Guilfoile v. Shields

United States Court of Appeals
For the First Circuit

No. 17-1610

THOMAS GUILFOILE,

Plaintiff, Appellant,

v.

JOHN M. SHIELDS, SR.; SHIELDS PHARMACY, LLC, d/b/a Shields
Health Solutions; UMASS MEMORIAL SHIELDS PHARMACY, LLC, d/b/a
Shields Health Solutions; SHIELDS PHARMACY EQUITY, LLC, d/b/a
Shields Health Solutions; SHIELDS SPECIALTY PHARMACY HOLDINGS,
LLC, d/b/a Shields Health Solutions,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Denise J. Casper, U.S. District Judge]

Before

Howard, Chief Judge,
Lipez and Barron, Circuit Judges.

Paul W. Mollica, with whom Tammy T. Marzigliano and Outten &
Golden LLP were on brief, for appellant.
Brian J. Leske for appellees.
Michael J. Sullivan and Ashcroft Law Firm, LLC on brief for
appellee John M. Shields.
Walter B. Prince, William A. Worth, and Prince Lobel Tye LLP
on brief for appellees Shields Pharmacy, LLC, and Shields Pharmacy
Equity, LLC.
David C. Casey, Stephen T. Melnick, and Littler Mendelson PC
on brief for appellees UMass Memorial Shields Pharmacy, LLC, and
Shields Specialty Pharmacy Holdings, LLC.
January 15, 2019
 LIPEZ, Circuit Judge. In alleged violation of the False

Claims Act, appellant Thomas Guilfoile claims he was fired from

his job in retaliation for accusing his employer of violating the

Anti-Kickback Statute and making false representations in customer

contracts. See 31 U.S.C. § 3730(h); 42 U.S.C. § 1320a-7b(b). The

district court dismissed his complaint on the ground that Guilfoile

did not allege sufficient facts to show he was engaged in protected

conduct within the meaning of the retaliation provision of the

False Claims Act. After careful review of the complaint and the

law, we affirm as to the contractual language claim but vacate and

remand as to the claim involving the Anti-Kickback Statute.

I.

A. Factual Background

Because this appeal follows the grant of a motion to

dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), we

recite the facts as alleged in the amended complaint. See

Davis v. Coakley, 802 F.3d 128, 130 (1st Cir. 2015). We include

only those facts relevant to the issues on appeal.

Appellant Guilfoile is a seasoned management

professional with 30 years of finance and operations experience.

Appellee John Shields, Guilfoile's employer during the period

relevant to this case, is the CEO of a collection of health care

LLCs, joint ventures, and holding companies that operate in concert

as a single integrated entity (the "Integrated Entity"). The

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component businesses of the Integrated Entity include appellees

Shields Pharmacy, LLC; UMass Memorial Shields Pharmacy, LLC;

Shields Pharmacy Equity, LLC; and Shields Specialty Pharmacy

Holdings, LLC.1

The Integrated Entity partners with hospitals to provide

specialty pharmacy services for chronically ill patients by either

operating a pharmacy directly in the hospital or by filling

specialty prescriptions through an off-site location. The

Integrated Entity processes the prescriptions, bills the patient's

insurance, provides patients with financial advice, and follows up

with patients to ensure their adherence to complex medication

regimens. The Integrated Entity regularly bills federal insurance

programs, including Medicaid and Medicare, for the services it

provides to patients covered by those programs. As a secondary

line of business, the Integrated Entity also runs home infusion

and high-risk care management programs.

After years of providing free business advice to his

long-time friend and neighbor Shields, Guilfoile began to consult

for the Integrated Entity in April 2013 and officially joined the

Integrated Entity full-time as president in August of that year.

1 All four component corporations are closely-held
corporations with a shared principal place of business at an office
in Quincy, Massachusetts. Two of the corporations are incorporated
in Massachusetts and two are incorporated in Delaware. Shields is
the sole manager registered with the Secretary of the Commonwealth
of Massachusetts for all four corporations.

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Guilfoile's employment contract included terms governing salary,

bonuses, an equity stake in the Integrated Entity's joint ventures,

an equity vesting schedule, and protocols in the event of

termination. Shields was Guilfoile's immediate supervisor. The

complaint alleges that during Guilfoile's tenure, Shields

Specialty Pharmacy Holdings and UMass Memorial Shields Pharmacy

had boards of directors composed of Shields, Guilfoile, and the

same two other individuals.2

Under Guilfoile's leadership, the Integrated Entity grew

from a start-up to a successful operation generating millions of

dollars in profit. The Integrated Entity enjoyed overwhelmingly

positive feedback from patients, providers, and employees, and

Guilfoile's leadership was appreciated by Shields and the

Integrated Entity.

However, in the fall of 2015, Guilfoile became concerned

that the Integrated Entity was violating the law. At that time,

he learned that Shields had previously entered into a contract on

behalf of the Integrated Entity with Michael Greene,3 Shields's

long-time friend and a consultant whom several New Jersey hospitals

2 The complaint does not shed much further light on the
Integrated Entity's management structure. For ease of reference,
we join the parties and refer to the two boards of directors
identified in the complaint as "the Board."

3 The pleadings, briefs, and the district court's order
sometimes spell the consultant's surname as "Green," but we follow
the spelling suggested by appellant and supported by the record.

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paid for financial advice. The contract obligated the Integrated

Entity to, among other things, pay Greene's consulting firm, the

Ayrault Group, $35,000 per quarter for each hospital contract that

Greene successfully referred to the Integrated Entity,

specifically targeting two hospitals that Greene was working for

as a paid consultant: Newark Beth Israel Medical Center ("NBIMC")

and University Hospital ("University"). The Integrated Entity,

with assistance from Greene, eventually entered into contracts for

specialty pharmacy services with both NBIMC and University, and

the Integrated Entity paid Greene "referral fees." Guilfoile

believed that these payments "had improperly induced [Greene] to

steer [the] hospital contracts to the Integrated Entity."

Guilfoile conferred with the Integrated Entity's

counsel, who agreed that Guilfoile had valid concerns about the

contract with Greene. Guilfoile notified Shields that he believed

the contract violated the federal Anti-Kickback Statute because

the Integrated Entity had paid Greene to secure contracts with

hospitals that would result in the Integrated Entity making claims

for payment to federal insurance programs. Such payments are

prohibited by the statute, as explained in greater detail below.

Guilfoile was especially concerned about the implications of the

kickback scheme for the contract with University, which he believed

was government owned.

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 At Guilfoile's insistence, Shields ultimately approached

Greene to discuss voiding Greene's contract with the Integrated

Entity and obtaining refunds of any payments to the Ayrault Group.

After an apparent negotiation, Shields revealed to Guilfoile that

Greene agreed to waive payments yet to be made for the University

referral but refused to return the money that the Integrated Entity

had already paid for the NBIMC referral. Guilfoile believed that

by letting the NBIMC payment stand, the Integrated Entity still

may have violated the Anti-Kickback Statute. He therefore urged

Shields to reveal the matter to the Board and offered to make the

disclosure jointly. Shields refused.

In December 2015, Guilfoile learned that the contracts

the Integrated Entity had used to form partnerships with hospitals

contained a false representation that the Integrated Entity

maintained "a fully staffed 24/7 [c]all [c]enter in Quincy,

Massachusetts." The Integrated Entity at the time did not have

such a center.4 Guilfoile believed that making false

representations to government-owned hospitals, like University,

about medication management services for chronically ill patients

with serious medical conditions was contract fraud and posed a

serious threat to public health and safety.

