Headen v. Adams and Associates, Inc. et al
MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 12/5/2017. (JLC)
2017 Dec-05 PM 03:41
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
UNITED STATES ex rel. STEPHEN
ADAMS AND ASSOCIATES, INC.,
d/b/a THE GADSDEN JOBS CORPS
CENTER; LORRAINE LANE; and
) Case No.: 4:16-CV-1164-VEH
On July 14, 2016, the Plaintiff-Relator, Stephen Headen, filed this action against
Adams and Associates, Inc. d/b/a the Gadsden Jobs Corps Center (“Adams”), Lorraine
Lane, Juvenel Levros, and Shaileen Viera to recover, on behalf of the United States,
damages and civil penalties arising from false statements and claims allegedly made by
the Defendants in violation of the Federal Civil False Claims Act, 31 U.S.C. §§
3729–3733, as amended (“the Act” or the “FCA”). (Doc. 1). On November 18, 2016, the
government filed its notice of non-intervention. (Doc. 9). Thereafter, Levros was
terminated as a defendant when the Relator filed an Amended Complaint which made no
claims against Levros. (Doc. 41).
The Amended Complaint, which is now the operative pleading, alleges that all
Defendants are liable for: “Substantive Violations of the False Claims Act” (Count One);
“Implied False Certification in Violation of the False Claims Act” (Count Two); and
conspiracy to violate the False Claims Act (Count Three).1 The case comes before the
Court on the Defendants’ Motion to Dismiss (the “Motion”). (Doc. 45). For the reasons
stated herein, the Motion will be GRANTED.
The Defendants state that their motion is brought “pursuant to Federal Rules of
Civil Procedure 8, 9(b), and 12(b)(6).” (Doc. 45 at 1). The Eleventh Circuit Court of
Appeals has stated:
Rule 9(b) applies in FCA cases. United States ex rel. Clausen v .
Lab. Corp. of Am., Inc., 290 F.3d 1301, 1308–09 (11th Cir.2002). An FCA
complaint must therefore “state with particularity the circumstances
constituting fraud or mistake.” FED.R.CIV.P. 9(b). “The particularity rule
serves an important purpose in fraud actions by alerting defendants to the
precise misconduct with which they are charged and protecting defendants
against spurious charges of immoral and fraudulent behavior.” United
States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1359 (11th Cir.2006)
(quotation marks omitted). An FCA complaint “satisfies Rule 9(b) if it sets
forth facts as to time, place, and substance of the defendant's alleged fraud,
specifically the details of the defendants’ allegedly fraudulent acts, when
they occurred, and who engaged in them.” Hopper v . Solvay Pharm., Inc.,
588 F.3d 1318, 1324 (11th Cir.2009) (quotation marks omitted).
These are the same counts that were set out in the original Complaint.
Because the submission of an actual claim to the government for
payment is “the sine qua non ” of an FCA violation, Clausen, 290 F.3d at
1311, a plaintiff-relator must “plead the submission of a false claim with
particularity,” United States ex rel. Matheny v. Medco Health Solutions
Inc., 671 F.3d 1217, 1225 (11th Cir.2012). To do so, “a relator must
identify the particular document and statement alleged to be false, who
made or used it, when the statement was made, how the statement was false,
and what the defendants obtained as a result.” Id.
Rule 9(b) “does not permit a False Claims Act plaintiff merely to
describe a private scheme in detail but then to allege simply and without
any stated reason for his belief that claims requesting illegal payments
must have been submitted, were likely submitted or should have been
submitted to the Government.” Clausen, 290 F.3d at 1311 (emphasis
added). Instead, “some indicia of reliability must be given in the complaint
to support the allegation of an actual false claim for payment being made
to the Government.” Id.
This Court evaluates “whether the allegations of a complaint contain
sufficient indicia of reliability to satisfy Rule 9(b) on a case-by-case
basis.” Atkins, 470 F.3d at 1358. Providing exact billing data—name, date,
amount, and services rendered-or attaching a representative sample claim
is one way a complaint can establish the necessary indicia of reliability that
a false claim was actually submitted. See, e.g., Hopper, 588 F.3d at 1326;
Atkins, 470 F.3d at 1358. However, there is no per se rule that an FCA
complaint must provide exact billing data or attach a representative sample
claim. See Clausen, 290 F.3d at 1312 & n. 21 (listing some of the types of
information that might help a plaintiff plead the submission of a claim with
particularity but cautioning that Rule 9(b) “does not mandate all of this
information for any of the alleged claims”); see also Durham v. Bus.
Mgmt. Assocs., 847 F.2d 1505, 1512 (11th Cir.1988) (“Allegations of date,
time or place satisfy the Rule 9(b) requirement that the circumstances of
the alleged fraud must be pleaded with particularity, but alternative means
are also available to satisfy the rule.”).
Under this Court’s nuanced, case-by-case approach, other means are
available to present the required indicia of reliability that a false claim was
actually submitted. Although there are no bright-line rules, our case law has
indicated that a relator with direct, first-hand knowledge of the defendants’
submission of false claims gained through her employment with the
defendants may have a sufficient basis for asserting that the defendants
actually submitted false claims. See U.S. ex rel. Walker v. R & F
Properties of Lake County, Inc., 433 F.3d 1349, 1360 (11th Cir.2005)
(holding that Rule 9(b) was satisfied where the relator was a nurse
practitioner in the defendant's employ whose conversations about the
defendant’s billing practices with the defendant's office manager formed
the basis for the relator’s belief that claims were actually submitted to the
By contrast, a plaintiff-relator without first-hand knowledge of the
defendants’ billing practices is unlikely to have a sufficient basis for such
an allegation. See Atkins, 470 F.3d at 1359 (holding that Rule 9(b) was not
satisfied where the relator was a doctor who did not allege first-hand
knowledge of the hospital’s submission of false claims). Additionally, a
corporate outsider likely does not have the required access to learn enough
about the defendants' billing practices. See Clausen, 290 F.3d at 1314
(noting that a corporate outsider's lack of information about the defendants’
billing practices makes it more difficult to gather the factual specifics
necessary to meet Rule 9(b)’s requirements).
At a minimum, a plaintiff-relator must explain the basis for her
assertion that fraudulent claims were actually submitted. See Corsello v.
