US Ex Rel. Ralph Vassallo v. rural/metro Operating Co.

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 23, 2020
• Docket: 19-15225
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 23 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

RALPH VASSALLO, Relator; et al., No. 19-15225

Plaintiffs-Appellants, D.C. No. 2:15-cv-00119-SRB

v. MEMORANDUM* RURAL/METRO OPERATING COMPANY LLC; RURAL/METRO (DELAWARE) CORPORATION,

Defendants-Appellees,

v.

UNITED STATES OF AMERICA,

Movant.

Appeal from the United States District Court for the District of Arizona Susan R. Bolton, District Judge, Presiding

Argued and Submitted March 4, 2020 Phoenix, Arizona

Before: HAWKINS, CLIFTON, and OWENS, Circuit Judges.

Relators Ralph Vassallo and Laura Spahn appeal from the district court’s

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. summary judgment in favor of Defendants-Appellants Rural/Metro Operating

Company LLC and Rural/Metro Corporation in this qui tam action under the False

Claims Act (FCA). We have jurisdiction under 28 U.S.C. § 1291. As the parties

are familiar with the facts, we do not recount them here. We affirm.

We review de novo the district court’s interpretation of the FCA as well as

its grant of summary judgment. See United States v. Bourseau, 531 F.3d 1159,

1164 (9th Cir. 2008); U.S. ex rel. Aflatooni v. Kitsap Physicians Serv., 314 F.3d

995, 1000 (9th Cir. 2002). The elements of FCA liability are: “(1) a false

statement or fraudulent course of conduct, (2) made with scienter, (3) that was

material, causing (4) the government to pay out money or forfeit moneys due.”

U.S. ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1174 (9th Cir. 2006).

Relators argue: (1) that the district court articulated the wrong standard for

scienter under the FCA, and (2) that there was sufficient evidence of scienter to

defeat summary judgment. To satisfy the scienter requirement, Relators must

show that Rural/Metro acted “knowingly” when it submitted false claims or made

false statements. See 31 U.S.C. § 3729(a)(1). The FCA provides three alternative

standards for “knowing” and “knowingly”: (1) “actual knowledge,” (2) “deliberate

ignorance of the truth or falsity of the information,” and (3) “reckless disregard of

the truth or falsity of the information.” Id. § 3729(b)(1)(A).

2 Viewing the facts in the light most favorable to Relators, and drawing all

justifiable inferences in Relators’ favor, a de novo review of the record indicates

that, under any standard relating to scienter, Relators have failed to demonstrate

any genuine issues of material fact. See Kitsap, 314 F.3d at 1000. As for

deliberate ignorance, the district court correctly concluded that Relators’ evidence

of “inexperienced coders, glitchy billing software, imperfect training practices, and

even post-transition billing and coding errors” does not demonstrate that

Defendants sought to avoid learning about coding issues. Nor does this evidence

make out a case of reckless disregard – as the district court found, it “does little

more than second-guess the wisdom” of Rural/Metro’s compliance efforts. At

best, Relators made out a case of negligence, which is insufficient for FCA

purposes. See, e.g., Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112, 1115

(9th Cir. 2014). Accordingly, the district court’s summary judgment was

appropriate.

AFFIRMED.