United States Ex Rel. Adams v. Aurora Loan Services, Inc.
2016 U.S. App. LEXIS 3034
| 9th Cir. | 2016Background
- Relators filed a False Claims Act (FCA) suit alleging lenders/servicers made false certifications about HOA liens on loans sold to Fannie Mae and Freddie Mac.
- Relators alleged those false statements were presented to Fannie Mae and Freddie Mac as federal instrumentalities, making the claims "presented to an officer, employee or agent of the United States" under 31 U.S.C. § 3729(b)(2)(A)(i).
- The district court dismissed on the ground that claims made to Fannie Mae and Freddie Mac are not presented to federal officers/employees/agents; relators appealed.
- The relators did not argue below (and did not press on appeal) that the alternative FCA definition of "claim" in § 3729(b)(2)(A)(ii) applied, despite the government’s amicus pointing out that possibility.
- The court considered whether Fannie Mae and Freddie Mac are federal instrumentalities for FCA purposes and whether FHFA conservatorship converted them into government entities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae/Freddie Mac are "officer, employee or agent of the United States" under 31 U.S.C. § 3729(b)(2)(A)(i) | Fannie/Freddie are federal instrumentalities (including because of FHFA conservatorship) so claims to them are claims presented to U.S. officers/employees/agents | Fannie/Freddie are private, government‑sponsored enterprises; conservatorship does not make them federal officers/agents | Not officers/employees/agents of the U.S.; FCA § 3729(b)(2)(A)(i) not satisfied |
| Effect of FHFA conservatorship on federal status | Conservatorship effectively makes Fannie/Freddie government instrumentalities for FCA purposes | Conservatorship places FHFA in their shoes but does not convert the entities into federal instrumentalities | Conservatorship does not transform Fannie/Freddie into federal instrumentalities |
| Relevance of prior rulings finding federal status for other purposes (e.g., tax) | Rust and similar holdings show federal instrumentality status generally | Instrumentality status is purpose‑specific; being federal for one purpose doesn't control another | Prior instrumentality findings for other contexts do not decide FCA status |
| Whether relators could proceed under § 3729(b)(2)(A)(ii) instead | (Not argued) | (Defendants did not contest potential applicability) | Court expresses no opinion; relators never argued this theory so it wasn’t adjudicated |
Key Cases Cited
- Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374 (Sup. Ct.) (federal‑instrumentality analysis where government retains appointive control)
- Rust v. Johnson, 597 F.2d 174 (9th Cir.) (Fannie Mae treated as federal instrumentality for state tax purposes)
- Kuntz v. Lamar Corp., 385 F.3d 1177 (9th Cir.) (instrumentality status may vary by legal context)
- Lewis v. United States, 680 F.2d 1239 (9th Cir.) (prior ruling recognizing context‑specific federal status)
- U.S. ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir.) (FCA coverage is for Congress to define)
- Cty. of Sonoma v. Fed. Hous. Fin. Agency, 710 F.3d 987 (9th Cir.) (FHFA conservator has rights, powers, and privileges of entities in conservatorship)
- Indep. Towers of Wash. v. Washington, 350 F.3d 925 (9th Cir.) (procedural rule on raising issues on appeal)
- U.S. ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121 (9th Cir. en banc) (standard of de novo review for FCA legal questions)