United States of America et al v. Infilaw Corporation et al

Filing 71

ORDER granting in part and denying in part 53 motion to dismiss. Plaintiff's Amended Complaint 48 is dismissed without prejudiced. See PDF for details. Signed by Judge Roy B. Dalton, Jr. on 4/23/2018. (PKK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
UNITED STATES OF AMERICA, ex rel.,
BARBARA BERNIER,
Plaintiff,
v.

Case No. 6:16-cv-970-Orl-37TBS

INFILAW CORPORATION; and
CHARLOTTE SCHOOL OF LAW, LLC.,
Defendants.
_____________________________________
ORDER
What goes up must come down. This case concerns the rise and fall of Charlotte
School of Law, LLC (“CSL”), a now-defunct for-profit law school owned by the private
entity InfiLaw Corporation (“InfiLaw”) (collectively, “Defendants”). (Doc. 48, ¶¶ 35–36.)
After flying too close to the sun, CSL was expelled from the federal student loan program
and its educational license revoked. (Id. ¶ 48.) Amidst its downfall, CSL’s former
professor Plaintiff Barbara Bernier initiated this qui tam action against Defendants under
the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., alleging fraudulent conduct in
connection with federal loan funding Defendants received from the United States
Department of Education (“DOE”). (See Doc. 1.)
After some investigation, the United States declined to intervene on Bernier’s
behalf (Doc. 14), 1 so the Court unsealed the complaint (Doc. 16) and Defendants moved

1

Before reporting that it declined to intervene, the United States sought several
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to dismiss (Doc. 45). With leave, Plaintiff filed an amended complaint (Doc. 48
(“Amended Complaint”)), now before the Court on Defendants’ motion to dismiss (Doc.
53 (“Motion”)).
I.

BACKGROUND

InfiLaw formed in 2006. (Doc. 48, ¶ 24.) Its stated mission was “to establish the
benchmark of inclusive excellence in professional education for the 21st Century.” (Id. ¶
30.) To that end, InfiLaw acquired three for-profit law schools: Florida Coastal School of
Law (“Florida Coastal”), Arizona Summit School of Law (“Arizona Summit”), and CSL
(“InfiLaw Schools”); and began implementing a “disruptive,” non-traditional law school
model at each school (“Model”). (See id. ¶¶ 31, 35.) What apparently sets the Model apart
is that its academic programs focus on placing “graduates into the stream of commerce,”
as opposed to “theory only programs” that lack practice competencies. (Id. ¶ 31.)
Touting this model, InfiLaw structures its operations differently from other law
schools: from its admissions practices, curriculum design, academic requirements and
bar exam preparation initiatives, InfiLaw certainly has its own way of doing things. (See
id. ¶¶ 23–31, 38–40, 42.) Yet one area where InfiLaw sticks to the well-trod path is by
having its schools participate in federal loan programs under Title IV of the Higher
Education Act (“HEA”), 20 U.S.C. § 1070, et seq.—meaning that students can obtain
federal funding to cover all of their education-related expenses. (Id. ¶¶ 9, 12, 51.) For law

extensions for its time to investigate and decide whether to intervene, which the Court
granted. (See Docs. S-8, 10–13.) As the United States’ investigation is ongoing, several
portions of the record remain sealed. (See Docs. 15–16.)
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schools, eligibility for this money hinges on accreditation by the American Bar
Association (“ABA”) and execution of a Program Participation Agreement (“PPA”) with
the DOE, whereby the institution agrees, among other things, to maintain certain
standards and comply with federal statutes and regulations while receiving funds. (Id.
¶¶ 10–22.) Such standards speak to admissions practices, academic progress,
employment outcomes, and institutional management—not only to ensure student
success and enable loan repayment, but also to stem potential program abuse and
promote the integrity of Title IV. (Id. ¶¶ 13–22.) Suffice it to say that the disbursement of
federal funds is highly regulated and has many strings attached. (See id.)
According to Plaintiff, Defendants did not comply with Title IV’s statutory and
regulatory requirements, but took federal funds anyway. (See id. ¶¶ 111–131.) She claims
that Defendants violated the FCA by: (1) knowingly presenting or causing to be presented
a false or fraudulent claim for payment or approval; (2) knowingly making, using, or
causing to be used a false record or statement material to a false or fraudulent claim; and
(3) conspiracy. (See id. ¶¶ 111–49 (alleging violations of §§ 3729(a)(1)(A)–(C)).) Claiming
that Defendants’ conduct netted over $285 million in federal funds (“Funds”), Plaintiff
brings suit to recover a percentage of the Funds, plus interest and attorney fees. (Id. ¶¶
128, 131, 142, 149.)
In response, Defendants move to dismiss Plaintiff’s Amended Complaint with
prejudice. (Doc. 53.) Having been fully briefed (Docs. 56, 59), the matter is now ripe. Upon
review, the Court finds that the Motion is due to be granted in part.

