Palmer v. Tata Consulting ServicesPalmer v. Tata Consulting Services
Pending before the Court is Defendant Tata Consultancy Services Limited‘s Motion to Dismiss Amended Qui Tam Complaint (Dkt. #65). Having considered the Motion, the relevant pleadings, and the applicable law, the Court finds that the Motion should be GRANTED.
BACKGROUND
This is a qui tam action. The Complaint, initiated by Jack “Jay” Palmer (“Relator”), accuses Tata Consultancy Services, Ltd. (“Tata”) of misusing the United States visa system by fraudulently procuring H-1B, L-1A, and B-1 visas (Dkt. #64). The Court will begin with a summary of the factual and procedural disposition before turning to the parties’ arguments.
I. Factual Background
Relator was hired by Comcast Corporation (“Comcast”) in 2016 to conduct an audit of Tata and its immigration practices (Dkt. #64 at p. 8). Tata is a global information technology and consulting services company headquartered in Mumbai, India, with approximately nineteen offices in the United States (Dkt. #64 at p. 8; Dkt. #65 at p. 9). Tata “contracts with U.S. companies to provide IT-related services” and hires individuals to fill positions to service those clients (Dkt. #64 at p. 9). “Tata prefers to staff open U.S. positions with foreign workers for whom Tata secures visas” (Dkt. #64 at p. 9). According to Relator‘s Amended Complaint, Tata employs nearly 30,000 workers in the United States, at least 76% of whom require an H-1B, L-1A, or B-1 visa (Dkt. #64). Because the distinction between these three types of visas is meaningful to this case, the Court briefly introduces each type below.
A. H-1B Visas
H-1B visas are intended to temporarily bring foreign workers to the United States to perform specialized work when there are insufficient workers in the United States to perform a specific job.
The H-1B application process is highly competitive. Each year, United States Citizenship and Immigration Services (“USCIS”) places a strict cap on the number of new H-1B visas it may issue each year.
B. L-1A Visas
L-1A visas are intended for intracompany transferees.
B-1 visas are intended for temporary business visitors.
With the stage set, the Court returns to Relator‘s factual contentions. Relator alleges that, throughout his audit of Tata, he observed multiple types of fraud in Tata‘s visa application procedures for each type of visa listed above.
First, Relator contends that Tata falsely submits prospective H-1B visa applications for positions that do not exist (Dkt. #64 at ¶ 9). According to Relator, this practice involves Tata falsifying employee roles listed in the H-1B visa petitions and falsely certifying that the visa recipient would work in a specialty occupation, as required by USCIS for an H-1B application (Dkt. #64 at ¶ 9). See supra Section I.A. In reality, however, Relator argues that Tata uses these employees to perform non-specialized work when they arrive to the United States (Dkt. #64 at ¶ 9). This allows Tata “to have an inventory of ‘visa-ready workers’ in India, available to travel to the U.S. at a moment‘s notice once or if the work becomes available” (Dkt. #64 at ¶ 9) (cleaned up). Because H-1B visas are only available to fill existing positions that require specialized work, supra Section I.A, Relator submits that Tata has defrauded the United States visa system (Dkt. #64 at ¶¶ 9–10). The goal? To enable Tata “to calculatedly pay its H-1B visa workers less than the required ‘prevailing wage rate,’ in violation of
Relator avers that Tata‘s alleged visa fraud enables it to game the H-1B lottery system and procure the maximum number of H-1B visas possible each year (Dkt. #64 at ¶ 31). To illustrate the impracticality of Tata‘s visa application procedures, Relator directs the Court to Tata‘s annual application numbers (Dkt. #64 at ¶ 31). Relator alleges that Tata received 7,936 new visas in 2015 and 11,295 in 2016, for a total of 19,231 approved H-1B visas over two years
