State of Minnesota, et al., ex rel. Richard Knudsen, Appellant,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A21-0054

State of Minnesota, et al., ex rel. Richard Knudsen,
Appellant,

vs.

AT&T Mobility National Accounts, LLC,
Respondent,

T-Mobile USA, Inc.,
Respondent,

Sprint Solutions, Inc.,
Respondent,

Cellco Partnership, d/b/a Verizon Wireless,
Respondent.

Filed December 27, 2021
Affirmed
Smith, Tracy M., Judge

Hennepin County District Court
File No. 27-CV-18-16765

Tejinder Singh (pro hac vice), Goldstein & Russell, P.C., Bethesda, Maryland; and

John G. Albanese, Berger Montague PC, Minneapolis, Minnesota (for appellant)

Aaron D. Van Oort, Jeffrey P. Justman, Faegre Drinker Biddle & Reath LLP, Minneapolis,
Minnesota (for respondent AT&T Mobility National Accounts, LLC)

Steve Y. Koh (pro hac vice), Perkins Coie LLP, Seattle, Washington; and

S. Jamal Faleel, Blackwell Burke, P.A., Minneapolis, Minnesota (for respondent T-Mobile
USA, Inc.)

2
William P. Ashworth (pro hac vice), Williams & Connolly LLP, Washington, District of
Columbia; and

Donald G. Heeman, Jessica J. Nelson, Randi J. Winter, Spen cer Fane LLP, Minneapolis,
Minnesota (for respondent Sprint Solutions, Inc.)

Libretta P. Stennes, Lindsey N. Schmid t, Greenberg Traurig, LLP, Minneapolis,
Minnesota; and

Mathew S. Rosengart (pro hac vice), Greenberg Traurig, LLP, Los Angeles, California (for
respondent Verizon Wireless)

Considered and decided by Smith, Tracy M., Presiding Judge; Slieter, Judge; and
Gaïtas, Judge.
NONPRECEDENTIAL OPINION
SMITH, TRACY M., Judge
Appellant-relator Richard Knudsen challenge s the dismissal of his qui tam claims
against respondents—four wireless-co mmunication-service providers—under the
Minnesota false claims act (MFCA), Minn. Stat. §§ 15C.01-.16 (2020). Knudsen argues
that the district court erred by determining that (1) his claims were not pleaded with
particularity as required under Minnesota Rule of Civil Procedure 9.02; (2) his amended
complaint failed to state a claim upon which relief can be granted; (3) the public-disclosure
bar in the MFCA precludes most of his claims ; and (4) the claim against one respondent
was precluded by Knudsen’s fail ure to file his amended comp laint under seal as required
by the MFCA.
Because we conclude that Knudsen’s amended complaint fails to satisfy the
requirement to plead his claims with particularity, we affirm.
3
FACTS
This case involves contracts between th e State of Minnesota and AT&T Mobility
National Accounts, LLC (AT&T), T-Mobile USA, Inc. (T-Mobile), Sprint Solutions, Inc.
(Sprint), and Cellco Partnershi p, d/b/a Verizon Wireless (Verizon) (collectively, the
carriers) for the provision of wireless-co mmunication services to state and local
governmental entities. The essence of Knudsen’s claim is that the carriers promised to
provide services to the state at the most favorable rates available but did not do so. Knudsen
alleges that the carriers violated the MFCA in two ways: (1) by fraudulently inducing the
state to enter into the contracts with them and (2) by making false certifications to the state
by presenting bills that were not based on the most favorable rates. The state has declined
to intervene in this case and is not a party.
At issue is the legal sufficiency of Knudsen’s amended complaint, and we look to it
for the factual allegations made to support Knudsen’s claims.1 According to the amended
complaint, Knudsen worked as a consultant in the wirele ss industry from 2008 to 2018.
Knudsen alleges that, as a consultant, he anal yzed hundreds of rate plans and contracts,
worked directly with companies and government entities regarding wireless services, and
assisted all the carriers at some point. It is th rough this work that Knudsen claims that he
learned of some of the carriers’ often-confid ential rate plans and sa w that the rates they

1 When reviewing a dismissal for failing to stat e a claim, we accept as true all facts as
alleged in the complaint and construe all reasonable inferences in favor of the nonmoving
party. See Walsh v. U.S. Bank, N.A., 851 N.W.2d 598, 606 (Minn. 2014).

