluded that the plaintiff's assertion that Planned Parenthood knowingly submitted false claims for reimbursement was compellingly contradicted by a series of letters he attached to the complaint. The panel held that the district court did not abuse its discretion in denying the plaintiff further leave to amend his complaint.

The panel held that the state law claims were barred by the three-year statute of limitations.

Walter M. Weber (argued), Jay Alan Sekulow, Stuart J. Roth & Tiffany N. Barrans, American Center for Law & Justice, Washington, D.C.; Jack M. Schuler & Sam D. Ekizian, Schuler, Brown & Ekizian, Van Nuys, California; Edward L. White III, American Center for Law & Justice, Ann Arbor, Michigan, for Plaintiff-Appellant.

Matthew Donald Umhofer (argued) & Amy M. Hinkley, Spertus, Landes & Umhofer LLP, Los Angeles, California, for Defendants-Appellees.

Before: Ronald M. Gould and N. Randy Smith, Circuit Judges, and Morrison C. England, Jr., Chief District Judge.[*] Opinion by Judge Gould.

OPINION

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GOULD, Circuit Judge:

P. Victor Gonzalez, a former Chief Financial Officer of Planned Parenthood of Los Angeles, appeals from the dismissal of his qui tam action against Planned Parenthood, et al., (" Planned Parenthood" ) asserting claims under the False Claims Act (" FCA" ) and the California False Claims Act (" CFCA" ). Gonzalez alleges that Planned Parenthood knowingly and falsely overbilled state and federal governments for contraceptives supplied to low-income individuals. The district court dismissed Gonzalez's claims under the FCA in his third amended complaint for a failure to sufficiently plead falsity and concluded that his state law claims were time-barred by the statute of limitations. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

I

Planned Parenthood is a participant in the Family Planning, Access, Care and Treatment program (" Family PACT" ), which reimburses Planned Parenthood for contraceptives that Planned Parenthood gives to low-income individuals. Family PACT is a program within California's Medicaid program (" Medi-Cal" ) providing family planning drugs and services to individuals under the poverty line. Family PACT has been jointly funded by the federal and state governments since 1999. Before then it was entirely funded by the State of California.

To participate in Family PACT, each California branch of Planned Parenthood signed a Provider Agreement, in which they agreed to " comply with all federal laws and regulations governing and regulating providers." The Provider Agreement also binds participants to " comply with all of the billing and claims requirements set forth in the Welfare and Institutions Code." The term " at cost" for billing is found only in the Family PACT billing manual, not in the Welfare and Institutions Code.

Because Planned Parenthood has agreements in place with manufacturers, it buys contraceptives at a discounted rate. From 1997 to 2004, when Planned Parenthood billed Family PACT and Medi-Cal for contraceptives given to low-income individuals, it quoted its " usual and customary rates" for reimbursement rather than its acquisition costs. The " usual and customary rates" represented what Planned Parenthood

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would charge an average patient for contraceptives, a price lower than the market cost to an individual, but higher than Planned Parenthood's acquisition cost for those contraceptives.

On May 5, 1997, the California Department of Healthcare Services (" CDHS" ) began exchanging letters with Planned Parenthood's executive director and later president, Kathy Kneer, telling her that claims made to Family PACT and Medi-Cal should be made " at cost." This letter exchange continued, and Kneer sent a letter dated January 14, 1998, responding to CDHS by stating that Planned Parenthood " clinics are billing" at the " usual and customary rate," not at acquisition costs. There was no response from CDHS after that letter, no advice to the contrary or objection. Planned Parenthood kept billing at its " usual and customary rates" until 2004, when CDHS conducted an audit of Planned Parenthood and found that Planned Parenthood had not complied with the billing practices outlined in the Family PACT manual. According to the audit, Planned Parenthood's noncompliance with the billing manual resulted in overcharges of $5,213,645.92 during the audit period. On November 19, 2004, the same day as the audit's release, CDHS sent a letter to Planned Parenthood stating that " no specific definition of 'at cost' is contained in [the billing manual]" and that " [i]n researching [the at cost] issue DHS has became [sic] concerned that, with regard to the definition of 'at cost,' conflicting, unclear, or ambiguous misrepresentations have been made to providers." For these reasons, CDHS did not seek reimbursement from Planned Parenthood.

Gonzalez was hired on December 9, 2002 as the CFO of Planned Parenthood of Los Angeles. He participated in early stages of the audit, but was fired on March 9, 2004. Id. On November 18, 2005, almost a year after the audit concluded, Gonzalez urged the United States Attorney General to address the " fraudulent billing" practices of Planned Parenthood. Gonzalez filed a qui tam suit under the FCA and CFCA on...

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