4 The complaint is unclear as to whether the Integrated
Entity operated a call center that did not conform with the
description in the contracts, or if the Integrated Entity did not
operate a call center at all.

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 Despite Guilfoile's insistence that the Integrated

Entity either amend the contracts to remove the representation or

create a fully-staffed 24/7 call center, Shields refused to take

action or notify the Board. Instead, Shields suggested that the

Integrated Entity should address the issue only if a customer

complained about the breach. In an effort to bring the Integrated

Entity into compliance with the contractual language, Guilfoile

alerted the Human Resources department and the Director of

Operations that they should prepare to hire enough staff to operate

a 24/7 call center.

On December 22, 2015, Shields asked Guilfoile to come

to his home office, where Shields expressed his concern about

Guilfoile "going over his head" and "airing his dirty laundry" to

the Board. Shields told Guilfoile that he viewed the Board as a

"third rail" -- i.e., an entity that should be approached with

caution -- to which Guilfoile was getting too close. Shields also

explained that he felt he "had to protect his interests and his

family" and that he could not risk a vote by the Board against

him. After Guilfoile rejected Shields's suggestion that the two

of them consider "parting ways," the meeting ended without a

concrete resolution. Shields stated that he would give the matter

additional thought.

A week later, on December 28, Shields terminated

Guilfoile's employment in a phone call without further

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explanation. The following day, Shields emailed Guilfoile to

confirm that his employment was terminated. Shields did not

provide any reason for the termination and did not refer to

Guilfoile's performance or possible misconduct as a basis for the

termination. Guilfoile then received a written notice stating

that his termination was retroactive to December 22. The letter

did not state that he was being terminated for cause.

After his termination, Guilfoile notified the Board that

Shields had terminated him because he feared that Guilfoile would

report the suspected violations of law to the Board. Guilfoile

subsequently forwarded a letter to the Board memorializing his

concerns. Following these disclosures, Shields made repeated

threats to file suit against Guilfoile for defamation and tortious

interference, which he in fact subsequently did. On February 26,

2016, Guilfoile received a letter from the Integrated Entity

discussing its purported right to repurchase Guilfoile's vested

equity for a total of $15. The letter stated, for the first time,

that Guilfoile had been "terminated for cause."

B. Procedural Background

On April 1, 2016, Guilfoile filed this action against

the Integrated Entity and Shields alleging "whistleblower

retaliation" in violation of the False Claims Act and a variety of

state law employment, wage, contract, and tort claims. In the

operative amended complaint ("the complaint"), filed after

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defendants filed motions to dismiss, Guilfoile alleges that the

Integrated Entity retaliated against him for his "efforts to stop

violations of the [False Claims Act]," specifically his

"disclosures . . . related to the kickbacks [the Integrated Entity]

paid Mr. Green[e] in exchange for referrals of federally insured

patients, and disclosures related to contracts the Integrated

Entity entered into with government-owned hospitals even though

the Integrated Entity knew the contracts included fraudulent

terms."

Regarding the payments to the Ayrault Group, the

complaint alleges that Guilfoile reasonably believed the payments

to be "violations of the [Anti-Kickback Statute], a per se

violation of the [False Claims Act], resulting in the submission

of fraudulent claims to the government," and that "[t]he Integrated

Entity violated the [Anti-Kickback Statute] and the [False Claims

Act] by willfully paying remuneration to induce a person [Greene]

to refer patients for the furnishing of a service for which the

Integrated Entity knew payment would be made under federal health

care programs." Finally, the complaint alleges that the Integrated

Entity retaliated against Guilfoile by terminating his employment,

"threatening to sue him, fabricating an after-the-fact contention

as to 'cause,' attempting to repurchase his equity for the amount

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of $15, and then making good on their threat to sue him after he

instituted this law suit."5

Following oral argument on defendants' motions to

dismiss, Guilfoile requested leave to file a memorandum "in

response to legal authority and factual allegations that

[d]efendants raised for the first time during oral argument." The

last sentence of the brief accompanying the request stated, "If

this [c]ourt determines . . . that the present [a]mended

[c]omplaint does not adequately plead a cause of action under the

anti-retaliation provision of the [False Claims Act], plaintiff

respectfully requests that the [c]ourt allow him the opportunity

to file a second amended complaint alleging additional facts, like

those set forth in this memorandum and supporting affidavit."

Guilfoile's "supporting affidavit" alleged additional facts

concerning the Integrated Entity's business, Greene's role in

recommending the Integrated Entity to the hospitals for the

provision of pharmacy services, and the nature of the 24/7 call

center service.

In granting the motions to dismiss, the district court

determined that Guilfoile had failed to adequately plead that he

was engaged in protected conduct, the first element of a False

5The complaint alleges that "four days after Mr. Guilfoile
initiated this action in federal court . . . Mr. Shields filed
suit against [him] in state court, bringing claims for defamation
and tortious interference."

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Claims Act retaliation claim. The court therefore dismissed the

retaliation count without analyzing the other elements of the

claim. The court then declined to exercise supplemental

jurisdiction over the state law claims and dismissed them without

prejudice. In a footnote, the court granted in part and denied in

part Guilfoile's request to provide a response to defendants'

purportedly new theories and factual allegations presented at oral

argument. The court stated that it had considered his briefing as

to the legal authority first raised at oral argument, but had not

considered factual assertions outside the complaint, presumably

including the factual assertions in the "supporting affidavit."

The court did not respond to Guilfoile's suggestion in his motion

that he be allowed to file a second amended complaint if the court

found the operative complaint lacking.

Guilfoile subsequently filed a "Motion to Vacate

Judgment and For Leave to Amend the Complaint" pursuant to Federal

Rules of Civil Procedure 59(e) and 15(a). After the district court

denied the motion, Guilfoile timely appealed both the dismissal of

his complaint and the denial of his post-judgment motion.

II.

A. Standard of Review

We review de novo a district court's grant of a motion

to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011). We must

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evaluate whether the complaint adequately pleads facts that "state

a claim to relief that is plausible on its face." Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007). In performing this

evaluation, we "assume the truth of all well-pleaded facts and

give the plaintiff the benefit of all reasonable inferences

therefrom." Thomas v. Rhode Island, 542 F.3d 944, 948 (1st Cir.

2008). However, we do not "draw unreasonable inferences or credit

bald assertions [or] empty conclusions." Theriault v. Genesis

HealthCare LLC, 890 F.3d 342, 348 (1st Cir. 2018) (alteration in

original) (internal quotation marks omitted). A suit is properly

dismissed "if the complaint does not set forth factual allegations,

either direct or inferential, respecting each material element

necessary to sustain recovery under some actionable legal theory."

U.S. ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 384

(1st Cir. 2011) (emphasis added) (internal quotation marks

omitted). Before reviewing the sufficiency of the complaint under

this standard, we provide a brief overview of the pertinent

statutes.

B. False Claims Act

The False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733,

prohibits, in relevant part, any person from "knowingly

present[ing], or caus[ing] to be presented, a false or fraudulent

claim" to the federal government. 31 U.S.C. § 3729(a)(1)(A)

(emphasis added); see Universal Health Servs., Inc. v. United

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States ex rel. Escobar, 136 S. Ct. 1989, 1996 (2016) (explaining

that the FCA is focused "on those who present or directly induce

the submission of false or fraudulent claims").6 For purposes of

the statute, "a 'claim' . . . includes direct requests to the

[g]overnment for payment as well as reimbursement requests made to

the recipients of federal funds under federal benefit programs."

Escobar, 136 S. Ct. at 1996 (citing 31 U.S.C. § 3729(b)(2)(A)).

The FCA includes a scienter requirement that the false claim be

submitted "knowingly." 31 U.S.C. § 3729(a)(1), (b)(1). A "non-

submitting" entity that knowingly causes the submission of a false

claim may be liable under the FCA even if the entity directly

submitting the claim to the government lacks the requisite mental

state. See Hutcheson, 647 F.3d at 389-90.

The FCA is also "subject to a judicially-imposed

requirement that the allegedly false claim . . . be material."

United States ex rel. Loughren v. Unum Grp., 613 F.3d 300, 307

(1st Cir. 2010).7 The falsity of a claim is "material" if it has

6 The FCA does not define "false or fraudulent." However,
the Supreme Court has held that the phrase encompasses
"misrepresentations by omission" in addition to "express
falsehoods." Escobar, 136 S. Ct. at 1999.
7 The FCA defines and uses "material." See 31 U.S.C.
§ 3729(a)(1)(B), (G), (b)(4). However, § 3729(a)(1)(A), which
prohibits the knowing submission of false claims, does not contain
the term. We have therefore described the "materiality"
requirement in regard to § 3729(a)(1)(A) as judicially created
because it derives from a general reading of materiality into all
sections of the FCA rather than from the statutory language. See

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"a natural tendency to influence or was capable of influencing the

[government]'s decision" whether to pay or reimburse the claim.

Id. The Supreme Court has emphasized that the FCA's "materiality

standard is demanding," and a plaintiff directly alleging the

submission of a false claim8 must plead facts to support

allegations of materiality with "plausibility and particularity."

Escobar, 136 S. Ct. at 2003, 2004 n.6. Whether an express or

implied false representation of compliance with statutes or

regulations is "material" is ordinarily "a fact-intensive and

context-specific inquiry." New York v. Amgen Inc., 652 F.3d 103,

111 (1st Cir. 2011).

In addition to prohibiting the submission of false

claims, the FCA bars an employer from retaliating against an

employee "because of lawful acts done . . . in furtherance of an

action under this section or other efforts to stop 1 or more

violations of [the FCA]." 31 U.S.C. § 3730(h)(1). To prevail on

an FCA retaliation claim, "a plaintiff must show that 1) the

employee's conduct was protected under the FCA; 2) the employer

Hutcheson, 647 F.3d at 388 n.13. Indeed, the Supreme Court has
declined to decide "whether § 3729(a)(1)(A)'s materiality
requirement is governed by § 3729(b)(4) [the statutory definition
of "materiality"] or derived directly from the common law."
Escobar, 136 S. Ct. at 2002.

8 The False Claims Act's "qui tam" provisions authorize
private individuals, known as "relators," to bring suit on the
government's behalf based on the submission of false claims to the
government. See 31 U.S.C. § 3730(b).

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knew that the employee was engaged in such conduct; and 3) the

employer discharged or discriminated against the employee because

of his or her protected conduct." United States ex rel. Karvelas

v. Melrose-Wakefield Hosp., 360 F.3d 220, 235 (1st Cir. 2004),

abrogated on other grounds by Allison Engine Co., Inc. v. United

States ex rel. Sanders, 553 U.S. 662 (2008). In general, "proving

a violation of § 3729 [the false claims provision] is not an

element of a § 3730(h) [retaliation] cause of action." Graham

Cty. Soil & Water Conservation Dist. v. United States ex rel.

Wilson, 545 U.S. 409, 416 n.1 (2005).

The pleading standards for actions directly alleging the

submission of false claims, such as qui tam actions pursuant to 31

U.S.C. § 3730(b), and the pleading standards for actions alleging

retaliation, differ in crucial ways. In a suit directly alleging

the submission of a false claim, a plaintiff must sufficiently

plead facts supporting the existence of an actual false claim.

See Karvelas, 360 F.3d at 225 ("Evidence of an actual false claim

is the sine qua non of a False Claims Act violation." (internal

quotation marks omitted)). However, in a suit alleging retaliation

under the FCA, a plaintiff must sufficiently plead that he or she

was retaliated against based on "conduct that reasonably could

lead to a viable FCA action." Id. at 236. We have further

explained that "conduct protected under" the FCA retaliation

provision encompasses an employee's "investigations, inquiries,

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testimonies or other activities that concern the employer's

knowing submission of false or fraudulent claims for payment to

the government." United States ex rel. Booker v. Pfizer, Inc.,

847 F.3d 52, 59 (1st Cir. 2017) (quoting Karvelas, 360 F.3d at

237).9 This standard is consistent with the legislative intent

that "[p]rotected activity [for purposes of an FCA retaliation

claim] should . . . be interpreted broadly." Karvelas, 360 F.3d

at 236 (quoting S. Rep. No. 99–345, at 34 (1986), reprinted in

1986 U.S.C.C.A.N. 5266, 5299). Because an FCA retaliation claim

"does not require a showing of fraud," a plaintiff alleging

retaliation "need not meet the heightened pleading requirements of

[Federal Rule of Civil Procedure] 9(b)." Id. at 238 n.23.10

9 We derived the "reasonably could lead" standard from the
statutory language prohibiting retaliation by an employer "because
of lawful acts done by the employee . . . in furtherance of an
[FCA] action." See Karvelas, 360 F.3d at 235-36 (quoting 31 U.S.C.
§ 3730(h)(1)). Therefore, a court must consider whether the
conduct of the employee who was allegedly retaliated against --
that is, the employee's whistleblowing or investigative activities
-- reasonably could lead to an FCA action. Of course, the question
of whether the employer engaged in conduct that could run afoul of
the FCA is a necessary component of this inquiry. After all, the
employee's conduct must "concern the employer's knowing submission
of false . . . claims . . . because only such conduct reasonably
could lead to an FCA action." Booker, 847 F.3d at 59-60 (internal
quotation marks omitted).

10 Conversely, because a direct FCA claim does require a
showing of fraud, a qui tam plaintiff must "meet the Rule 9(b)
pleading standards." Karvelas, 360 F.3d at 238.

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C. Anti-Kickback Statute

The Anti-Kickback Statute ("AKS") criminalizes, in

relevant part, the "knowing[] and willful[]" offer or payment of

"any remuneration (including any kickback, bribe, or rebate)" to

induce a person to "recommend . . . ordering any . . . service

. . . for which payment may be made in whole or in part under a

[f]ederal health care program." 42 U.S.C. § 1320a-7b(b)(2)(B).

Relevant considerations for identifying an unlawful kickback

include: (1) whether the person being paid the alleged kickback is

"in a position to generate [f]ederal health care program business"

and (2) whether at least one purpose of the payment could be "to

induce or reward the referral or recommendation of business payable

in whole or in part by a [f]ederal health care program." OIG

Supplemental Compliance Program Guidance for Hospitals, 70 Fed.

Reg. 4858, 4864 (Jan. 31, 2005). Essentially, the AKS targets any

remunerative scheme through which a person is "paid 'in return

for' referrals" to a program under which payments may be made from

federal funds. United States v. Patel, 778 F.3d 607, 618 (7th

Cir. 2015) (quoting 42 U.S.C. § 1320a-7b(b)(1)(A)).

In 2010, the AKS was amended to create an express link to the FCA.

The AKS now provides that "a claim that includes items or services

resulting from a violation of this section constitutes a false or

fraudulent claim for purposes of [the FCA]." 42 U.S.C.