4
were offering to certain corporate customers were superior to those offered to government
customers.
Knudsen alleges that the carriers violated the MFCA in relation to two sets of
contracts that the carriers ente red into with the Minnesota Office of State Procurement
(OSP). The first set consists of contracts that OSP negotiated directly with three of the
carriers, Sprint, Verizon, a nd AT&T, which became effectiv e in 2012 (the Minnesota
contracts); T-Mobile is not a party to the Mi nnesota contracts. The second set consists of
contracts that OSP entered into with all four carriers in 2018 thr ough a state purchasing
consortium called the Western States Contracting Alliance (the WSCA contracts). Both the
Minnesota contracts and the original WSCA master agreements on which Minnesota’s
WSCA contracts were based were developed following a request for proposal (RFP),2 the
terms of which were to be integrated into the final contracts along with any agreed-upon
modifications.
The Minnesota Contracts
At issue in the Minnesota contracts is a provision regarding price decreases. The
RFP provision stated as follows:
PRICE DECREASES. During the life of the Contract, any or
all temporary price reductions, promotional price offers,
introductory pricing, or any other offers or promotions that
provide prices lower than or discounts higher than those stated
in the Contract, must be gi ven immediately to the entities
eligible to purchase from the Contract. Invoices for goods

2 An RFP is an announcement of a project used to solicit proposals from contractors. The
RFPs here described the gove rnment’s needs for communica tions services, outlined the
proposed contract terms, and communicated the negotiation-and-final-contract process.
5
ordered or shipped or services performed during the decrease,
or promotion, must immediately reflect such pricing.

Under the RFP, the responding contractor wa s presumed to agree with the RFP’s terms
unless the responding contractor brought deviations to the attention of the state.
During the negotiation process with the three carriers, the price-decreases clause
was modified. Among the changes was the dele tion of the phrase “introductory pricing.”
The language in the final contract stated that
any or all temporary price reductions, promotional price offers,
or any other offers or promotions that provide prices lower than
or discounts higher than those st ated in the Contract, must be
given immediately to the [state] . . . if the prices given are
based on similar and comparable purchases.

Sprint, Verizon, and AT&T signed the Minne sota contracts in 2012, and the contracts
became effective on July 1, 2012. Knudsen a lleges that, even as modified, the price-
decreases clause obligated the three carriers to immediately offer the state “any offer of a
lower price or higher discount” given to a third party for comparable products and services.
The WSCA Contracts
In 2018, OSP started to sh ift its contracts with wireless-communications carriers
away from the Minnesota contracts. That year, all four of the carriers signed contracts with
Minnesota through WSCA, the state consortium that had negotiated contracts with the four
carriers.
3 Knudsen’s claims relate to the provisi ons of the WSCA mast er agreements on

