[00:00:00] Speaker 02:
Good morning and welcome to the Ninth Circuit.

[00:00:03] Speaker 02:
I just want to say I want to really appreciate the two people I'm sitting with today, judges Schroeder and Tallman.

[00:00:08] Speaker 02:
Both of them

[00:00:10] Speaker 02:
are working for free.

[00:00:11] Speaker 02:
So I appreciate that your continued support of our court.

[00:00:15] Speaker 02:
Our court would be in big, big trouble if we didn't have folks like these two stepping up and hearing cases.

[00:00:20] Speaker 02:
So with that, we have four cases for argument today.

[00:00:23] Speaker 02:
Before we begin with the first case, just something I always say, in the Ninth Circuit, there is no extra credit or bonus points for using all of your argument time.

[00:00:33] Speaker 02:
So if you've made your points and you're not getting any questions from us, it's OK to sit down.

[00:00:40] Speaker 02:
And with that, we'll call the first matter, Childs.

[00:00:45] Speaker 03:
Thank you, Your Honor.

[00:00:46] Speaker 03:
Kevin Lafkey.

[00:00:47] Speaker 03:
May it please the court on behalf of Plaintiff Martin Childs.

[00:00:51] Speaker 05:
Can you move the mic just a little bit?

[00:00:53] Speaker 05:
There you go.

[00:00:55] Speaker 03:
The clerk says this is a stationary antique.

[00:00:57] Speaker 03:
I was thinking, me too.

[00:01:00] Speaker 03:
But in any event, I did want to start out by bringing the court's attention to a relatively new case from the US Supreme Court that I think impacts our case here today.

[00:01:11] Speaker 03:
And that's Wisconsin Bell versus US X-Rail Heath.

[00:01:16] Speaker 03:
that's a case that the u.s.

[00:01:17] Speaker 03:
supreme court unanimously decided in february of this year and with the court's permission i'd file a memorandum of supplemental authorities uh... regarding their first twenty eighty would be great i appreciate it

[00:01:32] Speaker 03:
What Wisconsin Bell says and how I think it shows that the district court here too narrowly construed the definition of a claim and the reach of the False Claims Act is that, again, the allegations in this case are that Medicaid funds were used improperly, as you know, and were taken for purposes not consistent with Medicaid.

[00:02:02] Speaker 04:
But where's the claim?

[00:02:03] Speaker 04:
That's the problem I'm having with the case.

[00:02:06] Speaker 03:
And that's the problem, Judge, that the district court had.

[00:02:08] Speaker 03:
But I think in thinking about this case like the traditional FCA case, you know, I give you a bill and you pay it.

[00:02:17] Speaker 03:
The FCA is much broader than that.

[00:02:20] Speaker 03:
And so when the district court said, gosh, there's no claim here,

[00:02:24] Speaker 03:
They respectfully, I think, missed.

[00:02:29] Speaker 04:
When we decided Kitsap Physicians Service, we were pretty clear that it has to be a claim for the payment of monies by the United States.

[00:02:38] Speaker 03:
And I think in that case's context, that was correct, Judge.

[00:02:41] Speaker 03:
But if you look at this court's jurisprudence in Winter and Goedecky, this court's taken a much broader perspective on what constitutes a claim.

[00:03:24] Speaker 03:
I want to make it clear Judge that I think there's two pieces to that and so the LM-2 comes under 3729A1B where it talks about a false claim knowingly make use or cause to be made a false record or statement and so that's just that's much broader than just a bill that's much broader

[00:03:50] Speaker 03:
So the LM-2 is a false statement.

[00:03:54] Speaker 03:
And it comes right under that statute.

[00:03:56] Speaker 03:
A statement is not a claim.

[00:03:59] Speaker 03:
No, it's not.

[00:04:00] Speaker 03:
But as the statute defines claims, the term claim can be presented.

[00:04:08] Speaker 03:
Again, that's the first definition.

[00:04:10] Speaker 03:
Always with the FCA, the traditional is the first thing.

[00:04:14] Speaker 03:
But then the second is made to a contractor, grantee, or other recipient.

[00:04:19] Speaker 03:
if the money or property is to be spent or used on the government's behalf or to advance a government program or interest.

[00:04:29] Speaker 03:
That's very broad.

[00:04:30] Speaker 03:
And that encompasses the Medicaid diversion.

