Bnsf Railway Company v. Center for Asbestos Related Disease, Inc.

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 24 2024

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

BNSF RAILWAY COMPANY, Relator; No. 23-35507 UNITED STATES OF AMERICA,

D.C. No. 9:19-cv-00040-DLC Plaintiffs-Appellees,

v. MEMORANDUM* CENTER FOR ASBESTOS RELATED DISEASE, INC.,

Defendant-Appellant.

Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding Argued and Submitted August 21, 2024 Portland, Oregon

Before: CHRISTEN, NGUYEN, and HURWITZ, Circuit Judges.

The Center for Asbestos Related Disease (CARD) appeals a judgment in favor of relator BNSF Railway Company (BNSF) in this qui tam action filed pursuant to the False Claims Act (FCA), 31 U.S.C. §§ 3729–30. The jury found CARD liable for 337 false claims. The parties are familiar with the facts, so we do not recount them here. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

1. The district court did not err in denying CARD’s motion for summary judgment on the falsity, scienter, and materiality elements of the FCA claims, see United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 898–99 (9th Cir. 2017), nor on the applicable statute of limitations, 31 U.S.C. § 3731(b).1 Only the legal issues CARD challenged at the summary judgment level are properly before us, as “factual issues addressed in summary-judgment denials are unreviewable on appeal.” Dupree v. Younger, 598 U.S. 729, 735 (2023).

The district court correctly denied summary judgment on falsity, scienter, and materiality because each required fact-specific inquiries that remained for the jury: whether CARD submitted false or fraudulent information (falsity), whether its statements reflected “honestly held” opinions (scienter), and what the relevant federal agencies knew about the claims CARD submitted (materiality). See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The statute of limitations issue was also fact-bound because it depended on when the relevant government official knew or should have known of the material facts underlying the claims CARD submitted. See 31 U.S.C. §3731(b)(2); e.g. United States ex rel. Purcell v. MWI Corp., 254 F. Supp. 2d 69, 78 (D.D.C. 2003). The district court did not err at the summary judgment stage by concluding that the earliest alleged false claim was not barred by the statute of limitations.

2. CARD also challenges several jury instructions. We review de novo whether the jury instructions correctly state the law. Peralta v. Dillard, 744 F.3d 1076, 1082 (9th Cir. 2014) (en banc). “Jury instructions must be supported by the evidence, fairly and adequately cover the issues presented, correctly state the law, and not be misleading.” Id. An instruction error requires reversal “unless the error is more probably than not harmless.” Clem v. Lomeli, 566 F.3d 1177, 1182 (9th Cir. 2009) (quoting Dang v. Cross, 422 F.3d 800, 811 (9th Cir. 2005)).

a. CARD’s appeal involves 112 claims for which CARD submitted Medicare eligibility forms certifying that the patients had been diagnosed with an asbestos-related disease, even though no CARD doctor had made that diagnosis.2 For each of these claims, CARD relied on radiological reads from an outside “B- Reader.”

CARD argues on appeal that the Affordable Care Act, 42 U.S.C. § 1395rr- 1(e)(2)(B)(i), permitted it to submit these forms based solely on the positive “B- Read,” and therefore challenges the district court’s definition of “diagnosis” in Instruction F-24. There is no dispute, however, that the statute requires a diagnosis by someone.3 42 U.S.C. § 1395rr-1(e)(2)(A)(i) (“An individual described in this paragraph is any individual who . . . is diagnosed with 1 or more conditions described in subparagraph (B)[.]”). But CARD conceded before trial that “B-Readers do not diagnose,” and that “an abnormality detected by a B-reader is not considered a diagnosis of asbestos related disease.”4 Given the statutory requirement for a diagnosis and CARD’s stipulations, any error in the F-24 say that the verdict would have been the same” without the district court’s alleged errors. Clem, 566 F.3d at 1183. instruction was harmless.5 See Clem, 566 F.3d at 1183.

b. Instruction F-23 read, in part, “Certification of a person as eligible for Medicare coverage . . . who does not satisfy these requirements is a false claim.” CARD contends this instruction compelled the jury to find CARD liable for false statements without finding scienter. But CARD did not make this objection at trial.6 Fed. R. Civ. P. 51(c)(1). Thus, we review only for plain error. Fed. R. Civ. P. 51(d)(2); Skidmore v. Led Zeppelin, 952 F.3d 1051, 1065 (9th Cir. 2020) (en banc). We find none. Instruction F-23 pertained to the falsity element of the FCA, not the scienter element. Jury instructions are reviewed “as a whole.” Led Zeppelin, 952 F.3d at 1065. The district court properly instructed the jury that CARD was liable only if BNSF could prove each of the required elements of the FCA, including scienter, and the court separately instructed the jury on scienter.

c. CARD also argues that Instruction F-20 erroneously stated the law and precluded the jury from considering CARD’s contention that it lacked scienter when it submitted the “B-Read only” claims because it thought it was following agency directives. Instruction F-20 stated: “In evaluating a defendant’s knowledge, you may consider that parties who seek public funds are expected to know the law and may not rely on the conduct of Government agents contrary to law.” This instruction accurately recites the law. Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51, 63 (1984) (“Protection of the public fisc requires that those who seek public funds act with scrupulous regard for the requirements of law . . . . [T]hose who deal with the Government are expected to know the law and may not rely on the conduct of Government agents contrary to law.”). Instruction F-20 also states the “good faith” rule central to CARD’s defense: “A defendant who relies on a good faith interpretation of a regulation is not subject to liability under the Act, even if that interpretation is objectively unreasonable.” Instructions F-18 and F-19 further detail the scienter element. Viewing the jury instructions “as a whole,” Led Zeppelin, 952 F.3d at 1065, the instructions accurately explained the scienter element and the jury was free to make its own determination of whether CARD’s “B-Read only” practice was “honestly held.” See Winter ex rel. United States v. Gardens Reg’l Hosp. and Med. Ctr., Inc., 953 F.3d 1108, 1117–18 (9th Cir. 2020).

3. The district court did not err by excluding testimony of Senator Baucus pursuant to Evidence Rule 403 because it carried a high risk of unfairly prejudicing the jury. District courts have “wide discretion” to determine the admissibility of evidence, and “[t]his is particularly true with respect to Rule 403 since it requires an on-the-spot balancing of probative value and prejudice[.]” Sprint/United Mgmt. Co. v. Mendelsohn, 552 U.S. 379, 384 (2008). The district court also reasoned that it was the court’s role to instruct the jury on the controlling law, which was the subject of the proposed testimony. Moreover, CARD was able to present alternative evidence of its subjective beliefs and purported “good faith interpretations” of the ACA.

AFFIRMED.