Second, Relator submits that, in an effort to circumvent the stricter H-1B requirements and lottery system, Tata falsely applies for L-1A visas for technical employees who work non-managerial roles in the United States (Dkt. #64 at ¶ 39). To do so, Relator asserts that Tata falsifies job titles and responsibilities in the visa petitions to suggest that certain employees are managers when, in fact, they are not (Dkt. #64 at ¶ 39). According to Relator, this scheme allows Tata to maximize the number of L-1A visas it can receive from the government, then turn around and improperly assign those L-1A visa recipients to non-managerial positions that differ from those described in their fraudulent petitions (Dkt. #64 at ¶¶ 39–40). If stockpiling visas is the goal, Relator contends that Tata has met it (Dkt. #64 at ¶ 39). Indeed, from 2002 to 2011, Tata sponsored 25,908 L-1 visas, more than any other company in the United States (Dkt. #64 at ¶ 39). Relator adds that Tata received 1,606 L-1 visa approvals in 2015 and 1,615 in 2016 (Dkt. #64 at ¶ 39). The allegations do not stop there. To perpetrate this alleged L-1A visa fraud, Relator contends that Tata evades detection by USCIS Fraud Detection and National Security officers who make unannounced site visits to ensure compliance with the L-1A requirements (Dkt. #64 at ¶ 41). According to Relator‘s Complaint, Tata‘s scheme remains undetected because its corporate human resources team “instruct[s] all accounts to make backend changes in Tata‘s online Ultimatix system to conform L-1A visa holders’ employee information to their visa petitions” (Dkt. #64 at ¶ 41). In other words, Tata edits the roles and reporting structures in each account to match the management-level roles indicated in their corresponding L-1A visa petitions (Dkt. #64 at ¶ 41). Finally, Relator avers that Tata instructs its employees to directly lie to USCIS about their job titles and responsibilities (Dkt. #64 at ¶ 41). USCIS is none the wiser, allowing Tata to secure visa extensions to keep its L-1A visa holders in the United States for up to seven years (Dkt. #64 at ¶ 42). According to Relator, Tata‘s endgame is to secure L-1A visas for specialized employees that would otherwise require an H-1B visa so that the company can save $1,000 for each visa petition it submits ($5,460 for an L-1A visa compared to $6,460 for an H-1B visa) (Dkt. #64 at ¶ 43).
Third and finally, Relator argues that Tata falsified its B-1 applications (Dkt. #64 at ¶¶ 44–46). In an effort to bypass the stricter and more expensive H-1B and
II. Procedural Background
Relator timely filed his qui tam Complaint on January 31, 2017 (Dkt. #1). See
Tata filed the instant Motion to Dismiss on April 7, 2023 (Dkt. #65). On May 5, 2023, Relator filed a Response (Dkt. #74). Tata replied on May 26, 2023 (Dkt. #75). While Tata‘s Motion to Dismiss was pending, Tata filed a Notice of Supplemental Authority on February 15, 2024 (Dkt. #79). Through it, Tata directs the Court to a recent opinion from the United States District Court for the District of Columbia, where Tata was a party to a separate, similar qui tam action (Dkt. #79; Dkt. #79-1) (citing United States ex rel. Kini v. Tata Consultancy Servs., Ltd., No. 17-CV-2526 (TSC), 2024 WL 474260 (D.D.C. Feb. 7, 2024)). The Kini court granted Tata‘s motion to dismiss on grounds similar to those raised here. See Kini, 2024 WL 474260, at *7. Thus, Tata instructs the Court to follow the Kini court and dismiss this action (Dkt. #79). On February 29, 2024, Relator filed a Response to Tata‘s Supplemental Authority, urging the Court not to follow Kini because it is not binding and should not persuade the Court (Dkt. #80).
LEGAL STANDARD
A
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal, 556 U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary claims or elements.‘” Morgan v. Hubert, 335 F. App‘x 466, 470 (5th Cir. 2009) (citation omitted). This evaluation will “be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘” Id. at 678 (quoting Twombly, 550 U.S. at 570).