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§ 1320a-7b(g), as amended by the Patient Protection and Affordable

Care Act, Pub. L. No. 1110148, 124 Stat. 119 (2010).

III.

Appellant contends that he was retaliated against within

the meaning of the FCA anti-retaliation provision when he was fired

after raising concerns to Shields and others about (1) the alleged

kickbacks to Greene and (2) the contractual misrepresentations

regarding a 24/7 call center. Although appellees attack the

sufficiency of the complaint on several grounds, the district court

dismissed the FCA claims on the basis that Guilfoile had not

plausibly pleaded that he had engaged in protected conduct. Our

analysis begins with this first element of an FCA retaliation

claim.

A. Payments to Greene/Ayrault Group

The district court concluded that Guilfoile had failed

to adequately plead that his actions in raising concerns about the

payments to Greene and the Ayrault Group reasonably could have led

to an FCA action. Specifically, the district court reasoned that

Guilfoile failed to adequately plead an AKS violation, and that

even if he had adequately pleaded an AKS violation, he failed to

connect any such violation to a potential false claim within the

meaning of the FCA. We disagree with the district court's approach

and its conclusion.

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 Guilfoile has brought an FCA retaliation claim, not a

"direct" claim of an FCA violation. As discussed above, adequately

pleading an FCA retaliation claim does not require adequately

pleading the submission of a false claim or meeting the Rule 9(b)

standards for pleading fraud. See Graham Cty., 545 U.S. at 416 &

n.1; Karvelas, 360 F.3d at 238 n.23; see also United States ex

rel. Grenadyor v. Ukrainian Vill. Pharmacy, Inc., 772 F.3d 1102,

1108-09 (7th Cir. 2014) (affirming dismissal of qui tam claim for

failure to plead kickbacks with particularity but reversing

dismissal of retaliation claim based on internal reporting of

alleged kickbacks). Rather, plaintiffs like Guilfoile need only

plead that their actions in reporting or raising concerns about

their employer's conduct "reasonably could lead to an FCA action."

Booker, 847 F.3d at 59 (internal quotation marks omitted). Put

colloquially, rather than plausibly pleading the existence of a

fire -- the actual submission of a false claim -- a plaintiff

alleging FCA retaliation need only plausibly plead a reasonable

amount of smoke -- conduct that could reasonably lead to an FCA

action based on the submission of a false claim.

Because this case involves an alleged violation of the

AKS, we consider the 2010 amendment to the AKS stating that "a

claim that includes items or services resulting from a violation

of this section constitutes a false or fraudulent claim for

purposes of [the FCA.]" 42 U.S.C. § 1320a-7b(g). We have

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previously declined to directly address the impact of

§ 1320a-7b(g) on FCA actions, see Hutcheson, 647 F.3d at 379 n.1,

and we do not attempt to assess the full implications of the AKS

provision today. We need not do so because the issue before us is

not the standard for proving an FCA violation based on the AKS,

but rather the requirements for pleading an FCA retaliation claim.

For our present purposes, it is enough to say that in light of

§ 1320a-7b(g), "[a]n AKS violation that results in a federal health

care payment is a per se false claim under the FCA." United States

ex rel. Lutz v. United States, 853 F.3d 131, 135 (4th Cir. 2017).

That is, drawing on the "resulting from" language of the 2010

amendment, if there is a sufficient causal connection between an

AKS violation and a claim submitted to the federal government,

that claim is false within the meaning of the FCA. See United

States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d

89, 96-98 (3d Cir. 2018) (discussing causal connection issue);11

United States ex rel. Bawduniak v. Biogen Idec, Inc., No. 12-CV-

10601-IT, 2018 WL 1996829, at *5-6 (D. Mass. Apr. 27, 2018) (same).

We further read the AKS amendment as obviating the need

for a plaintiff to plead materiality -- that is, to plead that

11 We note that Greenfield involved a qui tam suit directly
alleging an FCA claim based on a violation of the AKS and
ultimately turned on the standard for proving such claims at
summary judgment. See Greenfield, 880 F.3d at 98.

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compliance with the AKS was material to the government's decision

to pay any specific claim. This construction inescapably follows

from the statute's plain language stating that a claim resulting

from a violation of the AKS "constitutes a false or fraudulent

claim." 42 U.S.C. § 1320a-7b(g). The statute's use of the term

"constitutes" would be meaningless if courts had to engage in a

materiality analysis -- for example, by inquiring into whether the

entity submitting the claim had certified its compliance with the

AKS -- after establishing that a claim resulted from an AKS

violation. See, e.g., United States v. Catholic Health

Initiatives, 312 F. Supp. 3d 584, 594 (S.D. Tex. 2018) ("Due to

[§ 1320a–7b(g)], liability under the FCA for AKS violations does

not require the defendants to have expressly certified their

compliance with the AKS."); United States ex rel. Kester v.

Novartis Pharm. Corp., 43 F. Supp. 3d 332, 364 (S.D.N.Y. 2014)

(stating that "from and after [the AKS amendment,] the act of

submitting a claim . . . itself implie[d] compliance with the AKS,

even in [the] absence of any express certification of compliance."

(second alteration in original) (internal quotation marks and

citation omitted)).

Our reading of § 1320a-7b(g) is consistent with the

legislative history, which indicates Congress's intent to "ensure

that all claims resulting from illegal kickbacks are 'false and

fraudulent'" and to "strengthen [] whistleblower actions based on

- 22 -
medical care kickbacks . . . [b]y making all claims that stem from

an illegal kickback subject to the False Claims Act." 155 Cong.

Rec. S10852-01, S10853 (daily ed. Oct. 28, 2009) (statement of

Sen. Kaufman). If a plaintiff must plead and prove that compliance

with the AKS was "material" to a claim "resulting from" an AKS

violation, § 1320a-7b(g) would not represent the strengthening of

whistleblower actions that Congress intended. Moreover,

§ 1320a-7b(g)'s obviation of the "materiality" inquiry essentially

codifies the long-standing view that AKS violations are "material"

in the FCA context.12 This codification has the benefit, however,

of bypassing judicially created theories of materiality, such as

express or implied certification, that "do more to obscure than

12 Prior to the 2010 AKS amendment, courts had consistently
held that compliance with the AKS (or the lack thereof) was
"material" to the government's decision to pay a given claim based
on the theory that the government's payment was contingent on the
submitting entity's express or implied certification that it had
complied with the AKS. See, e.g., Amgen, 652 F.3d at 110; United
States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295,
314 (3rd Cir. 2011), abrogated on other grounds by Escobar, 136 S.
Ct. 1989; United States v. Rogan, 517 F.3d 449, 452-53 (7th Cir.
2008); United States ex rel. Westmoreland v. Amgen, Inc., 812 F.
Supp. 2d 39, 52 (D. Mass. 2011); United States ex rel. Lisitza v.
Johnson & Johnson, 765 F. Supp. 2d 112, 127-28 (D. Mass. 2011)
(citing cases). The legislative history suggests that the 2010
amendment was intended to codify the link between AKS violations
and false claims within the meaning of the FCA as well as to
correct one district court case holding that claims for payment
resulting from AKS violations could be "laundered" if the claims
were submitted to the government by a party who was unaware that
a kickback had occurred. See 155 Cong. Rec. S10852-01, S10853-54
(daily ed. Oct. 28, 2009) (statements of Sens. Kaufman and Leahy);
Kester, 41 F. Supp. 3d at 332-35 (discussing the 2010 amendment's
legislative history).

- 23 -
clarify the issues before" a court considering an FCA claim.