Lincare, Inc., 428 F.3d 1008, 1013–14 (11th Cir.2005) (finding
insufficient indicia of reliability after noting that the relator “did not
explain why he believes fraudulent claims were ultimately submitted”). It
is not enough for the plaintiff-relator to state baldly that he was aware of
the defendants’ billing practices, see id. at 1014, to base his knowledge on
rumors, see Atkins, 470 F.3d at 1359, or to offer only conjecture about the
source of his knowledge, see United States ex. rel. Sanchez v. Lymphatx,
Inc., 596 F.3d 1300, 1303 n. 4 (11th Cir.2010).
U.S. ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591 F. App'x 693, 703–05 (11th Cir.
ALLEGATIONS IN THE AMENDED COMPLAINT
The Amended Complaint, in pertinent part, alleges:
Defendant Adams and Associates, Inc. (“Adams”) operates and does
business as the Gadsden Job Corps Center (the “center”) in Gadsden,
Alabama. Defendant Adams also operates at least fourteen (14)
other, similar facilities in several states. The Gadsden Job Corps
Center advertises space for approximately two hundred fifty-six
(256) enrolled residential student[s] as well as approximately thirty
(30) enrolled non-residential students.
Under the auspices of the Gadsden Job Corps Center, [Adams]
offers a GED program, a high school diploma through Etowah
County Public Schools, career technical training in six (6)
vocational areas, and collegiate classes at Gadsden State Community
College for certain students. Defendant Adams advertises that the
center provides “a full range of services to our students including
residential dorms, medical and dental care, career and social
counseling, academic and vocational training, transportation and a
Defendant Adams advertises that the Gadsden Job Corps Center
offers Career Technical Training, Academic Opportunities (High
School Diploma or GED), Room and Board, Medical and Dental
Care, Recreational Activities, Field Trips, Spending Money, Real
World Work Experience, Graduation Bonus, and Job Placement
Assistance. Defendant Adams advertises that the Gadsden Job Corps
Center Offers technical training programs in Advanced Human
Services, Carpentry, Culinary Arts, Nurse Assistant/Home Health
Aide, Office Administration, and Security & Protective Services.
Adams advertises that the Gadsden Job Corps Center offers
academic programs in Math & Reading, Mentoring, General
Education Diploma (GED), High School Diploma, Community
College for Qualified & Motivated Students, English Language
Learner (ELL), Tutoring, Study Groups, Counseling, Leadership, and
Defendant Lorraine Lane is the former Center Director and an agent
of defendant Adams and Associates. Defendant Lane was the highest
ranking official at the Gadsden Job Corps Center during a portion of
the relevant time period. Defendant Lane was the official in charge
of all aspects of the Gadsden Job Corps Center including
enforcement of the statutory “zero tolerance” policy prohibiting
drug use and violence described herein.
Defendant Viera is the CSIO2 Supervisor and an agent of defendant
Adams and Associates. Defendant Viera was the official in charge of
discipline of student enrollees including enforcement of the
statutory “zero tolerance” policy prohibiting drug use and violence
Defendant Adams is an “operator and service provider” who has
entered into an agreement with the U.S. Department of Labor
pursuant to 29 U.S.C. §3197 and receives approximately $27,000
per enrollee annually. Defendant Adams is paid based upon
anticipated enrollment and has to return or take a credit against
future payments for each slot for each enrolled student which is not
filled by an enrolled student or which is vacated when an accepted
enrolled student leaves the center for any reason. In order to qualify,
defendant Adams was required to submit certify [sic] that it provided
the services required by the Job Corps Act3 and to further certify
that it complied with the material provisions of the act. In particular,
Section 3197 requires an “[assurance the entity will comply with
basic health and safety codes, which shall include the disciplinary
measures described in section 3202(b) of this title.]”4
The acronym “CSIO” is not defined in the Amended Complaint.
The Court notes that provisions concerning the Job Corps are now codified at 29 U.S.C.
The Court notes that the statute, in context, provides:
To be eligible to operate a Job Corps center, an entity shall submit to the Secretary,
at such time and in such manner as the Secretary may require, information related to
additional selection factors, which shall include . . . [a]n assurance the entity will
29 U.S.C. § 3202(a) requires the Secretary and directors of Job
Corps to “stringently enforce standards of conduct within the
centers . . . [which] shall include provisions forbidding” acts of
violence and the use, sale, or possession of a controlled substance
Section 3202(b) requires the director to dismiss an enrollee from
the Job Corps, inter alia, if the director determines retention
jeopardizes the enforcement of standards and specifically
establishes a “zero tolerance” policy for the certain infractions,
including “an act of violence, for use, sale, or possession of a
controlled substance, for abuse of alcohol, or for other illegal or
disruptive activity.” Section 3202(b)(2)(ii) states “‘zero tolerance’
means a policy under which an enrollee shall be automatically
dismissed from the Job Corps after a determination by the director
that the enrollee has carried out an action” which specifically
includes, (1) an act of violence, (2) the use, sale or possession of a
controlled substance, or (3) abuse of alcohol.6
comply with basic health and safety codes, which shall include the disciplinary
measures described in section 3202(b) of this title.
29 U.S.C.A. § 3197(a)(3)(J).
The Court notes that the statute provides:
The Secretary shall provide, and directors of Job Corps centers shall stringently
enforce, standards of conduct within the centers. Such standards of conduct shall
include provisions forbidding the actions described in subsection (b)(2)(A).
29 U.S.C.A. § 3202(a).
The Court notes that the statute provides:
(b) Disciplinary measures
(1) In general
To promote the proper behavioral standards in the Job Corps, the directors of
Job Corps centers shall have the authority to take appropriate disciplinary
measures against enrollees if such a director determines that an enrollee has
committed a violation of the standards of conduct. The director shall dismiss
the enrollee from the Job Corps if the director determines that the retention
of the enrollee in the Job Corps will jeopardize the enforcement of such
standards, threaten the safety of staff, students, or the local community, or
diminish the opportunities of other enrollees.
(2) Zero tolerance policy and drug testing
The Secretary shall adopt guidelines establishing a zero tolerance
policy for an act of violence, for use, sale, or possession of a
controlled substance, for abuse of alcohol, or for other illegal or
(B) Drug testing
The Secretary shall require drug testing of all enrollees for controlled
substances in accordance with procedures prescribed by the
Secretary under section 3195(a) of this title.
In this paragraph:
(i) Controlled substance
The term “controlled substance” has the meaning given the
term in section 802 of Title 21.
(ii) Zero tolerance policy
The term “zero tolerance policy” means a policy under which
an enrollee shall be automatically dismissed from the Job
Corps after a determination by the director that the enrollee
has carried out an action described in subparagraph (A).