Because the FCA sounds in fraud, claims brought under the FCA must be pleaded with particularity under Rule 9(b). United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 266 (5th Cir. 2010) (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)).
Rule 9(b)‘s particularity requirement generally means that the pleader must set forth the “who, what, when, where, and how” of the fraud alleged. United States ex rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 453 (5th Cir. 2005). A plaintiff pleading fraud must “specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 564–65 (5th Cir. 2002). The goals of Rule 9(b) are to “provide[] defendants with fair notice of the plaintiffs’ claims, protect[]
ANALYSIS
Tata‘s moves to dismiss Relator‘s complaint on four separate grounds (Dkt. #65 at pp. 7–8). First, Tata submits that Relator failed to plausibly plead an affirmative FCA claim because “visas are not property for purposes of an FCA claim” (Dkt. #65 at p. 7). Second, Tata challenges the adequacy of Relator‘s reverse false claim theory because, according to Tata, its “contingent or potential obligations to pay the government” do not constitute “established obligation[s]” that are necessary to support a reverse false claim theory (Dkt. #65 at p. 7). Third, Tata argues that the FCA‘s “Tax Bar” precludes Relator‘s FCA claims (Dkt. #65 at p. 8). Fourth and finally, Tata contends that Relator‘s claims do not meet the heightened pleading standards under Rule 9(b) because they lack “any particularized detail as to the ‘who, what, when, where, and how’ of the alleged fraud” (Dkt. #65 at p. 8) (citing United States ex rel. Shupe v. Cisco Sys., Inc., 759 F.3d 379, 382 (5th Cir. 2014)). The Court addresses each argument in turn.
I. Relator‘s Affirmative FCA Claims
The Court begins with Relator‘s affirmative FCA claims. The FCA creates civil liability for persons who present false or fraudulent claims for payment to the Federal Government.
Relator asserts that Tata violated both “affirmative” FCA provisions by falsifying employee roles in H-1B visa petitions, fraudulently obtaining L-1A visas for employees in non-managerial roles, and improperly utilizing B-1 visa workers to perform skilled and unskilled labor that
As discussed, the “false claim” upon which Relator‘s affirmative FCA claims rest is Tata‘s submission of fraudulent visa applications (See Dkt. #64 at ¶ 48). But “while the underlying fraud that invokes the FCA differs under § 3729(a), ‘the statute attaches liability, not to the underlying fraudulent activity or to the government‘s wrongful payment, but to the claim for payment.‘” United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 467 (5th Cir. 2009). Indeed, it is not the false statement itself that gives rise to FCA liability; there must be a claim. In other words, “[t]here is no [FCA] liability ... for a false statement unless it is used to get false claim[s] paid.” United States v. Southland Mgmt. Corp., 326 F.3d 669, 675 (5th Cir. 2003). That payment can come in one of two forms: money or property.
The Court begins with the question of whether a visa application constitutes a claim for money such that an FCA claim may be predicated upon it. It is axiomatic that it is not. A visa application does not request money in any way, shape, or form. Certainly, visas might hold some intrinsic value—they are, at least, valuable insofar as they authorize foreign employees to work in the United States.10 But a visa, on its own, does not possess any pecuniary value that would qualify it as “money.” The United States Mint does not print visas. Visas cannot be sold, nor can they be exchanged for value. It is unsurprising, then, that Relator does not even advance an argument that an application for a visa constitutes a claim for money under the FCA (See Dkt. #74). Thus, the Court concludes that visas do not constitute money.