Hutcheson, 647 F.3d at 385–86.

With this understanding of the AKS amendment in mind, we

consider whether Guilfoile has plausibly pleaded that the concerns

he raised about the payments to Greene reasonably could have led

to an FCA action. The allegations in the complaint, coupled with

the reasonable inferences we must draw from them, plausibly pleaded

that claims for payment were, or were going to be, submitted to

the government in connection with the Integrated Entity's work

with the New Jersey hospitals. Specifically, the complaint alleges

that the Integrated Entity "regularly bills federal insurance

programs[,] including[] Medicaid [and] Medicare," and that

Guilfoile "believed the contract with Mr. Green[e] violated the

federal AKS because the Integrated Entity had paid illegal

kickbacks to secure a contract at hospitals where it billed to

federal insurance programs." (Emphasis added.) These allegations

support the reasonable inference that the government was being

billed for services provided by the Integrated Entity in connection

with its contracts with the hospitals.

Guilfoile has also plausibly alleged a sufficient causal

connection between any submitted claims and the payments to Greene.

Specifically, the complaint alleges that the Integrated Entity

entered into an agreement to pay Greene

"for each hospital contract that [he] successfully referred to the

- 24 -
Integrated Entity, specifically targeting two hospitals that [he]

was working for as a paid consultant"; that the Integrated Entity

entered into contracts with those two hospitals; and that the

Integrated Entity in fact paid him "referral fees." The allegation

that Greene was paid pursuant to the agreement supports the

reasonable inference that Greene was responsible for connecting

the Integrated Entity with the New Jersey hospitals. In other

words, we reasonably infer from the complaint's allegations that

the Integrated Entity paid Greene to induce him to use his position

with the hospitals to influence them to select the Integrated

Entity for the contracts at issue. Further, the complaint permits

the reasonable inference that, if not for the agreement with

Greene, the Integrated Entity would not have been in a position to

benefit from federal health care payments arising from its work

with the hospitals. See supra 5-6.13

Finally, Guilfoile has plausibly alleged that the

payments to Greene were a violation of the AKS. The relationship

between the Integrated Entity and Greene -- payment to induce the

13 In addition to the allegation that Greene was paid for
referring the hospitals to the Integrated Entity, the complaint
alleges that Greene advised the Integrated Entity on how to bid
for the hospital contracts. Contrary to the suggestion by
appellees, and drawing all reasonable inferences in Guilfoile's
favor, we simply do not read the complaint to allege that the
extent of Greene's assistance to the Integrated Entity was
providing insider information about the hospitals' bidding
process.

- 25 -
generation of federal health care program business -- has the

hallmarks of a kickback scheme. See 42 U.S.C. § 1320a-7b(b)(2)(B)

(criminalizing payments to "induce [a] person . . . to . . .

recommend purchasing, leasing, or ordering any good, facility,

service, or item for which payment may be made in whole or in part

under a [f]ederal health care program"). Importantly, the nature

of the alleged scheme is materially indistinguishable from the

scheme in United States v. Bay State Ambulance & Hospital Rental

Service, Inc., 874 F.2d 20 (1st Cir. 1989), which involved a

criminal conviction under the AKS. In Bay State, a hospital

employee, who was on an advisory committee charged with advising

the hospital on accepting bids for an ambulance services contract,

was paid by an ambulance company to induce him to recommend that

the hospital enter into a contract for ambulance services with

that company. See 874 F.2d at 22. There was no allegation that

the hospital employee was paid to refer individual patients for

individual ambulance trips or that the federal government would

pay the hospital simply for entering into the contract with the

ambulance company, which contract was the direct outcome of the

illegal remuneration scheme. Yet, we held that a crime had

occurred under the AKS once the person who was in a position to

influence the hospital was paid to use his influence to win the

contract for the ambulance company. See id.

- 26 -
 The dissent's concern with the "attenuated" nature of

the AKS scheme alleged in the complaint is misplaced.14 First,

although we can see how our colleague drew his interpretation from

the language of the AKS, we are bound by Bay State, as the dissent

recognizes. Appellees point to no authority for the contention

that the AKS scheme as pleaded is materially distinguishable from

the scheme in Bay State and outside the compass of the AKS. The

dissent's attempt to factually distinguish Bay State is also

unconvincing. Any suggestion in the dissent that the nature of

the kickback scheme is more speculative than the scheme in Bay

State fails to adequately recognize the difference between

pleading standards for an FCA retaliation claim, at issue here,

and standards of proof for a criminal conviction under the AKS, at

issue in Bay State. Second, but equally as important, this case

gives us no reason to question Bay State. The type of scheme

proven in Bay State and alleged in the present case is in the

heartland of what the AKS is intended to prevent -- the use of

payments to improperly influence decisions on the provision of

14As our dissenting colleague articulates his concern:
"There is . . . a fair amount of attenuation between the actual
transactions that Greene was allegedly induced to 'arrange for'
(the hospitals' 'purchas[es]' or 'order[s]' of the Integrated
Entity's general pharmacy services) and the transactions 'for
which payment may be made . . . under a Federal health care program'
(some unknown purchases from an Integrated Entity-run pharmacy of
some unknown drugs by some unknown patients who happened to be
eligible for reimbursement under a federal health care program)."

- 27 -
health care that lead to claims for payment to federal health care

programs.15 Accepting our colleague's contention -- that there is

too great a distance between the Integrated Entity's payments to

Greene to capture the hospital contracts and the submission of

claims to federal insurance programs, which is the unmistakable

objective of the contracts -- would leave a hole in the statutory

scheme and essentially permit pay-offs to capture federal health

care funds. See OIG Supplemental Guidance, 70 Fed. Reg. at 4864

(an illegal kickback is a payment whose purpose, at least in part,

is "to induce or reward the referral or recommendation of business

payable in whole or in part by a [f]ederal health care program").

Further, we disagree with our dissenting colleague that

our interpretation of the FCA and the AKS, and our application of

the statutory language to the alleged facts in light of our

precedent, is foreclosed by the manner in which Guilfoile presented

15 We also disagree with the dissent that we should consider
here arguments not raised in Bay State that would challenge the
viability of that decision. Unlike in United States v. DiPina,
178 F.3d 68, 73 (1st Cir. 1999), where we acknowledged that we are
not bound by dicta in a prior opinion, accepting the appellees'
arguments about attenuation in this case would mean that the
holding in Bay State was incorrect and that the case was therefore
wrongly decided. The similar facts in Bay State and this case are
not "background facts." They are facts that implicate the
applicability of the AKS in both cases. It is a fundamental
principle that a newly constituted appellate panel cannot overrule
a prior panel in the absence of newly announced Supreme Court law,
an intervening en banc opinion of this court, a statutory
overruling, or developments in the law. See Lassend v. United
States, 898 F.3d 115, 124-25 & n.6 (1st Cir. 2018).

- 28 -
his arguments before us or before the district court. This is not

a case where an appellant has tried to introduce on appeal an issue

that was never before the district court or to otherwise "sand

bag" the other side. Although Guilfoile may not have consistently

raised certain arguments, the core issue of whether the payment

scheme as pleaded falls within the compass of the AKS was before

the district court and is at the core of his appeal. Before the

district court and before us, Guilfoile consistently argued that

he has adequately alleged an AKS violation for purposes of pleading

an FCA retaliation claim. The fact that he did not rely on Bay

State or did not consistently present a "market access" theory to

support the AKS violation in no way precludes us from reaching our

result. In the context of a de novo review necessitating our

interpretation of a statute, we routinely employ rationales that

have been less than satisfactorily presented by the parties if

that is the correct way of resolving the issue under the applicable

law. We cannot allow our responsibility to articulate the most

sensible resolution of an issue, especially, as here, an issue of

statutory interpretation involving our own precedent, to be

unreasonably circumscribed by the parties' arguments.

Hence, in summary, after drawing all reasonable

inferences in Guilfoile's favor and considering the effect of the

statutory language drawing a connection between AKS violations and

FCA actions, we conclude Guilfoile has plausibly pleaded that he

- 29 -
engaged in protected conduct within the meaning of an FCA

retaliation claim. That is, when Guilfoile raised concerns about

the payments to Greene he was engaging in conduct that "reasonably

could lead to an FCA action," Booker, 847 F.3d at 59 (internal

quotation marks omitted), specifically, an FCA action based on the

submission of claims resulting from an AKS violation.16

In view of its conclusion that Guilfoile had not

adequately pleaded that he engaged in protected conduct, the

district court did not go on to analyze the other two elements of

Guilfoile's FCA retaliation claim: specifically, that (1) his

employer knew that he was engaged in protected conduct and (2) his

employer retaliated against him because of that conduct. See

Karvelas, 360 F.3d at 235. However, we readily conclude that

Guilfoile has plausibly alleged that the Integrated Entity knew

that he was engaging in protected conduct. Guilfoile specifically

16 Many of the cases cited by appellees for the proposition
that the complaint does not adequately plead an FCA retaliation
claim are clearly inapposite because they apply standards for
directly pleading violations of the AKS and FCA, see, e.g., United
States ex rel. Kalec v. NuWave Monitoring, LLC, 84 F. Supp. 3d 793
(N.D. Ill. 2015); standards for proving AKS and FCA claims on
summary judgment, see, e.g., United States ex rel. Perales v. St.
Margaret's Hosp., 243 F. Supp. 2d 843 (C.D. Ill. 2003); standards
for assessing criminal conviction under the AKS, see, e.g., Patel,
778 F.3d 607; or standards for evaluating FCA retaliation claims
that we do not follow, see, e.g., United States ex rel. Uhlig v.
Fluor Corp., 839 F.3d 628, 635 (7th Cir. 2016). The case of United
States ex rel. Rost v. Pfizer, Inc., 736 F. Supp. 2d 367 (D. Mass.
2010), predates the 2010 amendment to the AKS and applies an
outmoded theory of implied certification.

- 30 -
alleged that "he notified Mr. Shields . . . that he believed the

contract with Mr. Green[e] violated the federal AKS because the

Integrated Entity had paid illegal kickbacks to secure a contract

at hospitals where it billed federal insurance programs."

Guilfoile also has plausibly pleaded that he was

retaliated against because of his protected conduct, given the

close temporal proximity -- about a week -- of his termination to

his final conversation with Shields about the payments to Greene.

See Harrington v. Aggregate Indus. Ne. Region, Inc., 668 F.3d 25,

32 (1st Cir. 2012) (suggesting that a plaintiff can satisfy the

third element of a prima facie retaliation case by plausibly

pleading temporal proximity where the retaliatory action occurred

two months after the protected conduct). To the extent appellees

contend that the complaint does not adequately allege that

Guilfoile informed Shields that he was concerned about fraud on

the government, see, e.g., McKenzie v. BellSouth Telecomms., Inc.,

219 F.3d 508, 516 (6th Cir. 2000), we disagree. The complaint

explicitly alleges, for example, that Guilfoile "notified []

Shields . . . that he believed the contract with [] Green[e]

violated the federal AKS because the Integrated Entity had paid

illegal kickbacks to secure a contract at hospitals where it billed

to federal insurance programs."

- 31 -
B. The 24/7 Call Center

We agree with the district court that Guilfoile has not

sufficiently pleaded a connection between the 24/7 call center

contractual terms and the submission of any claim.17 In general,

"[i]t is not the case that any breach of contract, or violation of

regulations or law, or receipt of money from the government where

one is not entitled to receive the money, automatically gives rise

to a claim under the FCA." United States ex rel. Hopper v. Anton,

91 F.3d 1261, 1265 (9th Cir. 1996). Even in the FCA retaliation

context, there must be a reasonable connection between the alleged

conduct and the submission of claims within the purview of the

FCA.

For a plaintiff to adequately plead that a contractual

breach could reasonably lead to an FCA action, he or she must

17 Anticipating this possible outcome of our review,
Guilfoile asserts that the district court erred by twice rejecting
his requests to amend the complaint to correct any pleading
deficiencies. But he has not demonstrated that the court abused
its discretion and committed a manifest error of law in denying
his motion to vacate the judgment and amend the complaint. See
Markel Am. Ins. Co. v. Díaz-Santiago, 674 F.3d 21, 32 (1st Cir.
2012) (stating that we "review[] the district court's denial of
post-judgment relief under Rule 59(e) for abuse of discretion,"
and that, "[g]enerally, to prevail on a Rule 59(e) motion, the
moving party must . . . clearly establish a manifest error of law."
(internal quotation marks omitted)); Maldonado v. Dominguez, 137
F.3d 1, 11 (1st Cir. 1998) ("[A] district court cannot allow an
amended pleading where a final judgment has been rendered unless
that judgment is first set aside or vacated pursuant to Fed. R.
Civ. P. 59 or 60.").

- 32 -
adequately plead causation and materiality. See D'Agostino v.

ev3, Inc., 845 F.3d 1, 7-8 (1st Cir. 2016). With respect to the

24/7 call center contractual term, Guilfoile has not pleaded any

plausible connection between the alleged contractual breach and

the submission of claims to the government, or how the contractual

breach would have been material to the payment of any claims. For

this reason, the district court correctly dismissed Guilfoile's

FCA retaliation claim to the extent it relied on his activities

concerning the 24/7 call center.18

IV.

For the foregoing reasons, we affirm dismissal of the

complaint as to the 24/7 call center issue but vacate and remand

as to the retaliation claim involving a potential violation of the

Anti-Kickback Statute. Given this disposition, the district court

may need to reconsider its decision to decline supplemental

jurisdiction over Guilfoile's state law claims.

So ordered. Costs to appellant.

- Concurring and Dissenting Opinion Follows -

18Our reasoning and conclusion would be the same if Guilfoile
had alleged that the Integrated Entity violated any statute or
regulation by not having a 24/7 call center or by falsely stating
in its contracts that it had a 24/7 call center. See Booker, 847
F.3d at 60. However, we do not read the complaint to plausibly
allege that the Integrated Entity violated any statutes or
regulations despite Guilfoile's subjective belief that the alleged
false representation "posed a serious threat to public health and
safety."

- 33 -
 BARRON, Circuit Judge, concurring in part and dissenting

in part. To plead a viable retaliation claim under the False

Claims Act ("FCA"), 31 U.S.C. § 3730(h)(1), a plaintiff must allege

that the conduct that he reported to his employer and that resulted

in his termination was "calculated, or reasonably could lead, to

a viable FCA action." United States ex rel. Karvelas v. Melrose-

Wakefield Hosp., 360 F.3d 220, 236 (1st Cir. 2004) (internal

quotation marks omitted). Thus, when an FCA retaliation claim

relies on a report of a violation of the Anti-Kickback Statute

("AKS"), 42 U.S.C. § 1320a-7b(g), as is the case here, the

plaintiff needs to allege facts that would suffice to show that

the conduct that he reported to his employer is of a kind that is

actionable under the AKS. See Karvelas, 360 F.3d at 237 (holding

that "protected" activities must "concern the employer's knowing

submission of false or fraudulent claims for payment to the

government" (emphasis added)).