[00:04:34] Speaker 05:
But it implies that it has to go to the government.

[00:04:38] Speaker 05:
There's a communication to the government.

[00:04:40] Speaker 05:
Could you explain this?

[00:04:41] Speaker 05:
It's a mystery to me, in both your brief and the adversary's brief, as to how the money gets into the trust fund.

[00:04:50] Speaker 03:
Yeah, so as alleged, and again, I'd sideways say this is why we should have been allowed to amend, but again... But you never said you'd explain how the money got into the trust fund.

[00:05:02] Speaker 03:
Well, I think what we said was very broad in terms of how we could clarify and delineate the allegations.

[00:05:07] Speaker 05:
Would you explain to me how your position is that the money was, your allegation is that the money from the trust fund was misspent?

[00:05:21] Speaker 05:
And so what I want to know is how did the money get into the trust fund in the first place?

[00:05:25] Speaker 03:
the government pays the money into the trust fund.

[00:05:29] Speaker 03:
These are Medicaid funds that are designated to be used by the trust for purposes authorized by the government.

[00:05:38] Speaker 05:
And who tells the government that they should pay money into the trust?

[00:05:44] Speaker 03:
The trust.

[00:05:45] Speaker 03:
And so the trust is being run by the unions and they're getting this money from the government to

[00:05:53] Speaker 03:
supposedly be used for Medicaid related purposes related to these home health care workers and other union members and so again using it to buy a building is not one of those purposes.

[00:06:07] Speaker 05:
Well I understand that but how does the government know how much money to pay into the trust?

[00:06:13] Speaker 03:
By virtue of the the claims and disbursements that are made by the trust and so here like with

[00:06:23] Speaker 03:
Wisconsin Bell it's other entities that are moving the money and then in block or on a claim-by-claim basis

[00:06:36] Speaker 03:
Both.

[00:06:37] Speaker 03:
Both.

[00:06:37] Speaker 04:
So Medicare or Medicaid writes a check for a million dollars payable to the trust, anticipating that it will be used solely for the payment of benefits to the trust beneficiaries?

[00:06:50] Speaker 04:
Is that your theory?

[00:06:51] Speaker 03:
Correct.

[00:06:51] Speaker 04:
Correct.

[00:06:52] Speaker 04:
And it's not proper to spend any of that money on administrative expenses to actually process the claims?

[00:07:00] Speaker 03:
Yes, and it's obviously a complex scheme, but in winter, this court said, you know, when the plaintiff is an insider or whistleblower and says, this is a fraudulent scheme, then that determination or opinion, I'll call it, is entitled to what you said was, quote, a presumption of truth.

[00:07:21] Speaker 03:
And so again, this court and the US Supreme Court has said, we're going to interpret these claims very broadly.

[00:07:29] Speaker 03:
At this stage, it's in the light most favorable to the plaintiff.

[00:07:34] Speaker 03:
All inferences in the benefit of the plaintiff.

[00:07:37] Speaker 03:
And so here, motion to dismiss granted.

[00:07:39] Speaker 04:
But if the money is paid in part in a block grant before any claims are processed from individual beneficiaries,

[00:07:49] Speaker 04:
then I'm still having a causation problem between a claim and the government making a payment on the claim.

[00:07:58] Speaker 03:
And I respect your comment and understand it, but again would refer you back to the statute, which again is very broad.

[00:08:05] Speaker 03:
The Supreme Court in Wisconsin-Bell, very broad.

[00:08:09] Speaker 03:
And this court in Winter, very broad as to what constitutes a claim.

[00:08:13] Speaker 04:
It's almost a causation problem with your theory of the False Claim Act violation.

[00:08:19] Speaker 04:
You need to show a link between a fraudulent representation and the payment of the money.

[00:08:25] Speaker 03:
If the money is going to what the statute calls other recipient, then it still can be the basis of a false claim and a fraudulent scheme, which is actionable under the FCA.

[00:08:38] Speaker 03:
So again, I think where the district court missed it here, respectfully, is that in its opinion, I think it's at ER 10, it really constrained the definition of a claim.

[00:08:51] Speaker 04:
Do you have any other authority to support this theory?

[00:08:56] Speaker 03:
I sure hope so, Judge.

[00:08:57] Speaker 04:
I mean, I feel like- Well, you're looking at us in the hope that we're going to give you the answer that you're looking for, but what do I look at in terms of precedent?