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II.

LEGAL STANDARDS

Under the minimum pleading requirements of the Federal Rules of Civil
Procedure, plaintiffs must provide short and plain statements of their claims with simple
and direct allegations set out in numbered paragraphs and distinct counts. See
Fed. R. Civ. P. 8(a), 8(d), & 10(b). If a complaint does not comport with these minimum
pleading requirements, if it is plainly barred, or if it otherwise fails to set forth a plausible
claim, then it is subject to dismissal under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662,
672, 678–79 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
Plausible claims must be founded on sufficient “factual content” to allow “the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” See Iqbal, 556 U.S. at 678; see also Miljkovic v. Shafritz & Dinkin, P.A., 791 F.3d 1291,
1297 (11th Cir. 2015). When resolving a Rule 12(b)(6) motion to dismiss, courts must
consider only the complaint, its exhibits, “documents incorporated into the complaint by
reference,” and matters that are subject to judicial notice. See Telltabs, Inc. v. Makor Issues
& Rights, Ltd., 551 U.S. 308, 322 (2007). In the FCA context, courts may take judicial notice
of documents such as newspaper articles and information on publicly available websites
“for the limited purpose of determining which statements the documents contain (but
not for determining the truth of those statements).” See United States ex. rel. Osheroff v.
Humana, Inc., 776 F.3d 805, 812 n.4 (11th Cir. 2015).
Generally, courts should dismiss a claim if the sufficiently pled “factual content”
of the complaint does not allow the court to “draw the reasonable inference that the
defendant[s] [are] liable for the misconduct alleged” in the claim. See Ashcroft v. Iqbal, 556
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U.S. 662, 678–79 (2009). “Liability under the [FCA] 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 v. Lincare, Inc., 428 F.3d 1008, 1012
(11th Cir. 2005). To that end, the U.S. Court of Appeals for the Eleventh Circuit requires
that each element of a FCA claim meet the heightened pleading standard of Rule 9(b). See
id. at 1012 (citing Clausen, 290 F.3d at 1308–09); see also Jallali v. Sun Healthcare Grp.,
Sundance Rehab. Agency, Inc., 667 F. App’x 745, 745–46 (11th Cir. 2016). Thus, ”[i]n alleging
fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may
be alleged generally.” Fed. R. Civ. P. 9(b). This means that a plaintiff “must plead . . . ‘the
details of the defendants’ allegedly fraudulent acts, when they occurred, and who
engaged in them.’” Clausen, 290 F.3d at 1310 (quoting Cooper v. Blue Cross Blue Shield of
Florida, Inc., 19 F.3d 562, 567–68 (11th Cir. 1994)). And because the “sine qua non of a [FCA]
violation” is the submission of a false or fraudulent claim for payment, id. at 1311, “that
submission must be pleaded with particularity and not inferred from the circumstances.”
Corsello, 428 F.3d at 1013. Without this, a plaintiff fails to state a claim under the FCA. See
id. at 1013; Clausen, 290 F.3d at 1311–12.
III.

DISCUSSION

In support of their Motion, Defendants’ raise three principal arguments: (1)
Plaintiff lacks personal or firsthand knowledge of the allegedly fraudulent conduct; (2)
Plaintiff’s claims are foreclosed by the FCA’s public disclosure bar, and Plaintiff is not an
original source (“Bar Argument”); and (3) the Amended Complaint does not satisfy Rule
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9(b) (“9(b) Argument”). (Id. at 12.) To support the Bar Argument, Defendants submitted
voluminous exhibits. (See Docs. 53-1–53-27.) Finding the Bar Argument persuasive, the
Court addresses that first, followed by the 9(b) Argument. 2
A.

Bar Argument

The FCA bars private qui tam suits based on publicly disclosed information
(“Public Disclosure Bar”). See 31 U.S.C. § 3730(e)(4); Osheroff, 776 F.3d at 809. Under the
Public Disclosure Bar:
The court shall dismiss an action or claim . . . if substantially the
same allegations or transactions as alleged in the action or claim
were publicly disclosed—
(i)
(ii)
(iii)

in a Federal criminal, civil, or administrative hearing in
which the Government or its agent is a party;
in a congressional, Government Accountability Office, or
other Federal report, hearing, audit, or investigation; or
from the news media,

unless the action is brought by the Attorney General or the person
bringing the action is an original source of the information. . . .
For purposes of this paragraph, “original source” means an
individual who either (i) prior to a public disclosure . . . has
voluntarily disclosed to the Government the information on which
allegations or transactions in a claim are based, or (2) [sic] who has
knowledge that is independent of and materially adds to the
publicly disclosed allegations or transactions, and who has
voluntarily provided the information to the Government before
filing an action under this section.
§§ 3730(e)(4)(A)–(B). In Osheroff, the Eleventh Circuit recognized three steps for the public

Plaintiff’s three claims rely on the same underlying allegations, so the Court
evaluates the allegations’ sufficiency to determine whether Plaintiff’s claims survive. (See
Doc. 48, ¶¶ 111–49.)
2

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source inquiry: (1) have the allegations made by the plaintiff been publically disclosed;
(2) if so, are the plaintiff’s allegations substantially the same as allegations or transactions
contained in the public disclosures; and (3) if yes, is the plaintiff an “original source” of
that information. See 776 F.3d at 812 (describing three-part test from Cooper, 19 F.3d at 555
n.4 and re-framing for updated version of FCA). The Court proceeds under this analysis.
1.

Public disclosures

First things first, the Court finds that most allegations made by Plaintiff in the
Amended Complaint have been publically disclosed. This is clear based on a review of
Defendant’s exhibits, which the Court may—over Plaintiff’s objection—take judicial
notice of in this Motion for “the limited purpose of determining which statements the
documents contain,” not their truth.3 See Osheroff, 776 F.3d at 811 n.4, 812.
To categorize, Defendant’s twenty-seven exhibits consist of: (1) articles from
periodicals, accessed online (Docs. 53-1, 2, 7, 8, 9, 10, 11, 12, 15, 19, 20, 21, 23, 27); (2)
postings on blogs run by law-school faculty (Docs. 53-3, 5, 6, 17, 24); (3) articles from
online publishers focused on legal news (Docs. 53-13, 16, 18, 22, 25); (4) two other blog
posts, one from a former CSL professor, and one discussing a lawsuit against Arizona
Summit from a former employee (Docs. 53-4, 14); and (5) an informational brochure from
CSL (Doc. 53-26). Thirteen exhibits are from 2015; six from 2014; four from 2013; three
from 2016; and one is from 2012. On the whole, the exhibits provide detailed insight into

To the extent Plaintiff lobs an authenticity challenge (Doc. 56, p. 19), the Court
overrules it. See Osheroff, 776 F.3d at 811 n.4 (“Even if [the plaintiff] had preserved an
objection to the defendants’ motion, the court properly took notice of these documents.”).
3

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InfiLaw’s policies and practices at its three locations, some with responses by InfiLaw’s
executives and school officials, with many specific allegations about CSL. Synthesizing
their content, Defendants’ exhibits speak to four groups of issues: (1) admissions;
(2) matriculation, academic progress, and grading; (3) bar passage and employment; and
(4) treatment of faculty, each discussed in turn.
a.