3 Sprint signed on March 13, 2018, AT&T on March 23, 2018, T-Mobile on April 25, 2018,
and Verizon on October 2, 2018. Verizon’s signing date was three days before the original
complaint was filed. The claims against Verizon related to the WSCA contracts were added
in the amended complaint.
6
which Minnesota’s WSCA contracts were based, which, he alleges, require the provision
of services at “the lowest cost available.”
The WSCA master contracts were negotiate d in 2011 and 2012, with the state of
Nevada acting as the lead state on behalf of the consortium. The master contracts followed
an RFP process. The RFP, released in 2011, provided that its terms would be incorporated
into the contract unless the carrier expressl y excluded the provisions in its response.
Following the negotiation process, each of the four carriers entered into a WSCA contract
in 2012. In 2018, the 2012 WSCA contracts were incor porated into the WSCA contracts
that the carriers entered into with Minnesota.
Knudsen relies on three sections in the 2011 RFP that provided for the “lowest cost
available.” Section 3.1.2 provided that the carrier would provide “quality wireless voice
services, wireless broadband services, equipm ent and accessories at the lowest cost
available in a timely and efficient manner.” In addition, section 3.5.1 provided that the
carrier would provide wireless voice services at “the lowest cost available in a timely and
efficient manner” and section 3.6.1 provided that the carrier would provide wireless
broadband services at the “lowest cost available in a timely and efficient manner.”
In responding to th e 2011 RFP, three carriers subm itted modifications to some or
all of these sections. Sprint deleted secti on 3.5.1, noting that it does not offer “Most
Favored Customer” clauses, and instead o ffered services that are “not unreasonably
dissimilar” from “similarly situat ed customers.” Sprint did no t directly address sections
3.1.2 or 3.6.1. Verizon modifi ed sections 3.5.1 and 3.6.1, stating that it would provide
“quality wireless voice services” at “a fair and reasonable cost” but “not lowest cost.” In
7
response to section 3.1.2, Ve rizon wrote: “Noted and U nderstood.” AT&T modified
sections 3.1.2 and 3. 5.1, promising to provide “comp etitive prices” and “best value.”
AT&T did not modify section 3.6.1. T-Mobile made no changes to any of the three
sections. Knudsen alleges that master contr acts that resulted from th is process—with or
without the modifications to the three sections—required the carriers to provide the lowest
cost available for all services and that that requirement was incor porated into the 2018
WSCA contracts entered into with Minnesota.
Alleged Failures to Offer Minnesota the Best Rates
In support of his MFCA claim, Knudse n in his amended complaint provides four
examples in which the best rates that the ca rriers offered to Minnesota were compared to
cheaper rates allegedly offered to other entitie s. These price lists ar e for voice services
only—not for other services. Some of the plans that Knudsen alleges were offered to other
entities precede—even by a number of years—the carriers’ contracts here, but Knudsen
alleges that it is standard in the industry for carriers to allo w customers to maintain their
rate plans until a better rate plan comes along.
Knudsen asserts that there is no reason wh y the carriers could not have offered the
lower-cost price lists to Minnesota. He further alleges that the carriers knew that they were
offering better rates to other entities than to Minnesota and thus knew that they were
fraudulently not offering the lowest prices or best discounts to Minnesota, as allegedly
required by the contracts.
8
Procedural History
Knudsen filed his original complaint against the four carriers under seal on
October 5, 2018. The Minnesota Attorney General declined to intervene, and the case was
unsealed on May 21, 2019. In response to the carriers’ motions to dismiss, on January 31,
2020, Knudsen publicly filed an amended complaint that was not submitted to the attorney
general for review. The amended complaint cont ained similar allegations to the original
complaint, except for the a ddition of a claim against Ve rizon related to the WSCA
contracts.
The carriers brought new motions on variou s grounds. The district court ruled on
four bases for dismissal asserted by the carriers. First, the district court concluded that the
amended complaint failed to state an MFCA claim with particularity, as required for fraud
claims. Second, it concluded that the ame nded complaint failed to state a claim of
knowingly engaging in conduct in violation of the MFCA because the contract terms were
ambiguous and there was no othe r alleged evidence of the pa rties’ understanding of the
terms. Third, the district court determined that, with respect to all claims other than those
related to voice services under the 2012 Minne sota contracts, Knudsen’s claims were
barred because the claims were previously publicly disclosed and he was not an original
source of the information.
4 Finally, with respect to Veriz on, the district court concluded
that dismissal was warranted because Knudsen added the WSCA contract claim against