29 U.S.C.A. § 3202(b).
29 U.S.C. § 3195 requires the Secretary to establish specific
standards and procedures, which “at a minimum . . . [include]
informing enrollees that drug tests will be administered to the
enrollees and the results received within 45 days after the enrollees
enroll in the Job Corps.”7
The center is therefore required to administer drug tests to new
enrollees upon enrollment and is required by statute to expel any
enrolled student who tests positive for the use of a controlled
substance after 45 days.8 The center is also required by statute to
expel any enrolled student if the enrolled student is found to use,
sell or possess any controlled substance at any time after
The Court notes that the statute provides:
(a) Standards and procedures
(1) In general
The Secretary shall prescribe specific standards and procedures for the
recruitment, screening, and selection of eligible applicants for the Job Corps,
after considering recommendations from Governors of States, local boards,
and other interested parties.
In prescribing standards and procedures under paragraph (1), the Secretary,
at a minimum, shall-(A) prescribe procedures for informing enrollees that drug tests will
be administered to the enrollees and the results received within 45
days after the enrollees enroll in the Job Corps[.]
29 U.S.C.A. § 3195(a)(1)-(a)(2)(A).
The Court notes that the way this sentence reads, an enrollee would only be expelled for a
positive drug test result obtained more than 45 days after his or her enrollment. The 45-day period
in the statute refers to the deadline when test results must be received. The Court reads the statute
as providing a zero tolerance policy for drug use, whenever it is discovered.
Section 3202 prohibits the use of controlled substances. Section
3195 requires the center to administer drug tests at enrollment and
again within 45 days in order to enforce a zero tolerance policy
against continued drug use by enrolled students.9 The U.S.
Department of Labor Office of Job Corps Policy and Requirements
Handbook requires that each student be tested for controlled
substances at the time of admission and then re-tested at an interval
between and 40 days after an initial positive test.10 The handbook
also requires that an enrolled student must be tested on suspicion of
use of a controlled substance at any time.
Section 3202 prohibit[s] acts of violence. This section states the
standards of conduct shall include “zero tolerance” for acts of
violence and requires the director to dismiss any enrollee from the
Job Corps who commits and [sic] act of violence.
The plaintiff/relator was employed by defendant Adams from
approximately March 3, 2014[,] until approximately August 26,
2015.11 During his employment, Mr. Headen was aware that
defendant Adams did not follow the statute and failed to administer
drug tests as required. Mr. Headen was also aware that defendant
Adams ignored drug use including failing to administer tests as
required or by ignoring positive drug tests in violation of federal
All of the funds Defendant Adams received for all of the students in
the program came from the federal government through the
Department of Labor. There were no state, county or local funds
which paid for the students to attend or participate in the program.
There were no charitable funds which paid for the students to attend
As noted by this Court, supra note 8, that is not what the statute says.
The Court notes that the Relator provides no citation for this allegation, which, because it
calls for additional testing “40 days after an initial positive test,” implies that there is in fact no “zero
The Court notes that neither here, nor elsewhere in the Amended Complaint, does the
Relator state in what capacity he was employed by Adams, or what his job duties entailed.
or participate in the program. Defendant Adams did not offer
scholarships or tuition waivers since the students were not required
to pay any tuition, which was paid by the federal government.
Funding and enrollment levels were openly discussed at Adams,
including by defendant Lane, who emphasized the need to keep
numbers up as close as possible to the maximum of 290. The
students enrolled were listed on a roster which was distributed every
day. The plaintiff/relator and other employees conducted several
head counts daily which were used to produce the roster. Students
who were on sick leave continued to be listed on the roster, which
meant Adams was being paid by the federal government as if they
were enrolled. Adams would list students who were commuters on
the roster as if they were enrolled from time to time, depending
upon where the actual number of on campus students happened to be.
The plaintiff/relator had specific personal knowledge that defendant
Adams, by and through its agents Lane, Viera and others,
intentionally ignored the statutory “zero tolerance” policy against
acts of violence, drug use and alcohol abuse.
The plaintiff/relator had specific personal knowledge that defendant
Adams, by and through its agents Lane and others, claimed that
enrolled students who had left the program were actually present and
attending programs after these students had actually left the
program. The plaintiff/relator had specific personal knowledge that
defendant Adams claimed enrolled students were using residential
facilities after they had moved out and were no longer enrolled or
Defendant Adams, through Lane and Viera, had a policy and practice
of failing to drug test, ignoring positive drug tests, and/or ignoring
obvious drug use throughout the relevant time period. Nicholas
Johnson and NeQuia Underwood were two students who were
obviously using drugs and/or abusing alcohol during their
enrollment, but that drug use and alcohol abuse was ignored by
defendant Lane. When issues with Nicholas came up, Lane would
instruct staff not to file a case not because that would create a paper
record of the issue. Nicholas Johnson was allowed to remain
enrolled until May or June 2015, when he was finally expelled from
the program after multiple instances of fighting.
Defendant Adams, through Lane and Viera, had a policy and practice
of ignoring and failing to document acts of violence throughout the
relevant time period. Students Rashawn Lockley, Jamal Morgan,
Brian James, KenDarius Birmingham, Jessie Rollins, James
Spearman, Daryl Page, Johnny Ward, Quentin Slaughter and
Nicholas Johnson had multiple instances of fighting during their
enrollment. These issues were not documented based on direct
instruction from defendant Lane. Lane instructed the staff to alert
her about any instances of fighting before filing a written case note.
When staff alerted her to instances of fighting, including instances
involving these specific students, Lane instructed staff not to create
a case note about the incidents. Daryl Page and Johnny Ward were
still enrolled as students when Headen was terminated. Quentin
Slaughter was eventually expelled but was allowed to remain
because, according to defendant Lane, the student numbers were low
at the time. Nicholas Johnson was eventually expelled in May or
June 2015, but only after multiple instances of violence.
Defendant Adams, through Lane, had a policy and practice of
claiming that enrolled students who had left the program were
actually present and attending programs after these students had
actually left the program. Headen and other employees were
routinely sent on trips across the state to pick up students who did
not return to the campus after the weekend. Often, these students had
informed Lane, or her assistant Epiphany Cherry, that they did not
intend to return. Headen and other employees were sent in an Adams
vehicle to contact the students and at times to convince them to
return to the campus. Many times, Headen and other employees,
such as Ross Arrington, were told to offer these students paying jobs
if they would come back. However, some students refused to return
at all and were then listed as being on sick leave while still on the
roster. Students who refused to return were carried for seven (7)
days, and at times even longer, on the roster which meant that Adams
was being paid by the federal government as if they were present.
One student, Timothy Bradham, who was from the Troy, Alabama
area, informed Adams, and Cherry, that he was leaving the center.
Mr. Headen and another employee were sent to attempt to convince
Bradham to return. Bradham refused to return, and told Mr. Headen.
Mr. Headen in turn told Cherry and Lane that Bradham refused to
return. Despite Bradham’s refusal to return, Bradham was listed on
the roster for the following week as if her [sic] were on sick leave.
Bradham was eventually dropped from the roster after seven (7)
days, when a new group of students would arrive.
Defendant Adams, through defendant Lane, terminated Mr. Headen
on or about August 26, 2015. Defendant terminated Mr. Headen,
supposedly for using inappropriate and unprofessional language in
a text message he sent to NeQuia Underwood, who was his wife’s
cousin, from his cell phone to her cell phone during hours when he
was not at work and she was not on campus.
Mr. Headen had several conversations with NeQuia Underwood, his
wife’s cousin and an enrollee in the Gadsden Job Corps program.
Upon information and belief, Ms. Underwood tested positive for
controlled substances when she enrolled in the Gadsden Job Corps
program. Ms. Underwood continued to abuse alcohol and to use
controlled substances while she was enrolled. Defendant Adams,
through Lane, Viera and other agents, ignored Ms. Underwood’s
repeated alcohol abuse and continued drug use, failed to drug test
Ms. Underwood, and/or, in the alternative, ignored positive drug
tests. Mr. Headen learned that Ms. Underwood had been using drugs
and continued to use drugs while enrolled in the Job Corps program.
Upon information and belief, defendant Adams continues to operate
in the same manner under current Center Director Levros. Former
Director Lane was promoted to a position of greater authority and
now supervises the Gadsden Job Corps Center as well as other Job
Corps centers owned and operated by defendant Adams.
(Doc. 41 at 5-15, ¶¶11-33).
Count One alleges that the Defendants are liable for violation of 31 U.S.C.
§§3729(a)(1)(A), (a)(1)(B), and (a)(1)(G). Those sections impose liability on “any
person who[:] . . . (A) knowingly presents, or causes to be presented, a false or fraudulent
claim for payment or approval; . . . (B) knowingly makes, uses, or causes to be made or
used, a false record or statement material to a false or fraudulent claim; [and] . . . (G)
knowingly makes, uses, or causes to be made or used, a false record or statement
material to an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government[.]” 31 U.S.C. §§3729(a)(1)(A),
(a)(1)(B), and (a)(1)(G). The court will address each subsection in turn.
The Realtor Fails To Allege with Sufficient Particularity that the
Defendants Knowingly Presented, or Caused To Be Presented, a
False or Fraudulent Claim for Payment or Approval [31 U.S.C.
The Amended Complaint alleges two separate violations of this subsection of the
FCA: 1) the continued enrollment of students who violated the “zero tolerance” policy;
and 2) the creation of inaccurate rosters of students.
Failure to Follow “Zero Tolerance” Procedures
The Amended Complaint first alleges that the Defendants failed to follow statutory
“zero tolerance” procedures by: failing to administer drug tests as required (doc. 41 at
10, ¶23), and failing to expel enrollees who engaged in violence, or participated in the
use, sale, or possession of a controlled substance or alcohol. (Doc. 41 at 11, ¶26). The
Amended Complaint includes the names of several students who allegedly violated the
policy and were not expelled. (See doc. 41 at 11-12, ¶28 (Nicholas Johnson and NeQuia
Underwood– drugs and alcohol); doc. 41 at 12-13, ¶29 (Rashawn Lockley, Jamal
Morgan, Brian James, KenDarius Birmingham, Jessie Rollins, James Spearman, Daryl
Page, Johnny Ward, Quentin Slaughter, and Nicholas Johnson–fighting)). The Relator
further alleges that the federal government is the only source of funding for Adams (doc.
41 at 10, ¶24), and that Adams “is paid based upon anticipated enrollment and has to
return or take a credit against future payments for each slot for each enrolled student
which is not filled by an enrolled student or which is vacated when an accepted enrolled
student leaves the center for any reason” (doc. 41 at 7, ¶16). The Relator alleges that
“[f]unding and enrollment levels were openly discussed at Adams, including by defendant
Lane, who emphasized the need to keep numbers up as close as possible to the maximum
of 290.” (Doc. 41 at 10, ¶25).12
The gist of the Relator’s argument is that Adams did not expel students because every
student it lost would mean less money for it. The Relator argues that Adams was paid based on
enrollees, but then insists that it should not have been paid for enrollees who should have been
expelled. The Relator never explains why, if payment was based on enrollment alone, and enrolled
students received Jobs Corps services, a claim for payment for these students would be “false.”
Whatever other consequences there might be to Adams for keeping such students enrolled, the
Amended Complaint does not state that the Defendants failed to provide all of the services for
None of these factual allegations set out a violation of the Act.13 “Liability under
the False Claims Act arises from the submission of a fraudulent claim to the government,
not the disregard of government regulations or failure to maintain proper internal
policies.” Corsello, 428 F.3d at 1012 (citing Clausen, 290 F.3d at 1309) (emphasis
added). Instead, “to state a claim under the False Claims Act with particularity, the
complaint must allege facts as to time, place, and substance of the defendant’s alleged
fraud, [and] the details of the defendants’ allegedly fraudulent acts, when they occurred,
which the government contracted. Regardless, as shown infra, the failure to set out any particular
claims dooms this allegation.
Nor is it clear that Defendants were actually required to follow the procedures alleged by
the Relator. The Relator argues that the Defendants violated 29 U.S.C.A. § 3197(a)(3)(J), which
To be eligible to operate a Job Corps center, an entity shall submit to the
Secretary, at such time and in such manner as the Secretary may require,
information related to additional selection factors, which shall include . . . [a]n
assurance the entity will comply with basic health and safety codes, which shall
include the disciplinary measures described in section 3202(b) of this title.
29 U.S.C.A. § 3197(a)(3)(J) (emphasis added). Section 3202(b), which is referenced in section
3197(a)(3)(J), describes the zero tolerance policy. The plain wording of section 3197(a)(3)(J) clearly
applies only to information given to the Secretary in order to be eligible for initial selection as a Jobs
Corps center. It does not describe requirements or procedures for payment to established centers.
Furthermore, the Amended Complaint pleads the following:
The U.S. Department of Labor Office of Job Corps Policy and Requirements
Handbook requires that each student be tested for controlled substances at the time
of admission and then re-tested at an interval between and 40 days after an initial
positive test. The handbook also requires that an enrolled student must be tested on
suspicion of use of a controlled substance at any time.