Admissions

For admissions, Defendants’ exhibits expose how after InfiLaw’s Schools received
ABA accreditation and started participating in federal funding programs, enrollment
figures skyrocketed. (E.g., Docs. 53-1, 2, 3, 4, 5, 6, 7, 8, 12, 17, 19, 20, 24.) CSL’s enrollment
almost tripled between 2009 and 2011. (Doc. 53-1.) The growth is explained as InfiLaw’s
means of obtaining as much “taxpayer-supplied law-school tuition revenue” as possible,
achieved “by taking large numbers of students that almost no other ABA-accredited law
school would consider admitting.” (Id.) These students InfiLaw admitted had extremely
low GPAs and LSAT scores, which are the standards traditionally used by Admissions
Offices to predict aptitude for legal studies and legal reasoning (“Admissions
Standards”). (Id.; see also Doc. 53-3.) The exhibits charge that InfiLaw, by lowering
Admissions Standards and accepting students with little chance of success, perpetrated
a scheme to capture all the federal funding it could and reap enormous profit while
students suffered. (E.g. Docs. 53-1, 2, 3, 5, 6.) Through this, InfiLaw and CSL knowingly
deceived their students, the ABA, and the DOE. (Doc. 53-6.)
What is more, the exhibits uncover an alternative admissions program
(“AAMPLE”) developed by InfiLaw to bypass traditional admissions metrics, including
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the LSAT. (E.g., Docs. 53-1, 4, 9, 10, 26.) All InfiLaw Schools used AAMPLE, a pre-1L
program that involved passing a class or two before entering 1L. (See id.) AAMPLE
allowed students who didn’t take the LSAT, or scored extremely poorly, to gain
admission; and was specifically crafted to balloon enrollment figures and allow InfiLaw’s
Schools to publish misleading admissions statistics. (Docs. 53-4, 9, 10.) With AAMPLE,
InfiLaw concocted another way to draw in the warm bodies who brought more federal
funds. (See e.g., Docs. 53-1, 4, 9, 10.)
On top of this, InfiLaw employed deceptive marketing to lure in students. One
exhibit details how CSL would “gift” students for enrolling. (Doc. 53-11.) In exchange for
enrolling, CSL offered reimbursement funds for moving expenses, a laptop, or an iPad.
(Id.) CSL also had a rolling admissions program, seeking admissions a month before the
term started—especially for students with high LSAT scores. (Id.) These students were
sent last-minute solicitations with steep tuition discounts to coax them to join the
upcoming class. (Id.)
CSL also actively recruited students from Historically Black Colleges and
Universities, exclusively offering them a “Pre-Law Academy” program. (Doc. 53-26.)
And CSL expected its faculty to market the school to prospective students by calling them
directly to “entice them.” (Doc. 53-4.) InfiLaw’s corporate staff prepared special key-point
tip sheets for faculty to discuss in these calls, filled with exaggerations and lies to make
students believe they can get certain types of employment if they enroll. (Id.) Plus,
InfiLaw’s general marketing materials, developed by its corporate headquarters,
contained misleading employment statistics and inflated bar passage rates. (Docs. 53-4,
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9, 13, 17.) As the exhibits report, this was all a sham, part of InfiLaw’s scheme to game
the system and get more federal loans. (E.g. Docs. 53-4, 7, 9, 13, 17, 18, 19.)
b.

Matriculation, Academic Progress, and Grading

After students matriculated, the exhibits report the lengths InfiLaw went to for
retention, to keep the federal funds flowing. (E.g., Docs. 53-1, 2, 3, 4, 10, 12, 15, 17, 19, 20,
22, 23, 24.) First, InfiLaw actively discouraged and sought to prevent students from
transferring out. (See Doc. 53-4.) This was accomplished in several ways: (1) reordering
classes in the first-year curriculum to not offer traditional courses required for transfers;
(2) combining first-year courses to offer fewer classes per semester, making it harder for
students to achieve high GPAs; (3) requiring students interested in transferring to meet
with a school administrator before releasing their transcripts; and (4) instructing faculty
members to refuse letters of recommendation requests. (See Docs. 53-4 (CSL); 53-22
(Arizona Summit and Florida Coastal); see also Doc. 53-23.) Anything to retain.
Yet despite these hurdles, most students at the top of the class transferred out,
leaving behind students with very low performance. (E.g., Docs. 53-1, 3.) Some of these
students lacked competencies “such as writing and critical thinking, that are crucial to
law school success.” (Doc. 53-12; see also Doc. 53-4.) To compensate, InfiLaw’s Schools
lowered grading standards and allowed students who should have been academically
dismissed to leave for a semester and start fresh the next year. (E.g., Docs. 53-3, 4, 12, 17,
19.) They admitted high rates of part-time students (over 20% of an incoming class) with
even lower entrance credentials to maintain enrollment figures. (Docs. 53-6, 15.) They also
kept in place the mandatory grading curve, set when entering classes had much stronger
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credentials. (Doc. 53-3.) Not recalibrating the curve increased the likelihood of grade
inflation, and the curve was already skewed by admitting students through AAMPLE.
(Id.; Doc. 53-10.) As these exhibits display, CSL made its student body’s aptitude appear
higher than it actually was—fabricating academic progress. (Doc. 53-10.)
c.