4 The MFCA requires dismissal of an action if the allegations were previously publicly
disclosed in certain settings, unless the person bringing the action was the original source
of the information. Minn. Stat. § 15C.05(f).
9
Verizon in the amended compla int without following the MF CA procedural requirement
of filing under seal pending review by the atto rney general. The district court dismissed
the amended complaint in its entirety.
Knudsen appeals.
DECISION
We begin our analysis by evaluating wh ether Knudsen’s amended complaint states
the elements of an MFCA claim with sufficient particularity as required by Minn. R. Civ.
P. 9.02. We do so bearing in mind that we must accept all facts as alleged in the complaint
as true and construe all reasonable inferences in favor of the nonmoving party. See Walsh,
851 N.W.2d at 606. We first outline the lega l framework for Knudsen’s claims under the
MFCA, Minn. Stat. §§ 15C.01-.16.
The MFCA imposes civil liability on defendants who “wrongfully secure[] monies
from the State.” Phone Recovery Servs., LLC v. Qwest Corp., 919 N.W.2d 315, 319 (Minn.
2018) (emphasis omitted); see also Minn. Stat. § 15C.02(a). Under the statute, an
individual—called a relator—can bring claims to collect funds due to the government and
retain a portion of the litigation proceeds if the suit is successful. Phone Recovery Servs.,
919 N.W.2d at 319. The MFCA mirrors the federal false claims act (FCA), 31 U.S.C.
§§ 3729-3733 (2018). Olson v. Fairview Health Servs. of Minn., 831 F.3d 1063, 1069 n.6
(8th Cir. 2016). Because federal cases are inst ructive when a Minnesota statute mirrors a
federal one, federal cases interpreting the FCA are relevant to interpreting the MFCA. See
In re Commodore Hotel Fire & Explosion Case, 318 N.W.2d 244, 246 (Minn. 1982).
10
Under the MFCA, a defendant who “knowingly presents, or causes to be presented,
a false or fraudulent claim for payment or a pproval” to the government is civilly liable.
Minn. Stat. § 15C.02(a)(1). Additionally, a de fendant who “knowingly makes or uses, or
causes to be made or used, a false record or statement material to a false or fraudulent
claim” in government dealings is also liable. Id. (a)(2). “Knowingly” requires actual
knowledge or acting in deliberate ignorance or reckless disregard of the truth or falsity of
the information. Minn. Stat. § 15C.01, subd. 3. The MFCA does not require specific intent
to defraud, but mere negligence, inadvertence, or mistake will not be enough to have acted
knowingly. Id. The Supreme Court has stated about the FCA that it “is not an all-purpose
antifraud statute, or a vehicle for punishing garden-variety breaches of contract or
regulatory violations.” Universal Health Servs., Inc. v. United States ex rel. Escobar, 579
U.S. 176, 194(2016) (quotation and citation omitted).
Knudsen asserts that the carriers vi olated the MFCA under two theories––
promissory fraud and false certification. Promissory fraud occurs when a defendant makes
a promise with “no intention to perform at the time the promise was made.” Int’l Travel
Arrangers v. NWA, Inc., 991 F.2d 1389, 1402 (8th Cir. 1993) (quoting Hayes v. Northwood
Panelboard Co., 415 N.W.2d 687, 690 (Minn. App. 1987), rev. denied (Minn. Jan. 28,
1988)). False certification occu rs when a defendant submits a claim for payment that
certifies compliance with a material contractual obligation and the defendant knows that it
is not in compliance with that condition. Escobar, 579 U.S. at 190.
Knudsen contends that he pleaded the elements of each of his theories of fraud with
the particularity required under Minn. R. Civ. P. 9.02. See United States ex rel. Joshi v.
11
St. Luke’s Hosp., Inc., 441 F.3d 552, 556 (8th Cir. 2006) (applying Fed. R. Civ. P. 9(b) to
complaints alleging FCA violations). The rule states, “In all averments of fraud or mistake,
the circumstances constituting fraud or mistake shall be stated with particularity. Malice,
intent, knowledge, and other condition of mi nd of a person may be averred generally.”
Minn. R. Civ. P. 9.02. The federal counterpart uses similar language: “a party must state
with particularity the circumstances cons tituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R.
Civ. P. 9(b). Federal cases interpreting rule 9(b) are thus instructive on the interpretation
of rule 9.02. See, e.g., Commodore Hotel, 318 N.W.2d at 246.
“To plead with particularity is to plead the ultimate facts or the facts constituting
fraud.” Hardin Cnty. Sav. Bank v. Hous. & Redev. Auth. of Brainerd, 821 N.W.2d 184, 191
(Minn. 2012) (citations and quotation marks omitted). A party must plead “facts underlying
each element of the fraud claim.” Id. A complaint satisfies rule 9(b) if it pleads “such facts
as the time, place, and content of the defendant’s false representations, as well as the details
of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them,
and what was obtained as a result.” Olson, 831 F.3d at 1070 (citation omitted). The
complaint must identify the “who, what, where, when, and how of the alleged fraud.” Id.
(citation omitted).
Application of Law to the Amended Complaint
With that background, we turn to the claims here. Knudsen argues that the carriers