Having determined that a visa is not money for purposes of an FCA claim, Relator‘s only remaining hope is to classify Tata‘s visa applications as claims for property. See
both in turn. But first, the Court turns to
Cleveland asked the United States Supreme Court to determine whether the federal mail fraud statute,
Courts applying Cleveland to the FCA have similarly held that licenses do not fall within traditional concepts of property rights. See, e.g., United States v. Majestic Blue Fisheries, LLC, 196 F. Supp. 3d 436, 445 (D. Del. 2016) (holding that fishing licenses are not “property” because the right to fish using a fishing license “does not exist independent of a ‘regulatory regime‘”); Franchitti, 555 F. Supp. 3d at 69 (applying Majestic Blue to the visa context and holding that a visa is not property because such a “‘purely regulatory’ scheme does not invoke traditional property rights”); Billington, 2022 WL 2981592, at *7 (following Franchitti and holding that a visa is not property under the FCA). Relevant here are Franchitti and Billington, which Tata urges the Court to follow (Dkt. #65 at pp. 14–16).
First came Franchitti, where, under facts strikingly similar to those before the Court today, the United States District Court for the District of New Jersey was tasked with determining whether a visa could be construed as “property” under the FCA‘s definition of “claim.” Franchitti, 555 F. Supp. 3d at 69. Using the Supreme Court‘s reasoning in Cleveland, the court held in the negative. Id. The court noted that, like the licenses in Cleveland, “a visa has no value to the government beyond the revenue stream from application fees.” Id. Rather, the court explained, a visa simply “‘licenses ... engagement in pursuits that private actors may not undertake without official authorization.‘” Id. (quoting Cleveland, 531 U.S. at 13). Namely, a visa authorizes foreign workers to enter the United States to perform paid services, provided that they comply with immigration regulations. Id. According to the Franchitti court, the level of control that the government exercises over the number of visas issued and how those visas are allocated is “purely regulatory” and does not resemble traditional property rights. Id. Thus, the court dismissed the relator‘s affirmative FCA claims. Id.
The following year, the United States District Court for the District of Connecticut was presented with a nearly identical question in Billington. 2022 WL 2981592. The court‘s analysis is more terse than that in Franchitti, but its conclusion is no less persuasive. Id. at *5–7. Relying on Franchitti, Majestic Blue, and Cleveland, the court declined to expand FCA liability to encompass visas as a form of property because to do so would “‘fundamentally change[] the relationship between the FCA and garden-variety regulatory violations.‘” Id. at *6 (quoting United States ex rel. Kasowitz Benson Torres LLP v. BASF Corp., 929 F.3d 721, 728 (D.C. Cir. 2019)). Accordingly, the court dismissed the FCA claims that relator asserted under
The Court will do the same here. Extending FCA liability to reach visas as a form of property would require the Court to ignore its numerous sister courts which have declined to punish such “garden-variety regulatory violations.” Billington, 2022 WL 2981592, at *6 (quoting Kasowitz, 929 F.3d at 728); see also Franchitti, 555 F. Supp. 3d at 69; Majestic Blue, 196 F. Supp. 3d at 444-45. The Court refuses to turn such a blind eye. Like the video poker machine licenses in Cleveland and the fishing licenses in Majestic Blue, the right of a foreign worker to perform paid services in the United States using a visa does not exist independent of a “regulatory regime.” Compare Majestic Blue, 196 F. Supp. 3d at 445 and Cleveland, 531 U.S. at 13, with Billington, 2022 WL 2981592, at *7 and Franchitti, 555 F. Supp. 3d at 69. Consequently, Relator‘s affirmative claims asserted under
II. Relator‘s Reverse FCA Claims
With Relator‘s affirmative FCA claims put to rest, the Court turns to his reverse FCA claims. The FCA prohibits “reverse false claims,” which arise when a person “knowingly makes, uses, or causes to be made or used, a false statement material to an obligation to pay or transmit property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”
Relator advances two reverse false claim theories. First, Relator contends that by employing foreign workers on the cheaper B-1 and L-1A visas instead of H-1B visas, Tata has “deprive[d] the government of ... significant revenue that would otherwise be derived from visa application fees” (Dkt. #64 at ¶ 8). Second, Relator avers that Tata‘s practice of underpaying H-1B workers and its reliance on visa-reliant employees deprived the United States government of “significant tax revenue” that “would have been generated from the employment of non-visa reliant workers” or from Tata‘s payment of higher wages to H-1B employees (Dkt. #64 at ¶¶ 38, 43, 46, 48; Dkt. #65 at p. 17).