(Doc. 41 at 9, ¶21). As noted supra note 10, this allegation undercuts the Relator’s argument by
implying the absence of a zero tolerance policy.
and who engaged in them. Corsello, 428 F.3d at 1012; see also Clausen, 290 F.3d at
1308 (“Rule 9(b) prevents ‘[s]peculative suits against innocent actors for fraud,’ and. .
. under Rule 9(b) allegations of fraud ‘must include facts as to time, place, and substance
of the defendant's alleged fraud.’”) (quoting Cooper v. Blue Cross & Blue Shield of Fla.,
Inc., 19 F.3d 562, 566–67 (11th Cir.1994)). The Amended Complaint only alleges,
generally, that the Defendants submitted “false and fraudulent claims, records, and
statements” (doc. 41 at 15, 17, ¶¶36, 44). It does not identify, for example, the titles of
the forms or reports Adams submitted to the government for payment, how often they
were submitted, or who submitted them.14 Also, the Relator has neither produced, nor
referenced in his Amended Complaint, specific billing data evidencing any such claims,
records, and statements.15
Furthermore, the Amended Complaint contains no facts which
establish that the Relator would have had direct, first-hand knowledge of the Defendants’
The Court gives no weight to the generalized allegations, found throughout the Complaint,
that vaguely refer to false claims which were submitted by Lane, or “the defendants.” No specific
false claims have been pleaded.
The Relator correctly notes that “the Eleventh Circuit only requires that a complaint
‘contain sufficient indicia of reliability to satisfy Rule 9(b) on a case-by-case basis.’” (Doc. 48 at 9)
(quoting Clausen, 290 F.3d at 1310-11). He then argues:
The plaintiff has satisfied this standard by alleging that (1) all funding came from the
government, (2) that the source of funding and the need to keep enrollment
maximized was openly discussed, (3) that such discussions clearly related to the
violations the plaintiff actually witnessed and (4) identifying specifically the students
kept as enrolled despite these violations.
(Doc. 48 at 10). None of these allegations establish, with particularity, that a false claim was made.
submission of false claims gained through his employment with the Defendants. Indeed,
the Amended Complaint fails to even identify in what capacity the Relator was employed
The Relator attempts to circumvent the requirement of particularity by pleading,
and arguing, that a false claim must have been made, since the only source of funds for
Adams was the government. See doc. 48 at 8 (“Those specific factual allegations clearly
allege that it was common knowledge that the federal government was the sole payer for
enrolled students and that employees were told to take steps ensure that enrollment was
kept at the maximum”) (citing doc. 41 at 10, ¶¶24-25); doc. 48 at 11 (“The plaintiff’s
Amended Complaint likewise alleges that these false rosters were submitted to the
federal government, since the federal government was the sole source of funds for the
program”) (citing doc. 41 at 7-8, 10-11, ¶¶16, 24-25); doc. 48 at 12 (“the plaintiff
alleged it was openly discussed that the federal government was the sole source of funds
for the Gadsden Job Corps Center and provided specific factual allegations about the role
of the individual defendants in perpetrating that fraud” (citing doc. 41 at 3-4, 5-11, ¶¶4-7,
11-27; doc. 48 at 13 (“In this case the plaintiff not only alleged that fraudulent practices
The Defendants contend that his job title was “Dorm Supervisor.” (Doc. 46 at 7). The
Court need not determine whether someone employed in that capacity is a “corporate outsider,”
since the Plaintiff-Relator, who is the master of his Amended Complaint, has failed to allege facts
establishing that he was a “corporate insider,” or learned of the billing practices, and the submission
of false claims, through his employment with Adams.
occurred, but also clearly connected those payments to the federal government as the
sole source of funds for the program”) (citing Doc. 1 ¶¶18, 25-30); doc. 48 at 14 (“The
plaintiff’s Amended Complaint likewise alleges that both false statements resulted in
payment by the federal government, since the federal government was the sole source of
funds for the program.”) (citing doc. 48 at 7-8, ¶¶16). The Relator has cited no authority,
and the Court has found none, for the proposition that the existence of only one payer,
without more, establishes that a false claim was made. Indeed, the Court has found no
cases which have addressed the issue either way. However, it is often the case that, even
when the government is the only payer, the Eleventh Circuit finds the allegations of a
false claim to be lacking in particularity. See, e.g., Klusmeier v. Bell Constructors, Inc.,
469 F. App'x 718 (11th Cir. 2012) (relator’s allegation of violations of government
construction contracts not relevant to whether defendant submitted fraudulent claims
related to those contract violations); Jallali v. Nov a Se. Univ ., Inc., 486 F. App'x 765,
765 (11th Cir. 2012) (relator’s allegation that college falsely asserted compliance with
federal regulations in submitting claims for federal student aid to federal government
lacked specificity required by Rule 9). The Relator asks this Court to infer the existence
of a false claim, something it cannot do. See, Corsello, 428 F.3d at 1013 (“Although we
construe all facts in favor of the plaintiff when reviewing a motion to dismiss, we decline
to make inferences about the submission of fraudulent claims because such an
assumption would ‘strip[ ] all meaning from Rule 9(b)'s requirements of specificity.’”)
(quoting Clausen, 290 F.3d at 1312 n. 21).
The facts of this case are very similar to the facts in Klusmeier v. Bell
Constructors, Inc., 469 F. App'x 718 (11th Cir. 2012). In that case, the defendant, Bell,
was awarded two government contracts by the United States Army Corps of Engineers
for the construction of a pump station and levees. The procedures under which Bell was
paid required it to submit to the government a monthly request for payment and to
certify, in each monthly invoice, that the payment requested was for work performed
according to the contract’s specifications. The relators alleged that some of the work
Bell did failed to comply with the contractual specifications, and that the defendant billed
the government for non-compliant work. The Eleventh Circuit affirmed the district
court’s dismissal, writing:
Here, Relators' allegations fail to show that Bell's monthly invoices
actually included a false or fraudulent request for payment. Although
Relators allege details as to how Bell violated its contracts, and allege
some details as to when the monthly invoices were submitted, Relators fail
to establish that the contract violations actually resulted in the submission
of false claims. See Atkins, 470 F.3d at 1359 (concluding relator failed to
establish a link between detailed allegations of improper practices and the
actual submission of false claims relating to those violations). Relators
merely speculate that because Bell violated the contract in some instances,
and because Bell submitted some invoices, false claims “must have been
submitted, were likely submitted or should have been submitted....”