knowingly made false promises to provide Minnesota with the lowest-cost services.
12
Knudsen relies on the contracts themselves as evidence of the carriers’ fraud. Because his
claims depend on the contracts themselves, we examine their relevant provisions.
In the Minnesota contracts, which all of the carriers except T-Mobile signed, the
price-decreases clause in the final contract provided that “any or all temporary price
reductions, promotional price offers, or any other offers or promotions that provide prices
lower than or discounts higher than those stated in the Contract, must be given immediately
to the [state] . . . if the prices given ar e based on similar and comparable purchases.”
Knudsen relies on the “any other offers or promo tions” language to argue that this clause
applied to all pricing and required the carriers to provide the best pr ices at all times. The
three carriers point to the words “temporary” and “promotional,” arguing that this language
would be unnecessary if the clause was meant to apply to all prici ng. The three carriers
also point to the deletion of “introductor y prices” from the RFP provision as further
demonstration that the final price-decreases clause does not apply to all pricing because
that specific deletion would then be meaningless.
Regarding the WSCA contracts, the 2011 RFP that resulted in the master
agreements used by Minnesota as the bases for its 2018 WSCA contracts provided that the
carriers would provide services “at the lowest cost available in a timely and efficient
manner” in three sections. T- Mobile responded to the RFP without ch anges to the three
sections. The three other carriers responded with modifications to the lowest-cost language.
Sprint promised to provide pricing that wa s not “unreasonably dissimilar” from others.
Verizon promised to provide serv ices “at a fair and reasonable cost . . . not lowest cost.”
AT&T said it would provide prices at the “best value.”
13
Contract Ambiguity
The carriers argue that the Minnesota c ontracts and the WSCA contracts either do
not require the lowest prices or are ambiguous. If the contracts are ambiguous, the carriers
argue, Knudsen cannot allege an “objective fals ehood,” which, they co ntend, is essential
to an MFCA claim. Knudsen counters that the contracts unambiguously require the lowest
cost available—even with th e modifications—and that, in any event, an ambiguous
contract does not defeat MFCA liability as a matter of law.
The district court concluded, and we agree, that at least the Minnesota contracts and
the WSCA contracts with three of the carriers are, at best, ambiguous. As for the Minnesota
contracts, both interpretations advanced by the parties of the price-decreases provision are
reasonable in light of the RFP provision and its modification in the final contracts. As for
the WSCA contracts, the price-decreases pr ovision in the Minnesota contracts with
Sprint’s, Verizon’s, and AT &T’s attempted modificati ons render the lowest-cost
provisions related to voice and broadband serv ices ambiguous as applied to these three
carriers. None of the new lan guage clearly promises to provi de the lowest-cost services.
Further, it is unclear if the carriers meant to cover all the lowest-cost provisions when they
added the modified language. Thus, the WSCA contracts, at least where modified, are at
best ambiguous as to whether the carriers promised to provide the lowest cost.
Contract ambiguity, however, does not necessarily mean that a claimant cannot
adequately plead that a false promise was made. An ambiguous contract can still show that
a defendant made a false promise if the rela tor can adequately plead that the defendant
understood what the ambiguous contract required and knew that the promise was false. See,
14
e.g., Minn. Ass’n of Nurse Anesthetis ts v. Allina Health Sys. Corp. , 276 F.3d 1032, 1053
(8th Cir. 2002) (holding that an ambiguous regulation will not defeat an MFCA claim but
that the relator must show what the de fendant thought the regulation required); United
States ex rel. Druding v. Care Alts. , 952 F.3d 89, 100 (3d Ci r. 2020) (holding that
“objectivity speaks to the element of scienter, not falsity”); Winter ex rel. United States v.
Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1119 (9th Cir. 2020) (rejecting an
“objective falsity” requirement of the FCA and clarifying that the Eleventh Circuit did not
consider all subjective statements to be incapable of falsity).
The carriers point to several federal ci rcuit court decisions to argue that an
“objective falsehood” is require d to sustain a claim under the FCA, but even those cases
suggest that a claim could be made if there were additional evidence of fraud. See United
States v. AseraCare, Inc. , 938 F.3d 1278, 1301 (11th Cir. 2019) (reasoning that an FCA
claim requires a falsehood and that “the mere difference of reasonable opinion between
physicians, without more , . . . does not constitute an objective falsehood” (emphasis
added)); see also United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370,
378 (4th Cir. 2008) (“An FCA relator cannot base a fraud claim on nothing more than his
own interpretation of an imprecise contractual provision.” (emphasis added)).5

