305 F. Supp. 3d 1315
N.D. Ala.2018Background
- Relator Megan Gilbert, an adjunct cosmetology instructor at Virginia College (Birmingham campus), sued under the False Claims Act (FCA), alleging the College inflated student attendance and grades and falsified reports to obtain Title IV funds.
- Gilbert alleges supervisors instructed her to mark absent/late students as present, change failing grades to passing, ignore cheating, and present fabricated documentation to accreditors.
- The Government declined to intervene; Gilbert proceeded as a qui tam relator. Another qui tam suit (U.S. ex rel. Smith) alleging substantially similar misconduct had been filed and publicly unsealed earlier.
- Virginia College moved to dismiss Counts I and II (FCA §§ 3729(a)(1)(A), (B)), arguing the public disclosure bar, res judicata, and failure to state a claim; the court addressed only the public disclosure bar and original-source issues.
- The court concluded Gilbert’s FCA claims (Counts I and II) were barred by the post-2010 public disclosure rule because her allegations were substantially the same as those in Smith, the prior relator functioned as a government "agent," and Gilbert did not materially add independent information to qualify as an original source.
- The court denied dismissal as to Gilbert’s retaliation claims (Count III under § 3730(h) and Count IV under Title VII), finding adequate pleadings that she engaged in protected activity and suffered retaliatory acts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gilbert's FCA claims are barred by the public disclosure bar (31 U.S.C. § 3730(e)(4)(A)) | Gilbert: Her allegations differ in time/campus and contain independent, firsthand detail, so they are not "substantially the same." | Virginia Coll.: Smith publicly disclosed substantially the same allegations; bar requires dismissal. | Held: Allegations are "substantially the same" as Smith; public disclosure bar applies. |
| Whether the Government must have formally intervened to be a "party" under § 3730(e)(4)(A)(i) | Gilbert: "Party" requires actual government intervention (citing Eisenstein). | Virginia Coll.: The Government is always the real party in interest; relators act as government "agents." | Held: Government is not a "party" absent intervention, but qui tam relators qualify as government "agents," satisfying the statute's "Government or its agent is a party" phrase. |
| Whether Gilbert is an "original source" under § 3730(e)(4)(B) | Gilbert: She has independent, firsthand knowledge from employment and thus qualifies. | Virginia Coll.: Gilbert's allegations do not materially add to Smith; many claims were already publicly disclosed. | Held: Gilbert had independent knowledge but did not "materially add" to the public disclosures; she is not an original source. |
| Whether any FCA claims survive despite dismissal arguments (res judicata, failure to state a claim) | Gilbert: alternative defenses insufficient; factual specifics support plausibility. | Virginia Coll.: Also argued res judicata and failure to plead with Rule 9(b) particularity for some claims. | Held: Court did not reach res judicata or broader Rule 12(b)(6) arguments because public disclosure bar disposes of Counts I and II; incentive-compensation allegation also dismissed for lack of Rule 9(b) particularity. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility pleading standard)
- Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (qui tam relator as partial assignee of Government claim; standing discussion)
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (United States is a "party" to a qui tam action only when it intervenes)
- United States ex rel. Osheroff v. Humana, Inc., 776 F.3d 805 (11th Cir.) (application of public disclosure bar and substantial-sameness analysis)
- U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294 (3d Cir.) (interpretation of original-source requirement after 2010 amendments)