Clausen, 290 F.3d at 1311. Assuming arguendo that Bell violated the
contract and requested payment under the contract, this does not show that
Bell’s monthly invoices actually billed for the non-compliant work, and we
decline to make such an assumption. See id. at 1312 n. 21 (“We cannot
make assumptions about a False Claims Act defendant's submission of
actual claims....”). Thus, the Complaint, despite the inclusion of some
detailed factual allegations, has failed to sufficiently plead that Bell's
submissions included an actual false or fraudulent claim.
Moreover, Relators lack the type of knowledge that normally will
support an FCA complaint. See United States ex rel. Walk er v. R&F
Properties of Lake Cnty., Inc., 433 F.3d 1349, 1360 (11th Cir.2005)
(noting that knowledge developed from relator's employment by the
defendant and conversations with billing employees can support a FCA
complaint). Although Relator Gene Klusmeier alleges he was present on
the construction site and observed some of the contract violations, his
personal knowledge of the contract violations is not relevant to whether
Bell submitted fraudulent claims related to those contract violations. See
id. (finding personal knowledge of billing practices relevant to allegations
of false bills); see also Barys ex rel. United States v . Vitas Healthcare
Corp., 298 Fed.Appx. 893, 895 (11th Cir.2008) (holding that relator's
first-hand knowledge of billing practices could not support relator's
allegation that the services related to the bills were performed improperly).
Thus, Relators' personal knowledge of the contract violations does not
support the allegation that Bell submitted requests for non-compliant work.
Id. at 721–22.
Another Eleventh Circuit opinion, Jallali v. Nova Se. Univ., Inc., 486 F. App'x
765, 766 (11th Cir. 2012), is also instructive. In Jallali, the Eleventh Circuit, finding
Klusmeier persuasive, wrote:
In this case, Jallali[,] [the Relator][,] alleges that Nova Southeastern failed
to comply with 34 C.F.R. § § 602.22 and 668.14.1 He further alleges that
federal regulations required Nova Southeastern to certify compliance with
§ § 602.22 and 668.14 each time it requests federal student aid payments.
Finally, he alleges that Nova Southeastern did request federal student aid
payments. But, these allegations do not satisfy Rule 9(b) under our
precedent. Jallali’s complaint does not allege facts identifying the time,
place, or substance of the allegedly fraudulent claims for payment. The
complaint does not allege facts showing that Nova Southeastern actually
certified compliance with § § 602.22 and 668.14. Nor does the complaint
allege that noncompliance with these regulations renders Nova
Southeastern ineligible to receive federal student aid payments. Nor does
Jallali possess personal knowledge of Nova Southeastern's billing
We see no substantive distinction between Klusmeier and this case.
Jallali, 486 F. App'x at 767.
Similarly, in Britton ex rel. U.S. v. Lincare Inc., 634 F. App'x 238, 240 (11th Cir.
The relator, Willie Britton, was employed as a delivery person for
defendant Lincare. Britton delivered nebulizers to Lincare patients,
explained the doctor's prescription, and demonstrated proper breathing
technique while operating the nebulizer. Lincare's internal guidelines,
however, provide that these explanations and demonstrations are to be
performed by a “clinician only.” Britton has no respiratory training or
certification to credential him as a clinician. The assistance he provided,
Britton claims, should have been performed by a “Health Care Specialist,”
such as a Licensed Practical Nurse, Registered Respiratory Therapist, or
Certified Respiratory Therapist. Britton says that Lincare is forced to rely
on delivery personnel like him to complete these educational tasks because
its one Licensed Healthcare Representative in the Birmingham area is
unable to serve all of Lincare's clients.
Britton, 634 F. App'x at 239. The Eleventh Circuit affirmed the dismissal of the relator’s
Here, Britton's complaint alleges that he performed services that Lincare's
internal documents reserved for clinicians. However, “[t]he False Claims
Act does not create liability merely for a health care provider's disregard
of Government regulations or improper internal policies unless, as a result
of such acts, the provider knowingly asks the Government to pay amounts
it does not owe.” Clausen, 290 F.3d at 1311. Britton is unable to muster
any facts tending to show that Lincare asked the Government to pay
amounts it does not owe. He disclaims any knowledge of Lincare’s billing
practices, and does not allege the “who,” “what,” “where,” “when,” and
“how” of fraudulent submissions to the government. Nor does Britton
allege that the United States actually paid a false claim, or that Lincare
intended for the government to rely on false statements in deciding whether
to pay a false claim. See Hopper, 588 F.3d at 1329–30 (holding that actual
payment of a claim is an element of § 3729(a)(2), and dismissing the
relator's action because even if actual payment need not be pled with
particularity, the complaint failed to allege that the defendants intended for
the government to rely on their false statements in deciding whether to pay
a false claim).
Id. at 240–41; see also, Atkins, 470 F.3d at 1359 (“As the plaintiff did in Clausen,
Atkins has described in detail what he believes is an elaborate scheme for defrauding the
government by submitting false
claims. He cites particular patients, dates and
corresponding medical records for services that he contends were not eligible for
government reimbursement. Just like the Clausen plaintiff, though, Atkins fails to
provide the next link in the FCA liability chain: showing that the defendants actually
submitted reimbursement claims for the services he describes. Instead, he portrays the
scheme and then summarily concludes that the defendants submitted false claims to the
government for reimbursement.”) (emphasis in original).
The Court sees no distinction
in the allegations in the instant case and these cases.17
Both sections of the FCA under which Relator’s claim purportedly arises require proof of
scienter. See 31 U.S.C. ¶3729(a)(1)(A), (B). The Relator’s alleges that the Defendants: “knowingly
presented and caused to be presented to the United States Government and state governments
Furthermore, assuming Adams was not entitled to reimbursement for these
enrollees,18 the pleadings leave open the possibility that Adams made no claim for
payment for those enrollees. The existence of these alternate explanations means that the
factual allegations in the Amended Complaint fail to satisfy even the “notice pleading”
participating in the Job Corps program, false and fraudulent claims, records, and statements” (doc.
41 at 15, ¶36); “defendants and their agents and employees knowingly made, used, and/or caused to
be made or used false records and statements in order to get such false and fraudulent claims paid”
(doc. 41 at 15, ¶37); “defendants and their agents and employees knowingly made, used, and caused
to be made or used false records and statements to conceal, avoid, and/or decrease defendants’
obligation to repay money to the United States Government that defendants improperly and/or
fraudulently received” (doc. 41 at 16, ¶38). These threadbare allegations, which find no factual
support anywhere in the Amended Complaint, are insufficient allegations of scienter under Rule 8.