5 As another example, the Seventh Circuit requires an “objective falsehood” under the FCA
but noted that a contract subject to a disp uted legal question could meet the objective-
falsehood standard if the relator also pres ented evidence showing what the defendant
thought it was agreeing to. See United States ex rel. Yannacopoulos v. Gen. Dynamics, 652
F.3d 818, 836-37 (7th Cir. 2011).

15
Thus, Knudsen’s MFCA claims are not de feated merely because the contracts are
ambiguous. Knudsen does, however, need to ad equately plead the requisite scienter in
order to show that the carriers knowingly ma de a false promise and then submitted false
claims under that promise. The knowledge requirement is an essential element of an MFCA
claim. See Minn. Stat. § 15C.02(a)(1). Because the knowledge requirement applies to all
MFCA claims, it applies whether or not a c ontract is ambiguous. Thus, we need not
determine whether T-Mobile’s WSCA contract—which did not modify the 2011 RFP
provisions regarding lowest available price—is ambiguous in order to evaluate whether the
amended complaint pleads scienter with sufficient particularity.
Failure to Sufficiently Plead Knowledge
Knudsen alleges that, for some periods of time, the carriers offered better prices for
voice services to other entities th an those offered to Minnesota under the contracts. Even
if these alleged facts could establish a breach of contract, Knudsen needs to do more than
allege breach of contract, which is not actionable under the MFCA. See, e.g., Wilson, 525
F.3d at 377 (concluding that the “inefficient management of [one’s] contractual duties” is
not an FCA claim); Yannacopoulos, 652 F.3d at 836 (“Although a breached contractual
term may be considered a falsehood in a looser sense—a false promise––a mere breach of
a contractual duty does not satisfy [the FC A].”). To bring an actionable MFCA claim,
Knudsen needs to adequately plead scienter. Though scienter may be alleged generally, the
relator cannot rely solely on broad legal conclusions. See Bahr v. Capella Univ. , 788
N.W.2d 76, 80 (Minn. 2010) (holding in a Minn. R. Civ. P. 8.01 case––which has a lesser
standard for pleading––that a plaintiff “must provide more than labels and conclusions”).
16
The amended complaint generally alleges that the carriers “knew they were not
providing services to [the stat e] at the ‘lowest cost availabl e,’” and that they “knew what
[the] contractual language required, and they knew that they were not abiding by it.” These
are broad conclusions of scienter; Knudsen does not allege a single fact in support of these
allegations. With respect to his fraudu lent-inducement claim, he asserts no
contemporaneous facts showing that the carriers entered into the contracts with Minnesota
with “no intention to perform” as promised. See Int’l Travel Arrangers, 991 F.2d at 1402;
cf. Ambassador Press, Inc. v. Durst Image Tech. U.S., LLC , 949 F.3d 417, 423 (8th Cir.
2020) (affirming dismissal of a common-law fraud claim pursuant to Fed. R. Civ. P. 9(b)
for failure to set forth suppor ting facts demonstrating an in tention to defraud when the
contractual promises were made). Regardin g his false-certification claims, Knudsen
alleges no facts showing that the carriers kne w when they submitted a claim for payment
that the claim is not in compliance with a contractual obligations See Escobar, 579 U.S. at
190-91. Knudsen’s conclusory allegations are not enough under rule 9.02 for a claim under
the MFCA.6

