diff --git a/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py b/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
index 9d4aae789..2fbd972e9 100644
--- a/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
+++ b/hindsight-api-slim/hindsight_api/engine/retain/fact_extraction.py
@@ -1314,6 +1314,8 @@ def _build_request_body(llm_config, config, prompt: str, user_message: str, resp
 def _coerce_fact_response(response: Any) -> dict[str, Any] | None:
     """Accept the schema wrapper, or a recoverable top-level facts array."""
     if isinstance(response, dict):
+        if "parameter" in response and isinstance(response["parameter"], dict):
+            return response["parameter"]
         return response
     if isinstance(response, list) and all(isinstance(item, dict) for item in response):
         return {"facts": response}
diff --git a/hindsight-api-slim/tests/test_coerce_fact_response_parameter_wrapper.py b/hindsight-api-slim/tests/test_coerce_fact_response_parameter_wrapper.py
new file mode 100644
index 000000000..b25a98c7d
--- /dev/null
+++ b/hindsight-api-slim/tests/test_coerce_fact_response_parameter_wrapper.py
@@ -0,0 +1,66 @@
+"""
+Test that _coerce_fact_response unwraps the ``{"parameter": {...}}`` envelope
+that Vertex AI Claude returns for tool-use structured output via litellm.
+
+Without this fix, retains via ``litellm`` + ``vertex_ai/claude-*`` silently
+produce 0 facts because the extracted facts sit inside ``response["parameter"]``
+and ``response.get("facts", [])`` returns an empty list.
+"""
+
+from hindsight_api.engine.retain.fact_extraction import _coerce_fact_response
+
+
+def test_unwraps_parameter_envelope():
+    """Vertex AI Claude wraps tool output in {"parameter": {"facts": [...]}}."""
+    response = {
+        "parameter": {
+            "facts": [
+                {"what": "version is 1.0", "who": "user", "fact_type": "world"},
+            ]
+        }
+    }
+    result = _coerce_fact_response(response)
+    assert "facts" in result
+    assert len(result["facts"]) == 1
+    assert result["facts"][0]["what"] == "version is 1.0"
+
+
+def test_passthrough_normal_response():
+    """Normal {"facts": [...]} responses pass through unchanged."""
+    response = {"facts": [{"what": "something", "fact_type": "world"}]}
+    result = _coerce_fact_response(response)
+    assert result is response
+
+
+def test_passthrough_empty_facts():
+    """Empty facts list passes through."""
+    response = {"facts": []}
+    result = _coerce_fact_response(response)
+    assert result is response
+
+
+def test_coerces_bare_list():
+    """A bare list of fact dicts is wrapped into {"facts": [...]}."""
+    response = [{"what": "a"}, {"what": "b"}]
+    result = _coerce_fact_response(response)
+    assert result == {"facts": [{"what": "a"}, {"what": "b"}]}
+
+
+def test_rejects_non_dict_non_list():
+    """Non-dict, non-list values return None."""
+    assert _coerce_fact_response("bad") is None
+    assert _coerce_fact_response(42) is None
+    assert _coerce_fact_response(None) is None
+
+
+def test_parameter_with_nested_structure():
+    """Parameter envelope with additional metadata is still unwrapped."""
+    response = {
+        "parameter": {
+            "facts": [{"what": "a"}],
+            "metadata": {"extra": True},
+        }
+    }
+    result = _coerce_fact_response(response)
+    assert len(result["facts"]) == 1
+    assert result.get("metadata") == {"extra": True}
diff --git a/skills/hindsight-docs/references/openapi.json b/skills/hindsight-docs/references/openapi.json
index e8e14cb5a..ffad05bfa 100644
--- a/skills/hindsight-docs/references/openapi.json
+++ b/skills/hindsight-docs/references/openapi.json
@@ -10,7 +10,7 @@
       "name": "Apache 2.0",
       "url": "https://www.apache.org/licenses/LICENSE-2.0.html"
     },
-    "version": "0.8.4"
+    "version": "0.8.5"
   },
   "paths": {
     "/health": {