United States Ex Rel. Vigil v. Nelnet, Inc.
2011 U.S. App. LEXIS 9218
| 8th Cir. | 2011Background
- FFELP pays subsidies and allowances to private lenders and insures loans through guaranty agencies.
- Nelnet, JPMorgan Chase, and Citigroup are private lenders/servicers participating in FFELP.
- Vigil, a former Nelnet loan advisor, sues for FCA violations based on alleged FFELP inducements/advertising practices.
- Vigil’s complaint asserts Nelnet engaged in prohibited inducements and misleading advertising to obtain loans, with Chase and Citigroup as alleged co-conspirators.
- District court dismissed Vigil’s Third Amended Complaint for failure to plead fraud with particularity and lack of a causal link between alleged false FFELP certifications and government payment.
- The Eighth Circuit reviews de novo the district court’s Rule 12(b)(6) dismissal and affirms the dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Vigil pleaded a viable FCA § 3729(a)(1) claim | Vigil alleges every Nelnet FFELP claim was false due to independent FFELP violations | The certifications were not false without proof Nelnet lost eligibility or claimed false data | Counts 1 and 2 dismissed for lack of particularity and causation |
| Whether Vigil pleaded a viable FCA § 3729(a)(2) claim | False certifications caused payments of false claims | No specific claims identified; certifications do not show material false statements linked to payments | Count 2 dismissed for lack of particularity and materiality |
| Whether Vigil pleaded a viable FCA § 3729(a)(3) conspiracy claim | Nelnet, Chase, Citigroup conspired to defraud the government | Requires underlying FCA violations; none stated | Count 3 dismissed as dependent on failing § 3729(a)(1)-(2) claims |
| Whether Vigil pleaded a viable § 1078-9(g) per se liability claim for EP status | Noncompliance with inducement/advertising rules renders EP status defamatory | EP-related liabilities tied to due-diligence regs, not inducements; broader reading unjustified | Count 4 dismissed; EP provisions do not reach alleged inducements outside due-diligence context |
| Whether Vigil pleaded a viable reverse-FCA claim under § 3729(a)(7) | Nelnet’s certifications created a contingent/obligatory payment liability to the government | No existing specific obligation to the Government at the time of certifications | Count 5 dismissed for lack of a defined obligation to pay |
Key Cases Cited
- United States ex rel. Joshi v. St. Luke's Hosp., Inc., 441 F.3d 552 (8th Cir. 2006) (fraud pleading standard; Rule 9(b) particularity)
- United States ex rel. Costner v. URS Consultants, Inc., 317 F.3d 883 (8th Cir. 2003) (materiality; falsehood must be material to payment decision)
- Allison Engine Co., Inc. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (interpretation of § 3729(a)(2); materiality and causation guidance)
- United States ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211 (10th Cir. 2008) (admin remedies; FCA liability tied to payment decision)
- United States ex rel. Hawley v. City of Indianapolis, 619 F.3d 886 (8th Cir. 2010) (retroactivity considerations for amendments to FCA)
- Jones v. Collegiate Funding Servs., Inc., No. 3:07-cv-290, 2011 WL 129842 (E.D. Va. 2011) (Rule 9(b) pleading of certifications)
- Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004) (false or fraudulent claim presentation)
- United States v. Q Int’l Courier, Inc., 131 F.3d 770 (8th Cir. 1997) (existing obligation to pay under reverse-FCA theories)