[00:09:06] Speaker 03:
Again, I would look at Wisconsin Bell.

[00:09:08] Speaker 03:
I would look at this court's opinions in Winter and GoDecky.

[00:09:12] Speaker 03:
Again, Winter with several comments about a conspiracy.

[00:09:18] Speaker 03:
which this could be, to submit false claims is actionable.

[00:09:23] Speaker 03:
Aid in the submission of false claims is actionable.

[00:09:27] Speaker 04:
But in all those cases, there are actual claims.

[00:09:30] Speaker 04:
And then that makes perfect sense to me that you could have both a substantive false claim and a conspiracy to commit the filing of false claims.

[00:09:38] Speaker 04:
I think you may have a conspiracy, but where's the claim?

[00:09:44] Speaker 03:
I think in Wisconsin Bell the Supreme Court answered that because there the plaintiff alleged that the internet phone company essentially benefited from a fraudulent scheme.

[00:09:58] Speaker 03:
The money came from, you know, this

[00:10:02] Speaker 03:
E-rate program for school districts to subsidize internet coverage and then it went into another nonprofit private entity and ultimately Bell benefited in an indirect way.

[00:10:19] Speaker 03:
And so again, I think this court and the Supreme Court has said that these

[00:10:26] Speaker 03:
schemes, this claim is intended to reach all kinds of fraud, and that's what we've alleged here in the light most favorable to the plaintiff.

[00:10:35] Speaker 04:
The genesis of the False Claims Act, as I recall, is in the Civil War.

[00:10:40] Speaker 04:
Is it not as a result of ripping off the Union Army and the acquisition of war material?

[00:10:47] Speaker 03:
It was, and it's since been amended, and it's been broadened significantly consistent with recent jurisprudence from this court.

[00:10:56] Speaker 03:
I think Congress amended even in 09, and so there's been a broadening of this.

[00:11:02] Speaker 05:
I'm still not being clear, I guess.

[00:11:05] Speaker 05:
Did the union submit a bill to the government and say, you pay this into this trust?

[00:11:13] Speaker 03:
The trust submitted, I don't know if I'd call it a bill, but it submitted requests for funding and it was funded from the government from Medicaid funds.

[00:11:27] Speaker 04:
So, you know, again... Is that a different form than the LM-2?

[00:11:32] Speaker 03:
Yeah, I think that's different.

[00:11:34] Speaker 03:
I think it is different.

[00:11:35] Speaker 05:
I think this... Well, why didn't you allege that then?

[00:11:39] Speaker 03:
Perhaps we should have.

[00:11:40] Speaker 03:
Perhaps we should have been allowed to amend.

[00:11:44] Speaker 03:
But Judge, in the light most favorable to plaintiff, I think we've made it here.

[00:11:48] Speaker 03:
In a worst case scenario, it asks the court to remand to allow us to amend.

[00:11:52] Speaker 03:
To amend and say what?

[00:11:55] Speaker 03:
If I may?

[00:11:56] Speaker 03:
Yeah, sure.

[00:11:57] Speaker 03:
So thank you.

[00:11:59] Speaker 03:
To amend, to talk about the things we've been talking about here, I don't think it's necessary to say, for example, I think our allegations are sufficient.

[00:12:09] Speaker 03:
And I don't think it's necessary to have to say the trust got Medicaid funding by asking for it.

[00:12:17] Speaker 03:
I don't think we said that.

[00:12:18] Speaker 03:
Instead, we said the trust got Medicaid funding.

[00:12:21] Speaker 04:
OK, but asking for it in what form?

[00:12:24] Speaker 04:
I mean, you're alleging fraud here.

[00:12:26] Speaker 04:
So under 9b, you have to be fairly particular as to who, what, when, where, why, and how.

[00:12:32] Speaker 03:
There is that language, Judge, I acknowledge.

[00:12:35] Speaker 03:
But again, at the same time, that runs up against the broad nature of a claim and what that means.

[00:12:41] Speaker 03:
And so we've alleged significant facts related to this fraudulent scheme that plaintiff

[00:12:49] Speaker 03:
allowing for the presumption of truth is entitled to alleged misappropriation.

[00:12:55] Speaker 03:
Yeah.

[00:12:58] Speaker 03:
And that, given the fact that it's government money, is sufficient.

[00:13:06] Speaker 02:
All right, unless there are any further questions.

[00:13:08] Speaker 02:
I'm going to give you a minute for rebuttal, OK?

[00:13:10] Speaker 02:
Thank you, Judge.

[00:13:11] Speaker 02:
You got it.

[00:13:11] Speaker 02:
All right, so counsel, as you approach, I see we have split time six and four.

[00:13:16] Speaker 02:
So what I do in this situation is you have what I call a hard six, meaning that you don't need to worry about your four.

[00:13:23] Speaker 02:
You're up next, OK?

[00:13:25] Speaker 02:
All right, so you don't have to be panicking like, oh my god, he's eating my time, he's eating my time, he's eating my time.

[00:13:32] Speaker 02:
Your time is safe.

[00:13:35] Speaker 02:
All right, you may proceed.

[00:13:39] Speaker 01:
Good morning, Your Honors, and may it please the Court, Max Carter-Oberstone for Defendant SCIU International.

[00:13:45] Speaker 01:
I want to start my argument by addressing head-on two of the points that my friend on the other side made.

[00:13:52] Speaker 01:
So the first is the issue of whether a claim for payment was submitted in this case as required by the False Claims Act.

[00:13:58] Speaker 01:
And my friend cited three authorities for that proposition winter good decky and a new Supreme Court case, Wisconsin Bell, so under rule 9b Plaintiff has to allege the who what where when of whether claim was submitted that means when was it submitted?

[00:14:16] Speaker 01:
What did the claim say?

[00:14:17] Speaker 01:
Why was it false who received it the complaint in this case is bereft of those details?

[00:14:23] Speaker 01:
winter is is no provides no support

[00:14:27] Speaker 01:
uh... to the plaintiff in this case.

[00:14:28] Speaker 01:
In winter there were sixty-five examples of actual claims submitted described in great detail in the complaint.

[00:14:35] Speaker 01:
In Gideki there were fifteen examples of specific claims that were submitted in the case.

[00:14:41] Speaker 01:
Wisconsin Bell is a United States Supreme Court case decided in February of this year and my friend is raising it for the first time in argument.

[00:14:49] Speaker 01:
But that case also does not alter

[00:14:51] Speaker 01:
the standard for determining whether a claim was submitted.

[00:14:54] Speaker 01:
That case addresses an entirely different issue that is not presented here.

[00:14:59] Speaker 01:
In that case, the issue was whether a public-private entity

[00:15:05] Speaker 01:
that disbursed funds, where it was at least disputed whether those funds were in fact federal funds or not, could constitute a claim.

[00:15:14] Speaker 01:
And the Supreme Court had held that the funds were indeed federal funds.

[00:15:18] Speaker 01:
And so a claim could be submitted to this public private entity.

[00:15:22] Speaker 01:
But we don't have anything like that here.

[00:15:24] Speaker 05:
But would you explain to us how the money gets into the trust?

[00:15:28] Speaker 05:
Who tells the government to pay money?

[00:15:32] Speaker 01:
your i think that that's a great question that is not answered by the allegations in the complaints correct but i'm asking you do you know i do not know because i i i could only say what well

[00:15:44] Speaker 01:
what the plaintiff has alleged in this case.

[00:15:47] Speaker 01:
And I think the most charitable reading of what the plaintiff has alleged is that the funds were used in a way that is inconsistent with a declaration of trust.

[00:15:56] Speaker 01:
But that is an entirely separate legal question of whether they are consistent with the terms of the Medicaid program.

[00:16:02] Speaker 01:
And there are simply no allegations explaining what federal law, regulation, or contractual provision relating to the Medicaid program was violated here.

[00:16:14] Speaker 04:
So you're saying he might have a theory under breach of fiduciary duty, but he doesn't have a false claim?

[00:16:24] Speaker 01:
That's generally correct, Your Honor.

[00:16:26] Speaker 01:
I think at most, he's gestured towards a claim of breach of fiduciary duty.

[00:16:31] Speaker 01:
But even there, the details are quite scant.

[00:16:34] Speaker 01:
He just says that the money was not used for the benefit of the union members, but then cites the LM2 and points to the way certain monies were dispersed that, at least on their face, seem entirely consistent with benefiting union members.

[00:16:49] Speaker 05:
Counsel, I'm asking a real world question, not what was going back and forth in the district court.

[00:16:54] Speaker 05:
How does the money get into this trust?

[00:16:57] Speaker 01:
Your Honor, I do not know.

[00:16:58] Speaker 05:
You represent who?

[00:17:01] Speaker 01:
SCIU International.

[00:17:02] Speaker 05:
The International?

[00:17:03] Speaker 01:
Yes.

[00:17:03] Speaker 05:
So you don't actually operate this?

[00:17:06] Speaker 05:
This is done by the local?

[00:17:09] Speaker 05:
Is that what's going on?

[00:17:11] Speaker 01:
The trust is an entirely distinct entity, so it is not run by the local.

[00:17:18] Speaker 01:
Well, who set it up?

[00:17:20] Speaker 01:
The trust is a joint partnership between the state of Oregon and the local.

[00:17:27] Speaker 01:
It is a distinct entity.

[00:17:28] Speaker 01:
The trustees, as the plaintiff has alleged, there are five positions for trustees to be appointed by the state of Oregon and five positions to be appointed by the local.

[00:17:40] Speaker 01:
And the trust operates independently from either the state or the local union itself.

[00:17:45] Speaker 04:
And the trust itself was not named as a party, so there's no legal counsel representing it.

[00:17:51] Speaker 01:
That's absolutely correct, Your Honor.

[00:17:53] Speaker 04:
Nobody here can answer the question Judge Schroeder is posing.

[00:17:57] Speaker 01:
I will speak for myself and say that I cannot answer that question, and that it's plaintiff's burden to allege those facts if indeed he believes that they are relevant to approving his claim.

[00:18:07] Speaker 01:
After filing four separate complaints, he decided each time not to allege any such facts, and that's where we find ourselves today.

[00:18:15] Speaker 01:
I'd also just like to briefly note that there are no allegations in the complaint as to materiality.

[00:18:21] Speaker 01:
There are no allegations in the complaint as to science.

[00:18:25] Speaker 01:
And as to the international union, an entirely independent basis to affirm the judgment below are the lack of any particularized allegations as to vicarious liability.

[00:18:39] Speaker 01:
there's nothing in the complaint that would describe the type of principal-agent relationship that the Supreme Court has required in order to apply vicarious liability.

[00:18:50] Speaker 01:
Well, I think that that's an independent basis, certainly, in addition to the lack of allegations to support the substantive claim.

[00:18:59] Speaker 01:
In heeding Judge Owen's reminder at the beginning, if there are no further questions, I would ask this court to affirm the judgment below.

[00:19:07] Speaker 02:
Thank you counsel, so you've got some extra time now don't need to use it, but you've got some extra time 48 seconds I Promise I'm not paid by the syllable here on Good morning.

[00:19:21] Speaker 00:
May it please the court.

[00:19:22] Speaker 00:
My name is Noah Warman.

[00:19:23] Speaker 00:
I'm here on behalf of defendant SEIU local 503 Judge Trader to address your point.

[00:19:31] Speaker 00:
I similarly Do not know how the trust gets the money.

[00:19:35] Speaker 00:
I may have a better

[00:19:37] Speaker 00:
suspicion or relation and that is that as Council for the International Relay it is a trust and I want to note too there's four

[00:19:47] Speaker 00:
I'm sure you have read the documents.

[00:19:49] Speaker 00:
The committee is not a model of clarity.

[00:19:52] Speaker 00:
I'm never sure which trust we're talking about, but there are four trusts.

[00:19:56] Speaker 00:
They are between the state and the local.

[00:19:58] Speaker 00:
They are all distinct legal entities managed by and over.

[00:20:02] Speaker 00:
They report to a board of trustees composed of five management representatives from the state and five appointed by the union.

[00:20:10] Speaker 00:
So to address that, but that entity or those entities would get money through the state of Oregon.

[00:20:16] Speaker 00:
They are the receipt.

[00:20:17] Speaker 00:
Today, I heard for the first time with crystal clarity that the allegation, which was not discernible from the complaints, because they're up to four, one and three, and three amendments, that the payments are two.

[00:20:30] Speaker 00:
And the claims for payment to adjust Judge Tallman's point are made by the trusts in some way, shape, or form.

[00:20:37] Speaker 00:
I know what the trust who purchased the office building It's the union that purchased it and I think this is a critical thing to understand in looking at the complaint in the union You mean local 503 the local being 503.

[00:20:49] Speaker 00:
Yes, sir.