Tata seeks to dismiss Relator‘s reverse FCA claims on the basis that Relator failed to plausibly plead an “obligation” that Tata subsequently shirked. Critical to a successful reverse false claim is a showing that the defendant had an “obligation” to pay or transmit money to the government. See
Relator‘s reverse false claims are predicated on Tata‘s alleged obligation to pay the higher fees associated with securing H-1B visas, which Relator argues Tata avoided by fraudulently securing L-1A and B-1 visas instead (See Dkt. #64 at ¶¶ 38, 43, 46, 48). Tata insists that it had no obligation to pay H-1B fees (See Dkt. #65 at pp. 16–20). Instead, Tata contends that “any obligation [Tata] had to pay the fees associated with H-1B visas was contingent on [Tata] actually applying for those visas and receiving them in the government lottery” (Dkt. #65 at p. 20). The Court agrees with Tata.
Once more, to plausibly state a reverse FCA claim, the relator must identify an “obligation to pay or transmit money or property to the Government.”
The Court‘s conclusion finds support in recent FCA jurisprudence. See, e.g., Lesnik, 374 F. Supp. 3d at 940 (noting that “there was no obligation to pay the government for a petition-based visa because no visa application for a petition-based visa was ever actually submitted”); Billington, 2022 WL 2981592, at *10 (following Lesnik and dismissing the plaintiff‘s reverse FCA claims because “any purported obligation to pay [H-1B] fees was entirely contingent on the visa lottery process”). The Court briefly illustrates each below.11
In Lesnik, the plaintiffs asserted that the defendants brought foreign workers to the United States “on B-1 visas that are generally reserved for skilled work, even though [the defendants] allegedly knew the workers would actually be performing unskilled construction work.” Lesnik, 374 F. Supp. 3d at 934. The plaintiffs brought a reverse FCA claim against the defendants, asserting that “because Defendants falsely obtained cheaper B-1 visas, they
Then came Billington. 2022 WL 2981592. Like its affirmative FCA analysis, the Court finds Billington‘s reverse FCA analysis equally persuasive. There, the court recounted the FCA‘s history
since it was amended as part of the Fraud Enforcement and Recovery Act of 2009 (“FERA”) to add the definition of “obligation” to the statute “to address ‘conflicting definitions of the term obligation’ that had developed among the federal courts.” Id. at *9 (quoting United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co., 843 F.3d 1033, 1037 (5th Cir. 2016)). To reiterate, that definition now reads: “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”
That leaves the reverse FCA outlier: Franchitti. 555 F. Supp. 3d. As persuasive as the Court finds Franchitti‘s affirmative FCA analysis, supra at 16, the Court disagrees with its reverse FCA conclusion. In evaluating whether the defendant had an “obligation” to pay the higher H-1B visa fees, the court rejected the more factually similar analysis in Lesnik in favor of more factually distinct cases in which the court found the defendant was obligated to pay money to the Government. Id. at 70 (citing United States v. Pemco Aeroplex, Inc., 195 F.3d 1234, 1236–37 (11th Cir. 1999) (finding that the defendant had an “obligation” giving rise to reverse FCA liability when it misrepresented the true value of the equipment it purchased from the United States Air Force); United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., 839 F.3d 242, 245–46, 254–55 (3d Cir. 2016) (concluding that the defendant‘s importation of improperly marked pipe fittings without reporting them as such, thereby avoiding a 10% marking duty, constituted an “obligation” under the FCA)). The court analogized the visa application process to the procurement of Air Force equipment and failure to adequately mark
