United States of America, ex rel. Chickoiyah Miller, ex rel. Cathy Sillman Plaintiff
Weston Educational, Inc., doing business as Heritage College Defendant-Appellee Chickoiyah Miller; Cathy Sillman Relators-Appellants
Submitted: July 29, 2016
from United States District Court for the Western District of
Missouri - Kansas City.
SMITH, BENTON, and SHEPHERD, Circuit Judges.
BENTON, Circuit Judge.
Yehnee Miller and Cathy Lynn Sillman filed a qui tam False
Claims suit against Heritage College, alleging it
fraudulently induced the Department of Education (DOE) to
provide funds by falsely promising to keep accurate student
records. Each relator also alleged retaliation under the FCA
and wrongful discharge under state law. The district court
granted summary judgment to Heritage. Relators appealed,
except on Sillman's retaliation claim. The Supreme Court
vacated this court's earlier opinion. Weston Educ.,
Inc. v. United States ex rel. Miller, 136 S.Ct. 2505
(2016), vacating United States ex rel. Miller v. Weston
Educ., Inc., 784 F.3d 1198 (8th Cir. 2015). Having
jurisdiction under 28 U.S.C. § 1291, this court reverses
and remands the FCA claim, and affirms the employment claims.
a for-profit college, signed a Program Participation
Agreement (PPA) with the DOE to participate in programs under
Title IV of the Higher Education Act of 1965. See 20
U.S.C. §§ 1070-1099d (2012) (providing federal
financial assistance to eligible post-secondary
students). Under the PPA, Heritage and its students
submit applications for specific federal grants, loans, or
scholarships. Around 97% of Heritage students receive Title
IV aid, accounting for about 90% of gross tuition. From 2009
to 2012, the DOE disbursed $32, 817, 727 to Heritage.
obligates Heritage to "establish and maintain such
administrative and fiscal procedures and records as may be
necessary to ensure proper and efficient administration of
funds." See also 20 U.S.C. § 1094(a)(3)
(same language); 34 C.F.R. § 668.14(b)(4) (same
language). This includes "[d]ocumentation" of each
student's eligibility and of any refunds due on behalf of
the student. 34 C.F.R. § 668.24(c)(iii)-(iv). To be
eligible for funds, a student must make "satisfactory
progress." Id. §§ 668.32(f), 668.34.
SP is measured by cumulative grade point average.
See Heritage Coll., ABHES Institutional
Self-Evaluation Report 72 (2007) (noting student must attain
70% GPA by end of program to make SP). Refunds to the DOE may
be due when a student withdraws, depending on how much of a
program the student completed. See 34 C.F.R. §
668.22(e) (noting no refund required if student completes 60%
or more of program). Withdrawal is determined by the
"last date of academic attendance." Id.
both former Heritage employees, claim that Heritage altered
grade and attendance records from 2006 to 2012 to ensure
students made SP and to avoid refunds, thereby maximizing
Title IV funds. Miller saw an administrator increase student
grades without instructor knowledge or consent, erasing the
grades in a paper grade book and replacing them. She
identifies a number of her own students-from before and after
the signing of the PPA-whose transcripts reflect higher
grades than she awarded. She saw administrators alter
attendance records to mark absent students as present. At
meetings in 2009 and 2010, Miller heard administrators
discuss keeping students at Heritage long enough to get all
Title IV funds possible. Two other program managers testified
that administrators ordered them to go through instructor
grade books and change failing grades to passing. Other
Heritage employees and instructors witnessed or participated
in altering grade and attendance records, before and after
the signing of the PPA. For the purpose of summary judgment,
Heritage does not dispute it altered records.
December 2010, Relators complained to Heritage about this and
other alleged misconduct. Heritage fired Sillman on December
27, 2010, citing poor job performance and interpersonal
skills. Miller quit on January 7, 2011, claiming that she had
been excluded from meetings, removed as program manager,
refused a previously-offered employment position, docked
Saturday pay, and threatened with termination.
filed a qui tam FCA action, alleging numerous theories of FCA
liability. The federal government declined to intervene.