[00:20:50] Speaker 00:
The union being local 503 before I forget by the way by adoption I want to on behalf of the local adopt and the excellent points raised by Council for the International

[00:21:04] Speaker 00:
There is nothing impermissible inherently.

[00:21:05] Speaker 00:
It's quite lawful for a trust and a union to contract with one another to provide goods or services, for example, a call center, a mailing room, things like that.

[00:21:16] Speaker 00:
So what is cast repeatedly as something nefarious is quite lawful.

[00:21:21] Speaker 00:
And in fact, when you look under ERISA,

[00:21:23] Speaker 00:
And you see, for instance, prohibited transaction exemptions when you have a contract for goods and services at the market rate between those entities.

[00:21:31] Speaker 00:
It's perfectly fine.

[00:21:32] Speaker 00:
So in and of itself, the notion that money goes from a trust to a union or vice versa pursuant to a contract is not unlawful or suggestive.

[00:21:39] Speaker 05:
No, no.

[00:21:40] Speaker 05:
And it's OK to provide the services.

[00:21:42] Speaker 05:
The problem is with respect to buying the building and buying an asset.

[00:21:47] Speaker 05:
But are you saying that the local doesn't have any idea?

[00:21:56] Speaker 05:
How is this money supposed to be used when it comes out of the trust?

[00:22:01] Speaker 00:
or whatever the union is contracted to provide or agreed with the trust.

[00:22:04] Speaker 00:
So to follow up again on Judge Tallman's point, what we're talking about here are breach of fiduciary claims, a breach of a trust agreement, and or conceivably a breach of contract between two entities.

[00:22:17] Speaker 00:
You know, a core piece here, too, is the falsity.

[00:22:20] Speaker 00:
If the money is properly in the trust, we're done.

[00:22:22] Speaker 00:
It's no longer a Medicaid fund.

[00:22:24] Speaker 00:
So what we've never heard is that the trusts have never delivered whatever goods or services they are to be providing.

[00:22:31] Speaker 00:
So as Council for the International pointed out, there's this layer after layer here of deficiencies.

[00:22:36] Speaker 00:
I think that the judge below seized upon the crystal clear point

[00:22:40] Speaker 00:
We haven't even gotten to the step of the who, what, where, what.

[00:22:43] Speaker 00:
We don't even have a claim at this point.

[00:22:45] Speaker 00:
But it's like Jenga.

[00:22:49] Speaker 00:
You take one piece out, here, multiple pieces should be removed.

[00:22:51] Speaker 05:
Well, again, in the real world, what is your understanding as you represent the local, which had participated in the establishment of the trust?

[00:23:02] Speaker 05:
What was your understanding of what they were supposed to be doing?

[00:23:06] Speaker 00:
providing services pursuant to whatever things were supposed to be done by the trusts.

[00:23:10] Speaker 00:
For example, a call center to reach out to, I mean, these are folks who are represented by the unions, or are there some overlap here?

[00:23:17] Speaker 00:
We're not talking about a distinctly different, I see that my time is up, but a distinctly different pool of folks.

[00:23:24] Speaker 00:
So they can contract, and that call center may also have union purposes as well.

[00:23:28] Speaker 00:
So there could be like, if you will, a subcontract.

[00:23:30] Speaker 05:
Call center is to do what?

[00:23:32] Speaker 05:
to answer calls of the union members?

[00:23:35] Speaker 00:
And perhaps did you reach out?

[00:23:37] Speaker 00:
These are home health care workers who there's a very specific Oregon statute in terms of how they are represented by SEIU 503.

[00:23:44] Speaker 00:
They're dispersed throughout the state.

[00:23:46] Speaker 00:
So we're not talking, for example, large acute care hospital.

[00:23:50] Speaker 00:
We have people who literally are working in every corner of the state of Oregon.

[00:23:53] Speaker 00:
who we would be dealing with here.

[00:23:55] Speaker 04:
And you train them, right, in the training center?

[00:23:57] Speaker 00:
Yes, sir.

[00:23:59] Speaker 00:
So one of the trusts, one or two of the trusts, sorry I don't have the precise number, involve training.

[00:24:04] Speaker 00:
They receive money in order to train healthcare workers in order to make sure they're working with their

[00:24:12] Speaker 00:
I'm trying to remember the exact term.

[00:24:14] Speaker 00:
I don't know if it's a resident.

[00:24:15] Speaker 00:
People with whom they're working to make sure that they're compliant.

