DECISION AND ORDER I. INTRODUCTION In this False Claims Act case, the government alleges through its 102-page Complaint-in-Intervention that Defendants defrauded the federal Medicare program by submitting false and inflated claims for reimbursement. Defendants have jointly moved to dismiss the Complaint for failure to state a claim upon which relief can be granted. For the reasons that follow, Defendants’ motion is granted in part and denied in part, and the government is granted leave to file a First Amended Complaint-In-Intervention. II. BACKGROUND1 Relator Teresa Ross commenced this action on behalf of the United States in April 2012, alleging violations of the False Claims Act (“FCA”), 31 U.S.C. §§3729, et seq. (Docket No. 1). In August 2021, after nearly a decade of investigation, this Court permitted the government to intervene after the government previously declined to do so. See U.S. ex rel. Ross v. Indep. Health Corp., et al., 12-CV-299S, 2021 WL 3492917 (W.D.N.Y. Aug. 9, 2021). The government filed its Complaint-in-Intervention (“Complaint”) on September 13, 2021, seeking damages under the FCA and restitution under common law (Complaint, Docket No. 142). Defendants moved to dismiss on November 16, 2021, with briefing, including supplemental briefing, concluded on November 30, 2022, at which time this Court reserved decision without oral argument (Docket Nos. 154, 156-160). A. Parties Relator Ross is the former Director of Risk Adjustment Services for Group Health Cooperative (“GHC”), a private insurer (and former defendant2) that offered a Medicare Advantage Plan (Complaint at 24). Before becoming director of that division, Ross was GHC’s Director of Insurance and Health Data Analysis, a position in which she implemented the standard risk-adjustment claims-verification procedures and developed algorithms to identify and correct diagnosis-coding issues to ensure accurate and complete risk-adjustment claims submissions (id.). As part of her employment, Ross became familiar with the Medicare risk-adjustment system and Defendant DxID LLC’s (“DxID”) alleged misconduct at GHC (id.). Defendant Betsy Gaffney founded Defendant DxID and served as its CEO (id. at 28). Before founding DxID, Gaffney was a principal at non-party Cognisight (id.). Cognisight and DxID provided risk-adjustment and chart-review services to insurers who offered Medicare Advantage Plans (id. at 28). DxID is a subsidiary of Defendant Independent Health Corporation (“IHC”), which is a for-profit subsidiary of Defendant Independent Health Association, Inc. (“IHA”) (collectively “IH”), a non-profit corporation that offers Medicare Advantage Plans in New York (id. at
25-27). B. Medicare Part C Medicare is a federally operated health insurance program administered by the Centers for Medicare & Medicaid Services (“CMS”) for individuals aged 65 and older and the disabled (Complaint at 41). Medicare Parts A and B — sometimes referred to as “traditional” Medicare — are fee-for-service programs in which providers submit claims to CMS for healthcare services actually rendered, with CMS paying providers directly for each service based on rates predetermined by the government (id. at 42). In other words, Parts A and B are reimbursement programs. Part A covers inpatient and institutional care; Part B covers physician, hospital, outpatient, and ancillary services and durable medical equipment (id.). Medicare Part C, which is at issue here, is not a traditional reimbursement program. Part C allows beneficiaries to receive their healthcare services through Medicare Advantage (“MA”) Plans managed by private insurers known as MA Organizations (“MAOs”) (id. at 43). MAOs contract with CMS to provide healthcare services (id. at 44), and in turn, CMS pays MAOs on a per-member, per-month or capitated basis (id. at 3). But unlike Parts A and B, payments under Medicare Part C do not directly correlate to the healthcare services actually provided, but rather, consist of a fixed amount for each beneficiary based on that beneficiary’s expected average cost of care (id. at 64). This payment is adjusted among individual beneficiaries for risk factors that affect healthcare costs, such as age, disability status, gender, and institutional status (id. at