Bar Passage and Employment

Together, these admissions practices and retention policies brewed the perfect
storm, slated to strike when it came time to pass the bar exam and find a job. This is the
main event, the key to CSL’s downfall, and the focus of Defendants’ exhibits. These
exhibits offer incredible detail about InfiLaw’s practices and problems surrounding bar
passage and student employment, which are metrics the ABA uses to maintain
accreditation. (See Docs. 53-1–10, 53-12–53-25.) Basically InfiLaw’s Schools charged
students a pretty penny to attend—on the Government’s dime—but the students and the
Government didn’t get any bang for their buck.
To offer a snapshot, InfiLaw developed a “bar exam failure predictor formula” to
determine which students were unlikely to pass the bar exam. (Doc. 53-9.) These students
were called the night before the bar exam by a school administrator, sometimes the law
school’s dean, and offered stipends ranging from $5000 to $10,000 to delay taking the bar
exam and enroll in InfiLaw’s “Unlock Potential” program (“UL Program”). (Id., Docs. 532, 10, 13, 15, 16.) The UL Program offered enhanced bar preparation courses and
individual bar exam coaches for students enrolled. (Doc. 53-16.) Payment hinged on
participating in the UL Program and a student’s declared intent to sit for the bar exam.
(Id.) According to the exhibits, all of this was aimed at maintaining the façade that
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InfiLaw’s Schools students’ passed the bar exam, to not threaten their ABA accreditation
or tarnish their reputations, which could lead to lower applications and dry up their
federal funding stream. (See Docs. 53-1–10, 53-12–53-25.)
Despite these tactics, bar exam passage rates continued to plummet. (E.g. Doc. 532 (CSL falling from 78% to 47%).) When the ABA accredited InfiLaw’s Schools, it looked
at bar passage rates from classes with high performing students. (E.g. Docs. 53-2, 3.) The
schools then opened their admissions floodgates, but it took at least a full admissions
cycle to realize the effects of these lower credentialed students. (Doc. 53-3.) And although
the cat was now out of the bag, InfiLaw’s Schools dug in their heels, doing whatever they
could to prevent low-achieving students from taking the bar exam while allowing them
to stay in school and continue to funnel them federal funds. (E.g., Docs. 53-1, 3, 4, 13, 14,
17, 18, 19, 20.)
Beyond skewing bar passage rates, InfiLaw’s Schools manipulated employment
statistics. (Docs. 53-1, 3, 8, 9, 19, 20, 24.) Because the ABA requires schools to report
employment rates nine months after graduation, InfiLaw’s Schools scrambled to place its
students in jobs. (Doc. 53-1.) To meet the nine-month mark, CSL created “temporary” jobs
for its students, “the legal equivalent of manual labor,” and certainly “not the kind of
work someone spends three years and thousands of dollars to get.” (Doc. 53-8.) These
jobs “don’t even require a law degree.” (Id.) And higher salary jobs were essentially out
of the question for the majority of CSL’s students, meaning they would not be able to pay
back law school debt. (Id.)

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Of course, this harsh employment reality was not reflected in InfiLaw’s reported
employment figures, which just showed total employment rates, not types of jobs. (Id.;
see also Doc. 53-1.) Without these “deceptive employment rates,” InfiLaw’s wouldn’t be
able “to entice potential future students to enroll”—meaning less future federal funding.
(Id.) As the New York Times explained, the lure of federal funding was too powerful of
an incentive to keep InfiLaw’s stalling out Schools going, despite “dismal” employment
outcomes, because the Schools have no responsibility for the debt students take on to
attend. (Doc. 53-20.) With their deceptive employment rates, the InfiLaw Schools were
free to take the money and run. (See id., Docs. 53-19, 22, 24.) So they did, all the while
deceiving their students, the ABA, and the DOE. (Docs. 53-1, 2, 3, 4, 5, 10, 12, 20, 22, 25.)
d.