See U.S. ex rel. Barrett v. Beauty Basics, Inc., No. 2:13-CV-1989-SLB, 2015 WL 3650960, at *5
(N.D. Ala. June 11, 2015) (Blackburn, J.) (factually unsupported allegation that “with full
knowledge that [it] did not meet the requirements for accreditation under NACCAS standards,
[defendant] then represented to the United States Department of Education that it met NACCAS
standards” insufficient). The Relator argues that Lane
was the individual in charge of all aspects of the Gadsden Job Corps Center,
including the “zero tolerance” policy and the official rosters submitted claiming that
students not present were enrolled. Doc. 41 ¶6, 16, 23-30. While the Amended
Complaint does not allege a specific date for a specific certification, such specific
allegations are not required in order for these allegations to be reliable. The
plaintiff’s Amended Complaint alleges a policy and practice of these same violations
throughout his employment. Id. at 23-30. The plaintiff also alleges Lane was aware
that specific students were not eligible but remained in the program for an extended
period of time. Id. at 31-32. The plaintiff also alleges that students were moved back
and forth between “commuter” status and “resident” status in order to fill vacant
slots. Id. ¶25. Since funds were dispersed on a periodic basis, these certifications by
Ms. Lane as Center Director, along with a description of Ms. Vierra’s role as CSIO
Supervisor in charge of discipline, are reliable and sufficient to plead scienter.
(Doc. 48 at16-17). Assuming that these allegations establish the Defendants’ knowledge that
regulations were not being followed, or rosters were being inflated, none of these facts establish that
any Defendant knew that a false claim was being submitted.
Which, as discussed supra note 12, it not at all clear in the Amended Complaint.
standard of Rule 8. See Twombly, 550 U.S. at 567 (noting that where there was “an
obvious alternative [and legal] explanation” for the conduct alleged the plaintiffs had not
“nudged their claims across the line from conceivable to plausible”); U.S. ex rel. Nathan
v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 457 (4th Cir. 2013) (“[W]hen a defendant's
actions, as alleged and as reasonably inferred from the allegations, could have led, but
need not necessarily have led, to the submission of false claims, a relator must allege
with particularity that specific false claims actually were presented to the government
for payment.”; “[W]ithout such plausible allegations of presentment, a relator not only
fails to meet the particularity requirement of Rule 9(b), but also does not satisfy the
general plausibility standard of Iqbal.”) (italics in original).
The Amended Complaint also alleges that the Defendants “claimed that enrolled
students who had left the program were actually present and attending programs after
these students had actually left the program,” and “claimed enrolled students were using
residential facilities after they had moved out and were no longer enrolled or residents.”
(Doc. 41 at 11, ¶27). In his brief, the Relator argues:
In this case, the plaintiff has alleged all payments for every student come
from the federal government, which does not appear to be the subject of
reasonable dispute. Doc. 41 ¶16. In addition, in the Amended Complaint,
the plaintiff further alleged that no state, local or private funds were
received to support student enrollment. Id. ¶24. Finally, the plaintiff has
alleged that the source of funding and enrollment levels were openly
discussed and were discussed in a context which clearly related federal
government funding to the policy violations which the plaintiff witnessed.
Id. ¶25. The rosters, which the plaintiff participated in developing several
times daily, were known to be the documents which triggered payment and
employees were instructed as such. Id. These allegations have sufficient
indicia of reliability in this case on a motion to dismiss.
The plaintiff’s Amended Complaint also alleges with particularity
that these rosters showed that (1) the defendants falsely claimed specific
students were enrolled when they were not, that (2) the defendants ignored
the “zero tolerance” statutory requirement and allowed ineligible students
to remain enrolled, and (3) the defendants had a consistent policy and
practice of these types of violations throughout his employment. Doc. 41
¶¶23-30. The plaintiff’s Amended Complaint likewise alleges that these
false rosters were submitted to the federal government, since the federal
government was the sole source of funds for the program. Id. ¶¶16, 24-25.
(Doc. 48 at 10-11). In sum, unlike the “zero tolerance” allegations, in these allegations
the Relator actually alleges that the Defendants were paid based on enrollment figures,
and those enrollment figures were inflated. Furthermore, he claims that he took part in
the creation of these inflated rosters.
This claim fails for some of the same reasons the zero tolerance claim failed.
First, there is no allegation in the Amended Complaint that any rosters were ever
presented to the government for payment. For that reason alone, any claim that payment
was based upon the creation of false rosters fails. Second, even if there were such
allegations, there are no specifics as to when a roster was presented to the government,
by whom, for what amounts, etc. Accordingly, the claim fails to satisfy Rule 9(b).19
The Realtor Fails To Allege with Sufficient Particularity that the
Defendants Knowingly Made, Used, or Caused To Be Made or
Used, a False Record or Statement Material to a False or
Fraudulent Claim [31 U.S.C. §3729(a)(1)(B)]
This claim, which is based on the same facts as the claim under subsection A, fails
for the same reasons the previous claim failed.
The Realtor Fails To Allege with Sufficient Particularity that the
Defendants Knowingly Made, Used, or Caused To Be Made or
Used, a False Record or Statement Material to an Obligation To
Pay or Transmit Money or Property to the Government, or
Knowingly Concealed or Knowingly and Improperly Avoided or
Decreased an Obligation To Pay or Transmit Money or Property
to the Government [31 U.S.C. §3729(a)(1)(G)]
In the instant case, the Relator argues:
The plaintiff’s Amended Complaint alleges funds were provided by the
federal government to [Adams] on a rolling basis. Doc. 41 ¶16. Therefore,
at scheduled intervals, [Adams], through Director Lorraine Lane, would
have to account for students who left the program early, but for whom
[Adams] had already been paid. Id. ¶¶24-25, 30. Therefore, [Adams] would
be required to repay monies receive or not receive more money for future
use. Id. ¶25. Therefore, the plaintiff is alleging that false statements were
either false claims when submitted or reverse false claims if not accounted
for at each accounting period. Id. ¶¶42-49[.]
(Doc. 48 at 17). This type of claim is sometimes called a “reverse false claim.” It too
must meet Rule 9(b)’s heightened pleading standard. Matheny, 671 F.3d at 1222. As
Furthermore, the Relator does not explain under what rule or regulation rosters are
submitted by jobs corps centers for payments. Neither the jobs corps statutory provisions (29
U.S.C. §§3191-3212), nor the regulations concerning same (20 C.F.R. Part 670) discuss “rosters”.
shown above, the Relator has failed to allege with particularity that Adams sought
payment based on enrollment in the first place, let alone for enrollees who were not
enrolled, or failed to repay money it received for enrollees who subsequently left.