6 After oral argument, the carriers notified th e court of a recent Se venth Circuit opinion,
United States ex rel. Sc hutte v. Supervalu Inc. , 9 F.4th 455, 464 (7th Cir. 2021) (“A
defendant who acted under an incorrect interpretation of the relevant statute or regulation
did not act with reckless disregard if (1) the interpretation was objectively reasonable and
(2) no authoritative guidance cautioned de fendants against it.”). This case is
distinguishable in that it deal s with statutes and regulations , not a contract provision. But
at a general level, it requires a relator to show what the defendant thought their obligation
was under a statute, regulation, or contract if that obligation is unclear. Here, Knudsen has
not alleged anything beyond conclusions of scienter.
17
Knudsen’s allegations stand in stark contra st to claims in other cases, relied upon
by Knudsen, where courts have found that a complaint sufficiently pleaded a claim under
the FCA. In United States ex rel. Heath v. AT&T, Inc. , the D.C. Circuit Court of Appeals
concluded that the relator had satisfied the plea ding requirements of Fed. R. Civ. P. 9(b)
for its FCA claim. 791 F.3d 112, 11 5 (D.C. Cir. 2015). The complaint in Heath offered
substantially more factual support of the a lleged fraudulent conduct than Knudsen’s. The
relator in Heath alleged that AT&T had a scheme to defraud schools and libraries by not
enforcing federal regulations that required the provision of telecommunications at the
lowest rates. Id. at 117. The complaint alleged that AT&T had previously been investigated
for violating the regulatory requirement, that it had entered into a consent decree obligating
it to institute a plan to ensure compliance, that AT&T had nevertheless chosen not to train
its employees regarding the requirement, that AT&T employees therefore remained
ignorant of the requirement until AT&T revamped its pricing scheme, and that for ten years
AT&T consequently overbilled schools and libraries. Id. at 117-18. The complaint included
copies of AT&T’s training materials and alleged that an audit of AT&T’s bills to one public
school system revealed that—for five year s—AT&T overbilled schools by at least $2.8
million. Id. at 124. The Heath court concluded that the complaint sufficiently pleaded “the
fraud of which [AT&T] is accused: That, even in the wake of a consent decree . . . ,
[AT&T] persisted in knowin gly or recklessly failing to comply with the lowest-
corresponding-price requirement.” Id. Knudsen’s amended complaint asserts no similar
facts to establish such a knowingly fraudulent scheme.
18
Knudsen also cites Winter, where the Ninth Circuit co ncluded that a complaint
sufficiently alleged knowing misconduct under the FCA. 953 F.3d at 1120. But, again, the
complaint alleged factual support for the know ing scheme. In that case, a former hospital
administrator filed an FCA action alleging that the hospital submitted false Medicare
claims certifying that patients’ inpatient hospitalizations were medically necessary. Id. at
1115-16. The relator’s job included reviewing the hospital’s admissions for medical
necessity. Id. at 1115. After a company that owned nursing homes acquired an ownership
interest in the hospital’s management comp any, the relator noticed an unusually high
number of patients transporte d from those nursing homes a nd admitted into the hospital.
Id. The relator studied the statistics, saw that the spike correlated with the acquisition, and
determined that the increase resulted in an increase of admitted Medicare beneficiaries. Id.
The relator attempted to bring her concerns to hospital manageme nt but received no
response. Id. At a meeting in which management instructed staff not to question
admissions, the relator alleged that a co-owner cut her off, using profanity, when the relator
tried to speak up. Id. at 1115-16. The complaint alleged that the new owner and the hospital
operator exerted pressure on physicians to adm it patients, including Medicare recipients,
and detailed 65 separate patient admissi ons that were not medically necessary. Id. It
estimated over $1.2 million in false Medicare claims for a two-month period. Id. The Ninth
Circuit concluded that the complaint stated a claim, including that the allegations supported
an inference of scienter. Id. at 1120. In contrast, here, Knudsen only pleaded broad, general
conclusions of scienter.
19
Knudsen does not allege any conversa tions, communications, or other evidence
outside of the contracts, which included modifications to the RFPs, to demonstrate that the
carriers fraudulently induced the state to enter into the c ontracts by knowingly promising
to offer the lowest costs without intending to do so. For his claims of false certification,
Knudsen again relies on the contractual provisions and also on his examples of lower prices
that he alleges were offered to corporate customers for voice services only at some periods
of time. But he alleges no conversations, communications, or other evidence to demonstrate
that the carriers knowingly falsely certified compliance with their contracts. Again, a claim
under the MFCA requires more than just a breach of contract, see Escobar, 579 U.S. at 194
(discussing the FCA), Minn. R. Civ. P. 9.02 demands that the elements of fraud claims
must be pleaded with particularity, and a relator cannot solely rely on broad legal
conclusions to allege scienter, see Bahr, 788 N.W.2d at 80.
Because the amended complain t fails to allege with par ticularity facts that would
satisfy the knowledge element of an MFCA claim against the carriers, the district court did
not err by dismissing the amended complaint. And, because dismissal is warranted on this
ground, we need not address the other grounds relied on by the district court in dismissing
the amended complaint.
Affirmed.