Treatment of Faculty

Last but not least, the exhibits report poor treatment of faculty at InfiLaw’s
Schools. (Docs. 53-1, 4, 22, 23.) Specifically, the exhibits assert: (1) issues with faculty
members’ tenure; (2) eliminating faculty involvement in admissions; (3) scrutinizing how
faculty members conduct classes and requiring all doctrinal courses to give midterms;
(4) coercing faculty to make recruitment calls with misleading and false information;
(5) instructing faculty members to discourage students from transferring by telling
students that CSL was the best place for their tuition money; and (6) drilling into faculty
that obtaining tuition money was the most important focus. (Id.) Essentially, the exhibits
tell how InfiLaw’s corporate headquarters and school administrators ran the show and
the faculty had to sit back and watch. (Id.) Once the schools received accreditation,
InfiLaw cleared house. (Doc. 53-1.) All of this was profit-motivated. (Id.)
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Looking at all of these exhibits together, the Court finds that the news media
unearthed InfiLaw and CSL’s fraudulent scheme to obtain federal funding. With
painstaking detail, an avalanche of allegations was leveled against InfiLaw and CSL
before Plaintiff provided a written disclosure to the Government and initiated this action.
(See Doc. 48, ¶¶ 36, 108 (alternatively stating that Plaintiff provided a written disclose to
the Government in April 2016 and June 2016).) Now, the Court compares Plaintiff’s
allegations with those publically disclosed.
Plaintiff generally alleges these false claims:
1.

CSL doled out incentive payments to recruitment staff (id. ¶ 118a);

2.

Defendants admitted academically unqualified students without the dean
and faculty’s approval (id. ¶¶ 118b–c);

3.

Defendants altered students grades through CSL’s re-entry program (id.
¶118d);

4.

InfiLaw carried out improper trust accounting procedures that CSL
allowed (id. ¶¶e–f);

5.

CSL juked its employment stats (id. ¶ 118g);

6.

CSL impliedly certified academically underqualified students as having
made satisfactory academic process to receive federal funds (id. ¶ 118h);

7.

CSL failed to maintain ABA accreditation standards as required (id. ¶ 118i);

8.

Defendants failed to implement a written plan to combat misuse of
copyrighted works (id. ¶ 118j);

9.

CSL failed to create or abide by a code of conduct to prevent conflicts of
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interests concerning federal funding (id. ¶ 118k); and
10.

CSL failed to equip its graduates with the ability to pay back their
mountains of debt (id. ¶ 118l).

Apart from these, the Amended Complaint contains additional facts not alleged as false
claims: (1) CSL created “travel classes” that were field trips for which students received
federal aid (id. ¶ 87); (2) Defendants admitted veterans to ensure compliance with DOE’s
90/10 rule and retained them despite low academic achievement (id. ¶¶ 89–93); and (3)
CSL set up a suspect pro bono program in Haiti (id. ¶¶ 100–07).
Not all of these allegations were explicitly publicly disclosed. Specifically, the
exhibits do not reference: (1) the incentive payments to staff; (2) improper trust
accounting procedures; (3) misuse of copyrighted works; (4) an absent code of conduct;
(5) CSL’s travel classes; (6) veterans admissions; and (7) the Haiti program. The rest
were—albeit Plaintiff added some window dressing here and there to confirm that
InfiLaw’s practices at CSL mirrored those at Florida Coastal and Arizona Summit.
(Compare, e.g., Doc. 48, ¶¶ 68–71 (Plaintiff alleging CSL used AAMPLE to avoid using the
LSAT as an admission metric) with Doc. 53-9 (reporting lawsuit filed by former Arizona
Summit employee discussing AAMPLE).) The Public Disclosure Bar bar operates if
“substantially the same allegations or transactions . . . were publicly disclosed.” § 3730
(e)(4)(A). That is the case here—but also with one of Plaintiff’s “new” allegations,
concerning veteran admissions. Plaintiff’s veterans admissions allegations are
substantially the same as publicly disclosed allegations describing how Defendants did
whatever it took to retain students. (E.g., Docs. 53-3, 4, 12, 17, 19.) This includes specific
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allegations that Defendants failed to dismiss students who were barely scraping by
academically, which is the substance of Plaintiff’s veterans admissions allegations. (See
Docs. 53-4, 12.) So this too the Court finds has been publicly disclosed.
Now, unless Plaintiff qualifies as an “original source,” she is barred from asserting
all of these publicly disclosed allegations—admitting unqualified students, altering
student grades, juking employment stats, certifying satisfactory academic progress,
failing to maintain ABA standards, failing to equip students with the means to pay back
debt, and admitting and retaining veterans for revenue purposes. 4 § 3730(e)(4)(B);
Osheroff, 776 F.3d at 815–16. The Court turns to this.
2.

Original source

There are two ways to be an original source. § 3730(e)(4)(B). The first is by
voluntarily disclosing information to the Government that forms the basis of an FCA
claim prior to a public disclosure. See id. That is not the case here. Plaintiff provided a
written disclosure to the Government in either April or June 2016 (see Doc. 48, ¶¶ 36, 108),
and she initiated suit on June 6, 2016 (see Doc. 1). The public disclosures date back to 2012,
with most of them from 2014 and 2015. (See Docs. 53-1–53-27.) Two of them were
published after April 2016, one on May 26, (Doc. 53-25), the other on June 3 (Doc. 53-17),
and both recite the already-identified litany of issues with InfiLaw’s Schools (see Docs.
53-17, 25). So no, Plaintiff’s written disclosure in 2016 does not qualify her as an original
source the first way.

4

III.B.

Plaintiff’s remaining six allegations are addressed in the next section, infra Pt.
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The second way to qualify an original source has two requirements: (1) the source
must have “knowledge that is independent of and materially adds to the publicly
disclosed allegations or transactions”; and (2) the source must have “voluntarily
provided the information to the Government before filing an action.” § 3730(e)(4)(B). The
dispute here lies over the first part: whether Plaintiff’s knowledge was independent and
whether it materially adds to the public disclosures.
To show independent knowledge, Plaintiff claims she came by her allegations
“through faculty meetings.” (Doc. 56, p. 23.) Yet the Amended Complaint only mentions
Plaintiff’s attendance at faculty meetings as the source of her information for some
allegations, not all. (See, e.g., Doc. 48, ¶¶ 63, 64, 80.) The bulk of her allegations do not
trace the source of Plaintiff’s knowledge, although she does start out by saying, “[CSL]
required [Plaintiff] to directly engage in almost all [CSL] departments, including, but not
limited to, [CSL’s] Financial Aid and Admissions department. In doing so, [Plaintiff] was
privy to [Defendants’] policies, procedures, and conduct for [CSL’s] financial aid and
admission that are not typically available to a law professor.” (Id. ¶ 2.) Fine, the Court
accepts Plaintiff’s contention that she has independent knowledge. But even giving her
this, the Court finds that her allegations do not materially add to the public disclosures.
Indeed, the public disclosures “were already sufficient to give rise to an inference”
that Defendants were defrauding the Government of federal funds. See Osheroff, 776 F.3d
at 815 (defining “materially adds”). With great detail, the public disclosures expose the
various means Defendants employed to execute this scheme, all the while linking
Defendants’ conduct to the overriding goal of squeezing as much money as possible from
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the federal government. (See Docs. 53-1–10, 53-12–25.) They clearly outline “the essential
elements comprising [Defendants’] fraudulent [conduct] . . . so as to raise a reasonable
inference of fraud.” See Osheroff, 776 F.3d at 815 (quoting United States ex rel. Kraxberger v.
Kan. City Power Light & Co., 756 F.3d 1075, 1079 (8th Cir. 2014)); see also United States ex
rel. Saldivar v. Fresenius Med. Care Holdings, Inc., 841 F.3d 927, 932 n.1 (considering original
source inquiry under newer version of the FCA). Against this backdrop, Plaintiff’s
additions contribute little, let alone anything “material.” 5
Absent any material addition, Plaintiff is not an original source for those publicly
disclosed allegations, and her three claims cannot proceed based on those allegations. See
§ 3730 (e)(4)(A). Those comprise the bulk of her Amended Complaint, but not all. Next,
the Court evaluates the remainder.
B.