To be clear, the plaintiff in such a case need not prove

at the pleading stage that what he complained to his employer about

was an actual AKS violation. But, the plaintiff must sufficiently

allege that "his reports concerned FCA-violating activity such as

the submission of false claims" resulting from conduct that could

constitute a violation of the AKS. United States ex rel. Booker

v. Pfizer, Inc., 847 F.3d 52, 60 (1st Cir. 2017). And, for that

reason, the allegation in Thomas Guilfoile's complaint in this

- 34 -
case that "he reasonably believed" that the conduct that he was

reporting to his employer prior to his termination revealed a

"violation[] of the AKS . . . resulting in the submission of

fraudulent claims to the government" is not itself of any

significance. Guilfoile must do more than assert a "legal

conclusion couched as a factual allegation" to satisfy his burden

at the pleading stage. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007));

see also Karvelas, 360 F.3d at 224 (setting aside "bald assertions"

or "unsupportable conclusions" in an FCA complaint). The crucial

question that we must resolve, therefore, is whether, taking as

true the complaint's factual allegations about the conduct that

Guilfoile reported to his employer, Guilfoile has satisfied his

burden to show that the conduct that he allegedly reported is at

least of a kind that falls within the scope of the AKS. For, if

that conduct alleged is not even of that kind, then I do not see

how his FCA retaliation claim -- insofar as it is premised on the

report of an AKS violation -- may survive a motion to dismiss.

I.

Guilfoile alleges in his complaint that his employer --

several general pharmacy services providers operating as a single

integrated entity (the "Integrated Entity") -- was bidding for

hospital contracts with the assistance of a financial consultant,

Michael Greene, who was simultaneously serving as a financial

- 35 -
advisor to those hospitals. I agree with the majority that

Guilfoile sufficiently alleges in his complaint that he was fired

by his employer after reporting that it was making payments to the

consultant in order to induce him to use his position at the

hospitals to steer the hospital contracts the Integrated Entity's

way. See Maj. Op. 25. I also agree that these allegations of

employer-induced double-dealing are concerning.

Nevertheless, the District Court found those factual

allegations -- even if taken as true -- to be legally wanting.

The District Court did so because it interpreted the AKS to

prohibit only payments made to induce "other providers or

individuals [to] directly refer[] or recommend[] patients to

specific services" to be paid for with federal health care funds.

The District Court then concluded that Guilfoile has not alleged

facts sufficient to show that Greene "could or did play a role in

referring or recommending federal program patients to Defendants

through his financial consultant work with Defendants."

In reaching that conclusion, the District Court rejected

Guilfoile's argument that Greene's facilitation of general

contracts between the Integrated Entity and the hospitals for

general pharmacy services that created the opportunity for

"general access to patients amounts to a referral or

recommendation" within the meaning of the AKS. The District Court

appears to have relied for that determination on the attenuated

- 36 -
relationship between two things: (1) the general contracts for

pharmacy services that Greene allegedly arranged between the

Integrated Entity and the hospitals; and (2) the particular

purchases by particular buyers of drugs from the pharmacies set up

by the Integrated Entity in the hospitals.

I see how the text of the AKS lends support to the

District Court's logic. As relevant here, the AKS prohibits

payments "to induce" the recipient of the payments "to purchase,

lease, order, or arrange for or recommend purchasing, leasing, or

ordering any good, facility, service, or item for which payment

may be made in whole or in part under a Federal health care

program[.]" 42 U.S.C. § 1320a-7b(b)(2)(B). The only transactions

that Guilfoile has alleged that the Integrated Entity paid Greene

to induce him to "arrange for or recommend" directly, however, are

the "purchas[es]" or "order[s]" by the hospitals of the specialty

pharmacy services provided by the Integrated Entity via the

contracts allegedly facilitated by Greene's paid work for

Integrated Entity. But, "payment . . . under a Federal health

care program" is not made for those general services. Rather,

payment is only made from a federal health care program in

consequence of the particular purchases by particular buyers of

drugs from the pharmacies set up by the Integrated Entity in the

hospitals.

- 37 -
 There is, then, necessarily a fair amount of

attenuation between the actual transactions that Greene was

allegedly induced to "arrange for" (the hospitals' "purchas[es]"

or "order[s]" of the Integrated Entity's general pharmacy

services) and the transactions "for which payment may be made . .

. under a Federal health care program" (some unknown purchases

from an Integrated Entity-run pharmacy of some unknown drugs by

some unknown patients who happened to be eligible for reimbursement

under a federal health care program). Moreover, that degree of

attenuation appears to inhere in the conduct that Guilfoile's

complaint alleges took place, given the middleman nature of the

general pharmacy services that the Integrated Entity retained

Greene to assist it in offering to the hospitals. Thus, nothing

about Guilfoile's allegations concerning his report of that

conduct to his employer indicates that the progression of the case

will reveal the attenuation that concerned the District Court to

be any less substantial than it now appears to be.

II.

The majority rejects the District Court's reasoning

regarding the attenuation problem. The majority concludes that

United States v. Bay State Ambulance & Hosp. Rental Serv., Inc.,

874 F.2d 20 (1st Cir. 1989), compels us to construe the AKS to

encompass situations with this degree of attenuation between

general services contracts and any federal payment from a federal

- 38 -
health care program that would result from particular purchases by

particular patients availing themselves of those services. See

Maj. Op. 26-27. It is true that Bay State did uphold the AKS

conviction of an ambulance services company and its president for

paying kickbacks to a hospital employee. Bay State did so,

moreover, even though that employee "arrange[d] for" only a general

ambulance services contract between the hospital and the ambulance

services provider, and not any particular purchase of ambulance

services by a patient for which the federal government would make

a payment. See id. at 25-26, 36.

In my view, however, Bay State is not so clearly

controlling a precedent on the attenuation issue as the majority

concludes that it is. That is so for three reasons.

First, the attenuation issue was not raised in Bay State.

And thus, Bay State did not need to address -- and did not in fact

address -- whether what the kickback recipient "arrange[d] for or

recommend[ed]" fell within the scope of the AKS or was instead too

attenuated from any payment from a federal healthcare program to

do so because the parties made no such argument. See Gately v.

Com. of Mass., 2 F.3d 1221, 1226 (1st Cir. 1993) (describing the

"essential principles of stare decisis" to include "(1) an issue

of law must have been heard and decided" and "(2) if an issue is

not argued, or though argued is ignored by the court, or is

reserved, the decision does not constitute a precedent to be

- 39 -
followed"); United States v. DiPina, 178 F.3d 68, 73 (1st Cir.

1999) ("Where, in a prior decision, we have not considered an issue

directly and assessed the arguments of parties with an interest in

its resolution, that decision does not bind us in a subsequent

case where the issue is adequately presented and squarely before

us, merely because some of the background facts are the same.").

