United States v. University of Massachusetts, 812 F.3d 35

Relator Michael Willette, a long-time employee of UMMS’s Center for Health Care Financing (CHCF), discovered that colleague Leo Villani embezzled nearly $4 million from CHCF; Villani died in 2013 and Willette became his personal representative.
Willette brought a qui tam action under the federal False Claims Act (FCA) and Massachusetts counterpart against UMMS and Villani’s estate; the government declined to intervene.
The district court dismissed Willette’s FCA claims against UMMS, concluding UMMS is an arm of the state and therefore not a “person” subject to private FCA suits, and denied leave to file a third amended complaint adding Commonwealth Medicine, CHCF, and individual defendants.
Willette appealed after obtaining a Rule 54(b) partial final judgment limited to the dismissal of claims against UMMS; the appeal sought review of both the arm-of-the-state ruling and the denial of leave to amend.
The First Circuit applied the arm-of-the-state test (Eleventh Amendment framework) to the FCA question, concluded UMMS is an arm of the state based on statutory structure, governance, budgetary control, employee status, and state-court treatment, and affirmed the dismissal.
The court held the Rule 54(b) certificate could not be read to include the denial of leave to amend; it dismissed the attempt to appeal that denial for lack of appellate jurisdiction and taxed costs to UMMS.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether UMMS is a “person” subject to private FCA suit or an arm of the state exempt from suit	Willette argued UMMS was not an arm of the state because of post-1997 statutory changes, separate-reporting of UMMS budget, revenue-generating activities (Commonwealth Medicine/CHCF), and interagency service agreements	UMMS argued statutory scheme, governance (governor-appointed trustees), budgetary control, employee status, state supervision, inability to issue bonds, and state-court treatment show it is an arm of the state	UMMS is an arm of the state and not a “person” under the FCA; dismissal affirmed
Whether the district court’s denial of leave to file a third amended complaint is immediately appealable via Rule 54(b)	Willette sought to appeal denial to add Commonwealth Medicine, CHCF, and individuals as defendants	UMMS and the court maintained the Rule 54(b) certificate only made dismissal of UMMS final and did not cover the amendment denial	Appeal of denial to amend dismissed for lack of appellate jurisdiction because Rule 54(b) certificate did not include that order

Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (U.S. 2000) (FCA’s “person” does not include states; links FCA analysis to Eleventh Amendment arm-of-state inquiry)
Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. & Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56 (1st Cir. 2003) (arm-of-state factors and two-step inquiry)
Redondo Constr. Corp. v. P.R. Highway & Transp. Auth., 357 F.3d 124 (1st Cir. 2004) (first-step test: state intent and structural analysis)
Sikkenga v. Regence BlueCross BlueShield of Utah, 472 F.3d 702 (10th Cir. 2006) (distinguishing a separately incorporated university-affiliated lab not entitled to arm-of-state status)
Kreipke v. Wayne State Univ., 807 F.3d 768 (6th Cir. 2015) (applying arm-of-state test in FCA context)
Irizarry-Mora v. Univ. of P.R., 647 F.3d 9 (1st Cir. 2011) (public university role supports arm-of-state status)
Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30 (U.S. 1994) (factors relevant to arm-of-state analysis)
Lake Country Estates, Inc. v. Tahoe Reg'l Planning Agency, 440 U.S. 391 (U.S. 1979) (arm-of-state analytical guidance)
Metcalf & Eddy, Inc. v. P.R. Aqueduct & Sewer Auth., 991 F.2d 935 (1st Cir. 1993) (structural factors in arm-of-state inquiry)
Wojcik v. Mass. State Lottery Comm'n, 300 F.3d 92 (1st Cir. 2002) (public entity revenue-generating activity does not alone negate arm-of-state status)