9(b) Argument
Since the Public Disclosure Bar rids the Amended Complaint of most allegations,

the Court need only consider whether the remaining allegations satisfy Rule 9(b)’s
particularity requirement. These allegations are: (1) incentive payments to staff;
(2) improper trust accounting procedures; (3) misuse of copyrighted works; (4) no code
of conduct; (5) CSL’s travel classes; and (6) the Haiti program. (Doc. 48, ¶¶ 45–46, 57, 65–
66, 72, 87, 100–07.) To meet Rule 9(b), Plaintiff must plead with particularity the

Cf. United States ex rel. Patel v. GE Healthcare, Inc., No. 8:14-cv-120-T-33TGW, 2017
WL 4310263, at *4 (M.D. Fla. Sept. 28, 2017) (alternatively finding that Relator qualified
as an original source because he alleged that Defendant “effectively continued the
fraudulent scheme—through its own nuclear pharmacies—after settling [a previous
FCA] action,” which materially added to publicly disclosed allegations).
5

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circumstances surrounding the fraudulent submission of these claims, and that these
false statements were made in connection with Defendants’ funding requests. See Clausen,
290 F.3d at 1309.
Right off the bat, Rule 9(b) knocks out two of these allegations: CSL’s travel classes
and Haiti program. Neither allegation is tied to a “fraudulent claim” submitted by
Defendants to the government, or an implied certification. (Compare Doc. 48, ¶¶ 87, 100–
07 with ¶ 118.) Both allegations lack any indication how this conduct violates Title IV. (See
id. ¶¶ 87, 100-07.) Without such crucial information, these allegations do not support an
FCA claim; frankly, the Court questions why they were included.
The remaining four allegations fare no better. Rule 9(b) requires a plaintiff to allege
“the details of the defendants’ allegedly fraudulent acts, when they occurred, and who
engaged in them.” Corsello, 428 F.3d at 1012 (quoting Clausen, 290 F.3d at 1310 (citation
omitted)). Rather than comply with this requirement, Plaintiff provides just vague
allegations that these incidents occurred and Defendants were responsible. (See Doc. 48,
¶¶ 45–46, 57, 65–66, 72.) What is more, most allegations again do not identify why the
conduct constituted fraud or how it impacted Defendants’ ability to receive federal funds.
See Clausen, 290 F.3d at 1301. Thus, the remaining four allegations do not support
Plaintiff’s FCA claims. 6

Because Plaintiff’s three claims rely on all of these faulty allegations, none can
proceed. (See Doc. 48, ¶¶ 111–49.) But putting this aside, it is clear that Counts II and III
were due to be dismissed from the get-go for failure to comply with Rule 9(b). Count II
alleges that CSL submitted a false record, i.e. the initial PPA, and then annually recertified the PPA to receive federal funds. (Id. ¶¶ 132–42.) Yet Plaintiff provides
absolutely no detail about this entry process or the certifications—their time, place, or
6

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In short, Plaintiff adopted the kitchen-sink approach. This has failed—for all of her
claims. Although Amended Complaint must be dismissed, the Court will grant Plaintiff
an opportunity to re-plead.
IV.

CONCLUSION

Accordingly, it is ORDERED AND ADJUDGED as follows:
1.

Defendants’ Motion to Dismiss (Doc. 53) is GRANTED IN PART.

2.

Plaintiff’s Amended Complaint (Doc. 48) is DISMISSED WITHOUT
PREJUDICE.

3.

On or before Monday, May 7, 2018, Plaintiff may file a second amended
complaint. Failure to remedy the deficiencies identified in this Order or
otherwise state a plausible claim will lead to dismissal of this action with
prejudice.

DONE AND ORDERED in Chambers in Orlando, Florida, on April 23, 2018.

Copies to:
Counsel of Record
The United States
substance. See Corsello, 428 F.3d at 1008. The same goes for Count III, where Plaintiff
blanketly asserts a conspiracy claim with essentially no details. (See Doc. 48, ¶¶ 143–49.)
These seemingly unfounded claims fit Plaintiff’s indiscriminate approach to this action.
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