Second, Bay State is in some respects an easier case in

which to find the nexus that the text of the AKS demands between

the payment from a federal health care program and the transaction

that the payment recipient "arrange[d] for" than this one is. The

ambulance services eventually purchased by patients in Bay State

were clearly reimbursable under a federal health care program. By

contrast, it is less clear to me that the specialty pharmacy

service (as opposed to the drugs purchased by patients) is itself

reimbursable, thereby making the attenuation issue that concerned

the District Court all the more acute. And Guilfoile's complaint

does nothing to supply useful clarification.19

19 Contraryto the majority's suggestion that this distinction
is insignificant, see Maj. Op. 27-28, it seems to me that the fact
that the contracts between the Integrated Entity and the hospitals
contemplate the provision of a general service that is not itself
reimbursable under a federal healthcare program should give us
pause. The text of the relevant AKS provision requires that the
"good, facility, service, or item" at issue be one "for which
payment may be made in whole or in part under a Federal health
care program[.]" 42 U.S.C. § 1320a-7b(b)(2)(B). And I have found
no authority -- nor does Guilfoile identify any -- that suggests
that the AKS does encompass conduct predicated on the defendant's
offering of middleman services of this type. See, e.g., United

- 40 -
 Finally, we should, in my view, be wary of extending Bay

State in construing the AKS to reach the conduct alleged here.

Congress passed the AKS to address a form of corruption that

threatens to cheat federal taxpayers and that might also pose a

risk to public health. See, e.g., Medicare-Medicaid Anti–Fraud

and Abuse Amendments, Pub. L. 95-142, 91 Stat. 1183 (1977)

(describing the act as one "to strengthen the capability of the

Government to detect, prosecute, and punish fraudulent activities

under the [M]edicare and [M]edicaid programs"); United States v.

Hancock, 604 F.2d 999, 1001 (7th Cir. 1979) (identifying the "evils

Congress sought to prevent by enacting the kickback statutes" to

include the "potential for increased costs to the Medicare-

Medicaid system and misapplication of federal funds"). In fact,

Congress was so concerned about this form of corruption that it

even made it a felony to engage in the conduct that the AKS covers.

See Pub. L. 95-142 (upgrading an AKS violation to a felony).

States v. Polin, 194 F.3d 863, 864-65 (7th Cir. 1999) (upholding
convictions of a doctor and nurse who paid a pacemaker company
sales representative a fee for each patient he "referred" to the
company for pacemaker monitoring services); United States v.
Vernon, 723 F.3d 1234, 1254-55 (11th Cir. 2013) (upholding
conviction of specialty pharmacy executive who paid a patient
advocate a 45% commission for each prescription that her patients
filled at the pharmacy to induce the patient advocate to refer her
patients to the pharmacy); United States v. Shoemaker, 746 F.3d
614 (5th Cir. 2014) (upholding conviction of nursing staffing
company executive who paid a hospital's board chair $5 for each
staffing hour that the hospital purchased from the nursing company
to induce the chair to recommend to the hospital's COO that the
hospital increase its hours from the nursing company).

- 41 -
 But, the AKS, like any statute that addresses an

important public problem, does not have limitless reach. And, as

with any statute that imposes criminal liability, as the AKS does,

we must be careful to construe its reach in a manner that ensures

that it affords those subject to it with due notice and in

accordance with the principle that only Congress may impose

criminal liability. See Liporata v. United States, 471 U.S. 419,

427 (1985).

I recognize that we would not need to worry about

transgressing those interpretive principles here if, as the

majority concludes, this case concerns the alleged reporting of

conduct that falls within the AKS's "heartland." See Maj. Op. 27.

But, I do not see how we could so conclude, no matter how broad

the AKS may seem to be. In fact, if the conduct alleged in the

complaint before us constitutes conduct that is of a kind that

falls within the AKS's heartland, then I would be hard-pressed to

conjure the kind of conduct that would reside on its outskirts.

Of course, statutes that have cores also have

peripheries. And conduct that falls within the periphery of a

statute's scope is no less unlawful than conduct that falls within

its core. At the same time, conduct that lies outside even the

periphery -- as measured, most clearly, by the words that Congress

chose to denominate the statute's bounds -- is not conduct that

may give rise to liability. And that is so no matter how much

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such conduct may seem to be concerning in its own right and no

matter how much that kind of conduct may even bear some resemblance

to the kind of conduct that plainly does falls within the statute's

scope.

For all of these reasons, then, Bay State does not, in

my view, dictate the outcome in this case. And that matters

because, although we are generally free to affirm a judgment below

on any ground manifest in the record, see MacDonald v. Town of

Eastham, 745 F.3d 8, 11 (1st Cir. 2014), we are not equally free

to reverse one on a ground that the appellant does not raise on

appeal. Yet while Guilfoile did cite Bay State in a footnote in

his filings below to support the proposition that "paying

inducements for referrals to access markets in order to bill

federal health care programs is a cognizable violation of the AKS,

and therefore the FCA," he has inexplicably, as the Integrated

Entity points out, abandoned that market access argument on

appeal.20 See Igartúa v. United States, 626 F.3d 592, 603 (1st

20
I note that Guilfoile does cite Bay State on appeal, but
only in support of the separate points that he adequately alleged
that Greene's position as a financial advisor at the hospitals put
him on sufficient footing to steer the hospital contracts to the
Integrated Entity and that he does not need to show that the
alleged arrangement resulted in a drain on the public fisc.
Guilfoile does not, however, make any argument on appeal as to how
Bay State resolves the attenuation issue in his favor. See
González v. Vélez, 864 F.3d 45, 56 n.7 (1st Cir. 2017) ("On appeal,
. . . claims are deemed abandoned unless they are, at a minimum,
accompanied by some developed argumentation.").

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Cir. 2010) (noting that "[a]rguments that are intentionally

relinquished or abandoned" or "raised in a perfunctory or not

serious manner [are] waived").

Having abandoned that theory for why the attenuation

inherent in the conduct that he alleged poses no concern, Guilfoile

engages with the attenuation issue on appeal only by invoking cases

that discuss whether the plaintiff has sufficiently made out a

false claim under the FCA. See, e.g., U.S. ex rel. Hutcheson v.

Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011) (holding

that hospitals' claims for reimbursement of doctor's services

using medical devices were "false" under the FCA where the doctors

had accepted kickbacks from the medical device manufacturer);

United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 740

(D.C. Cir. 1998) (holding that plaintiff had "a good faith basis

for going forward at the time of retaliation" as to the

"[]submission of a false claim to the federal government" element

where the plaintiff knew that 80% of the defendant's money came

from the federal government). But, those cases bear only on the

separate element of an FCA action that a "false or fraudulent

claim" be submitted to the federal government. See 31 U.S.C. §§

3729(a)(1),(b)(2). Given that Guilfoile's FCA retaliation claim

is premised only on the theory that the conduct that he reported

to his employer was prohibited by the AKS, see 42 U.S.C. § 1320a-

7b(g), that separate issue takes on significance only if Guilfoile

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has sufficiently alleged as a threshold matter that the conduct

that he was reporting was of a kind that violates the AKS.

III.

Because I do not believe that Bay State is controlling

on the critical issue of attenuation, and because Guilfoile has

dropped the market access theory that he pressed below, I see no

viable basis on appeal for rejecting the District Court's

conclusion that Guilfoile "has not set forth sufficient factual

allegations to support a plausible anti-kickback statute

violation." To excuse the waiver here is to deprive the appellees

of their judgment based on an argument that Guilfoile -- by

abandoning that argument on appeal -- gave them no reason to think

that they needed to confront and that, understandably, they did

not. Accordingly, I see no reason to decide, without adequate

briefing from the parties, the open interpretive question

concerning the scope of what constitutes conduct that is of a kind

the AKS encompasses on which Guilfoile's retaliation claim

necessarily depends. And so, given the posture of this case -- a

posture that is of Guilfoile's own making on appeal -- I conclude

that we must affirm the District Court's decision.

I therefore respectfully dissent.

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