Handal v. Center for Employment Training, 2:13-cv-01697

Background

Four qui tam relators (former CET students) allege Center for Employment Training (CET) and several staff submitted false certifications to obtain Title IV and state Cal Grant eligibility, violating the federal False Claims Act (FCA) and California False Claims Act (CFCA).
Relators claim CET failed to provide required gainful-employment disclosures (employment/placement rates, tuition, median loan debt, program occupations, financial aid) and made affirmative misrepresentations about job placement assistance and program outcomes.
Specific defendants Johnson (admissions rep) and Cruickshank (center director) are alleged to have made particular false statements to students; other individual defendants are alleged only in general, conclusory terms.
The United States and California declined to intervene; defendants moved to dismiss the First Amended Complaint. The court held a hearing and took limited judicial notice of agency materials.
The court denied dismissal as to CET, Johnson, and Cruickshank on FCA/CFCA and state fraud claims (as to Johnson/CET), but dismissed claims against several other individual defendants for failure to plead with Rule 9(b) particularity; common-law claims were dismissed without prejudice to refiling if the government intervenes.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether CET’s certifications (PPA/IPA) support an express or implied FCA theory	Relators: CET expressly certified compliance with Title IV/regulations in PPA and thus false certifications support FCA liability	Defendants: some regs (e.g., 34 C.F.R. § 668.6) post‑dated PPA and issues are conditions of participation not payment	Court: Express certification theory viable; PPA is a prerequisite to payment so certifications are material; denies dismissal as to CET, Johnson, Cruickshank
Pleading particularity under Rule 9(b) for individual defendants	Relators: pleaded specific misrepresentations by Johnson and Cruickshank supporting FCA/CFCA and state fraud claims	Defendants: allegations are generalized and fail Rule 9(b) for many individual defendants	Court: Allegations satisfy Rule 9(b) as to CET, Johnson, Cruickshank; claims against other individuals dismissed with leave to amend
Materiality: whether regulatory/reporting failures are conditions of payment	Relators: compliance with disclosure/misrepresentation regs is material to Title IV funding decision	Defendants: these are conditions of participation subject to administrative remedies and not FCA materiality	Court: Follows Ninth Circuit precedent (Hendow) that conditions of participation can be material/conditions of payment; denies dismissal on materiality ground
State law fraud/deceit and common-law claims viability	Relators: state fraud parallels FCA allegations; common-law claims seek restitution	Defendants: FCA does not vest relators with standing to bring common-law claims on U.S.’s behalf; state fraud claims insufficiently pleaded against some defendants	Court: Denies dismissal of state fraud claim against Johnson and CET (based on Johnson’s conduct); grants dismissal as to Cruickshank and other defendants; common-law claims dismissed without prejudice

Key Cases Cited

United States v. Hendow, 461 F.3d 1166 (9th Cir. 2006) (PPA certifications can create FCA liability; conditions of participation may be material to payment)
Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993 (9th Cir. 2010) (particularity satisfied by alleging scheme plus indicia that false claims were submitted)
Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989 (U.S. 2016) (distinguishing express and implied false certification theories and materiality principles)
United States ex rel. Anderson v. Northern Telecom, 52 F.3d 810 (9th Cir. 1995) (qui tam standing and FCA basics)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard: plausibility requirement)
United States ex rel. Lee v. Corinthian Colleges, 655 F.3d 984 (9th Cir. 2011) (Rule 9(b) application in FCA qui tam suits)