The Relator cites to Matheny for the proposition that “‘[a]n express contractual
obligation to remit excess government property is a definite and clear obligation for FCA
purposes.’” (Doc. 48 at 18) (quoting Matheny, 671 F.3d at 1223). Importantly, however,
the Matheny court also wrote:
Here, the Complaint contains detailed allegations relating to the
Defendants' contractual obligation to identify, report, and remit excess
government money in accordance with the CIA's instructions. . . . Relators
have alleged an express contractual obligation on behalf of the Defendants
to remit Overpayments within thirty days of identification and defined that
obligation in detail with references to particular contract sections. These
factual allegations are sufficient to plead with particularity the existence
of an obligation to pay money to the government.
Matheny, 671 F.3d at 1223–24. Unlike Matheny, in the instant case the Relator has pled
no facts establishing that he would be in a position to know how the Defendants were
paid, or identifying any particular payment, or failure to return same. He merely returns
to his same refrain that there must be an overpayment because the government was the
only source for payment. (Doc. 48 at 18) (“There is no such difficulty [in identifying the
overpayment] in this case, since all funds for every student for every purpose were paid
by the federal government.”).
This claim too fails to satisfy the requirements of Rule
Count Two is entitled “Implied False Certification in Violation of the False Claims
Act.” (Doc. 41 at 17). As the Supreme Court has noted:
According to this theory, when a defendant submits a claim, it impliedly
certifies compliance with all conditions of payment. But if that claim fails
to disclose the defendant's violation of a material statutory, regulatory, or
contractual requirement, so the theory goes, the defendant has made a
misrepresentation that renders the claim “false or fraudulent” under §
Universal Health Serv s., Inc. v. United States, 136 S. Ct. 1989, 1995, 195 L. Ed. 2d 348
(2016).20 “[T]he implied certification theory can be a basis for liability . . . where two
conditions are satisfied: first, the claim does not merely request payment, but also makes
specific representations about
the goods or services provided; and second, the
defendant's failure to disclose noncompliance with material statutory, regulatory, or
contractual requirements makes those representations misleading half-truths.” Universal
Health Servs., Inc., 136 S. Ct. at 2001.
Count Two alleges that the Defendants
falsely implied and/or certified that they complied with applicable
statutory, regulatory and contractual requirements and knowingly presented
The Defendants note: “False certification is not an independent basis for relief; rather it is
a species of the explicit false claims prohibited by statute.” (Doc. 46 at 17) (citing United States v.
Beauty Basics Inc., No. 2:13-CV-1989-VEH, 2016 WL 3519365, at *3 (N.D. Ala. June 28, 2016)
(Hopkins, J.)). The Relator responds that this theory was set out as a separate claim “out of an
abundance of caution.” (Doc. 48 at 18). He also notes, correctly, that under Rule 8(a) and (d) he is
allowed to plead in the alternative. Id. The Court addresses the theory as merely another method of
making a claim pursuant to 31 U.S.C. § 3729(a)(1)(A).
and caused to be presented to the United States Government and state
governments participating in the Job Corps program, false and fraudulent
claims, records, and statements in order to obtain reimbursement for
various services provided pursuant to 29 U.S.C. §3191 et seq.
(Doc. 41 at 17, ¶44). In his brief, the Relator alleges that the Defendants
submitted documents which certified to the federal government that it had
proper procedures in place to ensure that it followed the statutory scheme
and . . . that defendant [Adams], in fact, followed the statutory scheme as
required. The plaintiff’s certification theory is based on the simple idea that
if the Gadsden Job Corps Center was not eligible to receive any payments
at all from the federal government, then all receipts for all students were
(Doc. 48 at 19) (internal citations omitted).
As discussed previously, it is not clear from the allegations in the Amended
Complaint that the Defendants were required to comply with any of the statutes set out
therein. Even if they were, “[i]t is the false certification of compliance which creates
liability when certification is a prerequisite to obtaining a government benefit.”
Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1052 (11th Cir. 2015) (internal
quotations and citations omitted). Again, the Relator has failed to satisfy Rule 9(b)’s
requirement to plead these claims with particularity. Count Two is due to be dismissed.
Count Three alleges that the Defendants engaged in a conspiracy to violate the
FCA in violation of 31 U.S.C. § 3729(a)(1)(C). “To state a claim [for conspiracy to
violate the FCA], the plaintiff must show (1) that the defendant conspired with one or
more persons to get a false or fraudulent claim paid by the United States; (2) that one or
more of the conspirators performed any act to effect the object of the conspiracy; and
(3) that the United States suffered damages as a result of the false or fraudulent claim.”
Corsello, 428 F.3d at 1014 (internal quotations and citations omitted). Rule 9(b) applies
to this claim as well. Id. For the same reasons the other claims failed, this claim does as
well. The Relator has failed to plead any of the elements of the conspiracy claim with
particularity.21,22 Count Three is due to be dismissed.
Based on the foregoing, the Motion To Dismiss is due to be GRANTED, and this
The Relator notes in his brief that “funding and enrollment were openly discussed” and
the federal government was the only source of funds. (Doc. 48 at 21). These allegations do not
establish, even under notice pleading standards, an agreement to conspire to defraud the
In addition to failing to satisfy Rule 9(b), the conspiracy claim must be dismissed because
the underlying FCA claims are due to be dismissed. As one court has noted:
[S]econdary liability for conspiracy [for conspiracy to violate the FCA] cannot exist
without a viable underlying claim. The FCA provides . . . that any person who
“conspires to defraud the Government by getting a false or fraudulent claim allowed
or paid ... is liable to the United States Government for a civil penalty[.]” Liability for
conspiracy under the FCA is governed by traditional notions of civil conspiracy. See
United States v. Murphy, 937 F.2d 1032, 1039 (6th Cir.1991) (containing general
discussion of civil conspiracy in FCA context).
U.S. ex rel. Coppock v. Northrup Grumman Corp., No. CIV.A. 3:98-CV-2143-, 2003 WL
21730668, at *14 (N.D. Tex. July 22, 2003). The Court finds this logic persuasive, and adopts it.
case DISMISSED with prejudice.23 A Final Order will be entered.
DONE and ORDERED this 5th day of December, 2017.
VIRGINIA EMERSON HOPKINS
United States District Judge
The Relator has not requested leave to amend. Even if he had, the Court notes that he
has already amended once.
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