Relators added claims for retaliation under the FCA and
wrongful discharge under Missouri law. The court granted
summary judgment to Heritage on all claims. Relators appeal
on one theory of FCA liability, fraudulent inducement. They
also appeal the judgments on wrongful discharge and
Miller's retaliation claim.
claim that Heritage committed fraudulent inducement by
signing the PPA without intending to maintain "records
as may be necessary to ensure proper and efficient
administration of funds." The district court held
Heritage did not promise to keep perfect records and any
promise was not material to the disbursement of funds. This
court reviews de novo a grant of summary judgment.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042
(8th Cir. 2011) (en banc). Summary judgment is proper when
"there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). A court "must view the evidence in
the light most favorable to the opposing party" and draw
"reasonable inferences" in favor of that party.
Tolan v. Cotton, 134 S.Ct. 1861, 1866, 1868 (2014)
(per curiam) (internal quotation marks omitted).
makes liable anyone who "knowingly makes, uses, or
causes 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). Under fraudulent inducement, FCA
liability attaches to "each claim submitted to the
government under a contract so long as the original contract
was obtained through false statements or fraudulent
conduct." In re Baycol Prods. Litig., 732 F.3d
869, 876 (8th Cir. 2013), citing United States ex rel.
Marcus v. Hess, 317 U.S. 537, 543-44, 552 (1943)
(finding contractors liable under FCA for all claims
submitted under government contract obtained by collusive
bidding). Accord United States v. United Techs.
Corp., 626 F.3d 313, 320 (6th Cir. 2011) ("False
statements underlying multi-year contracts generate a stream
of related invoices and cause the government to pay all of
the invoices related to the contract."); United
States ex rel. Longhi v. United States, 575 F.3d 458,
468 (5th Cir. 2009) ("[A]lthough the Defendants'
subsequent claims for payment made under the contract were
not literally false, [because] they derived from the original
fraudulent misrepresentation, they, too, became actionable
false claims." (second alteration in original) (internal
quotation marks omitted)); United States ex rel. Hendow
v. Univ. of Phoenix, 461 F.3d 1166, 1173 (9th Cir. 2006)
("[L]iability will attach to each claim submitted to the
government under a contract, when the contract . . . was
originally obtained through false statements or fraudulent
conduct."); United States ex rel. Main v. Oakland
City Univ., 426 F.3d 914, 916 (7th Cir. 2005) ("If
a false statement is integral to a causal chain leading to
payment, it is irrelevant how the federal bureaucracy has
apportioned the statements among layers of paperwork.");
Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 788 (4th Cir. 1999) (stating "any time a false
statement is made in a transaction involving a call on the
U.S. fisc, False Claims Act liability may attach" even
if "the claims that were submitted were not in and of
themselves false"). See also United States v.
Neifert-White Co., 390 U.S. 228, 232 (1968) (noting FCA
"was intended to reach all types of fraud, without
qualification, that might result in financial loss to the
inducement requires a plaintiff to show: (1) the defendant
made a "false record or statement"; (2) the
defendant knew the statement was false; (3) the statement was
material; and (4) the defendant made a "claim" for
the government to pay money or forfeit money due. See
Baycol, 732 F.3d at 875-76 ("[A] claim alleging
fraud in the inducement of a government contract does focus
on the false or fraudulent statements which induced the
government to enter into the contract at the outset.");
United States ex rel. Vigil v. Nelnet, Inc., 639
F.3d 791, 796, 799 (8th Cir. 2011) (requiring materiality).
At issue is whether Heritage made a knowingly false
statement, and whether it was material.
claim that Heritage falsely stated it would keep accurate
student records. Heritage argues that the PPA does not
require the maintenance of these specific grading and
statement to be knowingly false, a person must have
"actual knowledge of the information, " or act in
"deliberate ignorance" or "reckless
disregard" of the truth or falsity of the information.
31 U.S.C. § 3729(b). "Innocent mistakes and
negligence are not offenses under the Act. In short, the
claim must be a lie." United States ex rel. Onnen v.
Sioux Falls Indep. Sch. Dist. No. 49-5, 688 F.3d 410,
413 n.2 (8th Cir. 2012). A defendant's "reasonable
interpretation of any ambiguity inherent in the regulations
belies the scienter necessary to ...