[00:24:18] Speaker 00:
They're patients, basically.

[00:24:19] Speaker 00:
Basically, yes, sir.

[00:24:21] Speaker 00:
That's the point of that process.

[00:24:22] Speaker 05:
And this is all under a special Oregon statutory program.

[00:24:26] Speaker 00:
all through an Oregon legislative, very comprehensive Oregon legislative scheme, which, by the way, of course, is overseen by the state of Oregon.

[00:24:34] Speaker 00:
And then with respect to the union, there was just a piece that struck me, if I may address it real quick, and that is the United States Department of Labor has a very specific division, the Office of Labor Management Standards.

[00:24:47] Speaker 00:
that absolutely make sure that union funds are being used appropriately, they are being used for lawful purposes, that that reporting is proper.

[00:24:54] Speaker 00:
So to suggest that there's no oversight is to ignore actually a very comprehensive federal regime of regulating labor expenses.

[00:25:01] Speaker 00:
The labor management.

[00:25:02] Speaker 00:
Yes.

[00:25:03] Speaker 00:
And so if there are no further questions.

[00:25:07] Speaker 03:
All right, thank you, Council.

[00:25:08] Speaker 00:
Thank you very much for your time today.

[00:25:13] Speaker 03:
Thank you.

[00:25:13] Speaker 03:
And that's why the LM-2 is important as a statement that potentially violates the FCA here because of that oversight.

[00:25:22] Speaker 04:
But what does the LM-2 look like?

[00:25:23] Speaker 04:
I mean, isn't it essentially a balance sheet that tells the Department of Labor how much money is in each of the trusts?

[00:25:29] Speaker 03:
And what money was spent on what?

[00:25:33] Speaker 04:
Importantly here and and I think the most important thing to finish what I assume those reports show them that funds were used to purchase the And set up the call center and the training center, right?

[00:25:47] Speaker 03:
The allegation is that the LM-2 misrepresented the true use of those funds.

[00:25:55] Speaker 04:
Wouldn't it be just under sort of a general administrative and overhead budget category?

[00:26:01] Speaker 03:
Again, it could be, but the allegation in this complaint is that the LM-2 submitted here misrepresented the true use of those funds.

[00:26:11] Speaker 04:
What was the representation on the LM-2 that you allege to be false?

[00:26:16] Speaker 03:
Yeah, if I remember, it was around paragraphs 15 to 20 in the third amended complaint, and it alleged, for example, that the use of the Medicaid funds to buy the building, it wasn't disclosed.

[00:26:30] Speaker 03:
So again, under the FCA, it's a crime, I'll call it, by omission, fault by omission.

[00:26:36] Speaker 03:
And if I could, just I'm over time, just the last thought.

[00:26:41] Speaker 03:
What you heard here in the last argument was essentially the union can set up a trust, and the trust can get federal government money, and then the union and the trust can agree to use it however they want.

[00:26:54] Speaker 03:
If there's an agreement between the union and the trust, we can use it for that purpose.

[00:26:58] Speaker 04:
But isn't the check the fact that the board is composed of equal numbers of labor and management representatives?

[00:27:05] Speaker 04:
And the employers certainly have.

[00:27:07] Speaker 04:
a monetary interest in seeing to it that the funds are properly used.

[00:27:12] Speaker 03:
Do they not?

[00:27:12] Speaker 03:
I don't think it's a check, Judge, but I think what it is as alleged is that there's five from the union and five from the state of Oregon.

[00:27:21] Speaker 03:
Right.

[00:27:21] Speaker 03:
And so it's not necessarily management.

[00:27:24] Speaker 03:
It's state government.

[00:27:25] Speaker 04:
State money's also advanced to the trust?

[00:27:28] Speaker 03:
To the extent that Medicaid could have involved state money, it could.

[00:27:31] Speaker 04:
But of course, most Medicaid- Isn't the state the primary administrator of Medicaid funds?

[00:27:36] Speaker 03:
I thought that was the difference the feds handle Medicare and the state handles Medicaid It certainly can in terms of on the ground like the traditional uses of Medicaid But again, I'd say this is not the traditional use of Medicaid nor is it a traditional false claims that case as I've argued Okay All right.

[00:27:56] Speaker 02:
Thank you.

[00:27:57] Speaker 02:
Yeah, so thanks to all of you for your briefing and argument this case this matter submitted I