US ex rel. Rose v. Stephens Institute, No. 17-15111 (9th Cir. 2018)Annotate this Case
The Ninth Circuit affirmed the district court's order denying the school's motion for summary judgment in a qui tam action brought by relators under the False Claims Act (FCA). Relators alleged that the school violated an incentive compensation ban included in its program participation agreement with the Department of Education, through which it qualified for federal funding.
The panel held that a reasonable trier of fact could conclude that the school's actions met the falsity requirements in Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016). The panel held that Escobar did not overrule United States ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166 (9th Cir. 2006), which held that, with regard to materiality, the question is whether the false certification was relevant to the government's decision to confer a benefit. The panel applied Esobar's standard of materiality and held that a reasonable trier of fact could find materiality because the DOE's payment was conditioned on compliance with the incentive compensation ban, past enforcement activities, and the substantial size of the incentive payments. Finally, the safe harbor provision was inapplicable in this case.
The court issued a subsequent related opinion or order on November 26, 2018.