The Court disagrees with Franchitti‘s expansive approach. See Billington, 2022 WL 2981592, at *10 (rejecting Franchitti‘s holding because it “expand[s] FCA liability beyond that contemplated by Congress”). A close reading of Pemco and Victaulic reveals that those cases are distinguishable. In Pemco, the Eleventh Circuit determined that “Pemco had a written contract which expressly obligated Pemco to be responsible and accountable for the government property in its possession and to return that property to the government or dispose of the property in accordance with the government‘s instructions.” Pemco, 195 F.3d at 1237 (emphasis added).12 Thus,
Pemco‘s contract with the government created a “specific legal obligation” to dispose of the property on the government‘s terms. Id. That obligation existed at the time Pemco misrepresented the government. See id. In other words, the duty was “established,” as required by
Victaulic fares no better. There, the Third Circuit performed a reverse FCA analysis in the context of improperly marked pipe fittings. Victaulic, 839 F.3d at 253–56. The defendant in Victaulic allegedly “imported millions of pounds of improperly marked pipe fittings without disclosing that the fittings [were] improperly marked,” which allowed the defendant to avoid paying a 10% “marking duty” on the improperly marked goods. Id. at 245–46. The Third Circuit allowed the reverse FCA claim to proceed because the defendant importer‘s obligation to pay the 10% marking duty was “deemed to ‘have accrued at the time of importation’ and [was] due and owing, without exception.” Id. at 254 (quoting
But that is not the only distinction. Victaulic is further distinguishable because it relied, in part, on legislative history—which the Court in no way relies upon here. See Victaulic, 839 F.3d at 254. United States v. Dixon, 185 F.3d 393, 399 (5th Cir. 1999) (“[T]he legislative history of a statute may not compel a meaning at variance with its plain language.”) (internal quotations omitted). In Victaulic, the FERA‘s legislative history contemplated the precise issue presented in that case. See S. REP. NO. 111-10, at 24 n.10 (2009). Namely, the Senate Report discussed how it would handle “customs duties for mismarking country of origin” under the new “obligation” definition.
Here, unlike Victaulic, the Court need not review the legislative history. Indeed, the plain text of the statute, as interpreted by the foregoing caselaw, compels only one conclusion: Tata had no “obligation” to pay fees for applications it never submitted. Though the Court has no reason to engage with the FERA‘s legislative history, even if it did peel back that curtain, what lies behind offers no guidance. Cf. Victaulic, 839 F.3d at 254 (citing S. REP. NO. 111-10 (2009)). Thus, Victaulic is distinguishable. Therefore, Franchitti‘s reliance upon it is unpersuasive. Accordingly, neither opinion controls the Court‘s analysis here.
Shifting course, the Court turns to Relator‘s wage-related reverse FCA claims. To the extent Relator argues that Tata was obligated to pay its employees the higher of the actual wage or prevailing wage—and failed to fulfill that obligation—that argument necessarily concedes that Tata owed no such obligation to the Government. Indeed, Tata‘s obligation, if any, to pay its employees a higher wage, was owed to its employees, not to the Federal Government. See
For the foregoing reasons, Relator‘s allegations in his Amended Complaint do not demonstrate that Tata had any “established duty” at the time of its alleged visa fraud that could support a reverse FCA claim. Consequently, Relator‘s reverse FCA claims asserted under
Finally, having determined that Relator has not plausibly pleaded a claim for relief under the FCA—whether affirmative or
CONCLUSION
It is therefore ORDERED that Defendant Tata Consultancy Services Limited‘s Motion to Dismiss Amended Qui Tam Complaint (Dkt. #65) is hereby GRANTED.
Because any amendment of Relator‘s Complaint would not fix its legal deficiencies, Relator‘s Amended Qui Tam Complaint (Dkt. #64) is DISMISSED with prejudice.
IT IS SO ORDERED.
SIGNED this 20th day of May, 2025.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE