United States v. Sanford-Brown, Limited
2016 U.S. App. LEXIS 19195
| 7th Cir. | 2016Background
- Relator Nelson sued Sanford‑Brown College (SBC) under the False Claims Act, alleging implied false certification in claims for federal student‑aid funds.
- Case reached the Seventh Circuit; the court previously issued an opinion that was partially vacated and the matter was remanded by the U.S. Supreme Court for reconsideration in light of Universal Health Servs., Inc. v. United States.
- The implied‑certification theory requires claims to make specific representations and omissions about noncompliance that render those representations misleading half‑truths.
- Nelson offered no evidence that SBC made any specific representations in the claims for payment or that any representations were false or misleading.
- The government (or its agencies) had repeatedly reviewed SBC and chose not to impose penalties or terminate participation, undermining any showing that noncompliance was material to payment decisions.
- The Seventh Circuit on remand substituted a new analysis of the false‑presentment claim under Universal Health, reinstated the remainder of its prior opinion, and affirmed the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether implied‑false‑certification can support liability for SBC's claims | Nelson: SBC’s claims impliedly certified compliance with Title IV requirements; nondisclosure made claims misleading | SBC: Nelson offered no evidence of any specific representations or misleading half‑truths in claims | Court: No — Nelson offered no evidence SBC made specific representations; speculation insufficient |
| Whether alleged noncompliance was material under the FCA | Nelson: Violation entitled the government to refuse payment; thus material | SBC: Government paid claims and agencies repeatedly reviewed SBC without imposing sanctions, showing noncompliance wasn’t material | Court: No — materiality requires likely or actual effect on government payment decision; mere entitlement to refuse is insufficient |
Key Cases Cited
- Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989 (2016) (establishes two‑part test for implied‑false‑certification and a rigorous, fact‑specific materiality standard)
- United States v. Sanford‑Brown, Ltd., 788 F.3d 696 (7th Cir. 2015) (prior Seventh Circuit opinion in this case, largely reinstated except for the revised false‑presentment analysis)
- Bass v. Joliet Pub. Sch. Dist. No. 86, 746 F.3d 835 (7th Cir. 2014) (speculation is insufficient to survive summary judgment)