Despite (or perhaps because of) this, the Ninth Circuit’s opinion is non-controversial; it does not approach the underlying ideological disputes, and its substantive ruling is not surprising. At issue in Gonzalez was whether Planned Parenthood should bill California’s Medicaid program (“Medi-Cal”) its “usual and customary rate” (Planned Parenthood’s position) or “at cost” (the relator’s position). The relator argued that Planned Parenthood submitted false claims because it did not submit claims “at cost.” The State of California, however, through its Department of Health Care Services, had sent a letter to Planned Parenthood admitting that the phrase “at cost” was ambiguous and undefined. Planned Parenthood, in turn, had explicitly informed California how it was billing – not “at cost” – and California had not protested. Accordingly, the Ninth Circuit ruled that Planned Parenthood lacked the requisite scienter, or knowledge of wrongdoing. As summarized by the Ninth Circuit:

[Relator’s] assertion that Planned Parenthood knowingly submitted false claims for reimbursement is compellingly contradicted by a series of letters he attached to his complaint. In the first exchange of letters, from 1997 to 1998, the CDHS expressed concern over Planned Parenthood’s billing practices, but remained silent when Planned Parenthood explicitly described its billing practices and rational. . . .  the State acknowledged in a letter to Planned Parenthood 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.”

[. . .]

[E]ven if bills sent by Planned Parenthood were false in portraying its costs, one cannot plausibly conclude that there was knowing falsity on the part of Planned Parenthood given the explicit statements addressing this subject made by the State of California through CDHS and the State’s silence after being told what procedures Planned Parenthood was following.

Gonzalez, 759 F.3d 1115-16 (emphasis added).

Gonzalez thus confirmed the unremarkable proposition that there is no knowing submission of false claims where: (1) the Defendant had explicitly informed the State how it was billing and received no objection; and (2) the State directly acknowledged that the requirement at issue was vague and undefined. 

Additionally, in a very brief discussion, the Ninth Circuit also affirmed the district court’s dismissal on statute of limitations grounds. Notably, the Ninth Circuit applied the pre-2012 amendment version of the CFCA’s statute of limitations, which was broader than the current version. The prior version required filing within “three years after the date of discovery by the official of the state or political division charged with responsibility to act in the circumstances.” Cal. Gov't Code § 12654(a). The current version clarifies that the statute of limitations does not start running until the Attorney General’s office (or local prosecuting authority) has knowledge of the facts. See id. (“more than three years after the date when facts material to the right of action are known or reasonably should have been known by the Attorney General or prosecuting authority with jurisdiction to act under this article”). Thus, knowledge by any agency or state employee does not start the clock running.