United States Ex Rel. Miller v. Weston Educational, Inc.
840 F.3d 494
| 8th Cir. | 2016Background
- Heritage College, a for‑profit institution, signed a Program Participation Agreement (PPA) with the DOE to participate in Title IV programs; ~97% of its students received Title IV aid and DOE disbursed ~$32.8M from 2009–2012.
- Relators (former employees Chickoiyah Miller and Cathy Sillman) alleged Heritage falsified grade and attendance records before and after the PPA to preserve student eligibility/avoid refunds and maximize Title IV funds; Heritage did not dispute record alteration for summary‑judgment purposes.
- Relators filed a qui tam False Claims Act (FCA) suit asserting fraudulent inducement (that Heritage obtained the PPA while intending not to maintain required records), plus FCA retaliation and state wrongful‑discharge claims; the government declined intervention.
- The district court granted summary judgment to Heritage on all claims; on appeal the Eighth Circuit (after Supreme Court vacatur of an earlier opinion) reversed as to the FCA fraudulent‑inducement claim and affirmed dismissal of the employment claims, remanding the FCA claim for further proceedings.
- The court found triable issues of fact whether (a) Heritage, when executing the PPA, knowingly intended not to maintain records necessary for proper administration of funds, and (b) that promise was material to the government’s decision to enter/maintain the Title IV relationship.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Heritage knowingly made a false statement by promising to maintain records while intending not to (fraudulent inducement scienter) | Miller/Sillman: Heritage had pre‑PPA knowledge and intent to falsify records (internal policy, pattern of falsifications, retention/financial motive) | Heritage: PPA language does not require the specific grading/attendance records at issue; no evidence of pre‑PPA intent not to comply | Triable factual dispute exists; reasonable jury could find Heritage knew recordkeeping was required and intended not to comply — summary judgment improper |
| Whether the alleged false promise was material to the government’s payment decisions under the FCA | Relators: recordkeeping condition was expressly required by statute/regulation/PPA and a reasonable person/government would attach importance | Heritage: falsified records did not cause any specific improper disbursement or retention; immaterial unless tied to particular payments | Held material for summary‑judgment purposes: the recordkeeping promise was a condition of Title IV participation and thus material under Escobar and Baycol principles |
| Miller’s FCA retaliation claim (demotion, exclusion, pay docking, withdrawn offer) | Miller: she engaged in protected activity; employer knew; took adverse actions including demotion/withdrawn offer and exclusion | Heritage: asserted actions were not adverse/retaliatory; no demotion or adverse employment action proven; speculative pay claim | Affirmed for Heritage: Miller failed to prove adverse, retaliatory conduct or causal link required under §3730(h) |
| State wrongful‑discharge claims (Miller constructive discharge; Sillman termination for reporting misconduct) | Miller: working conditions were intolerable, forcing resignation; Sillman: reported practices amounting to theft of student loan funds violating public policy | Heritage: conditions were not objectively intolerable; reported regulations/statutes cited by Sillman are too general to establish a clear public‑policy mandate | Affirmed for Heritage: Miller’s constructive discharge not shown; Sillman’s reported violations did not point to a specific statute/regulation establishing clearly mandated public policy |
Key Cases Cited
- United Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (materiality standard under the FCA; government’s designation of condition relevant but not dispositive)
- In re Baycol Prods. Litig., 732 F.3d 869 (8th Cir. 2013) (fraudulent‑inducement liability attaches to claims submitted under a contract obtained by false statements)
- United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943) (fraudulently obtained government contract triggers liability for related claims)
- Tolan v. Cotton, 134 S. Ct. 1861 (2014) (summary‑judgment review requires viewing evidence in light most favorable to nonmoving party)
- United Techs. Corp. v. United States, 626 F.3d 313 (6th Cir. 2011) (false statements inducing multi‑year contracts produce a stream of related claims)