may have please the court charles scarborough for the united states as is secure in support of opponents this case involves allegations that the university of phoenix knowingly made false promises to comply with the statutory prerequisite to obtaining federal one in a multistep process for obtaining federal funds are actionable if they cause a phase to request repayment by the government even if that request does not itself contain any false statements  absolutely your honor i think the cases are on all fours and that would be sort of the easiest way to do it for me thirty seven twenty nine eighty two imposes liability where a person uses a false statement to get a claim of proof and that's precisely what happened here sort of at the outset in order to even become eligible to receive any title for fines the university made representations that it would comply with the intent of compensation that knowing at the time that it was in fact not going to comply these are the allegations of course remains to all to be group still in the district court said because the threshold statement was not a certification for the magic language rule that it was not actionable even though it was in fact clearly a prerequisite to obtaining the government benefit and that is just clearly wrong the false claims act itself doesn't speak in terms of certification to require any sort of magic language of that sort it requires a false statement being used to get a claim paid to which you are government benefit there's absolutely no dispute that compliance with the incentive compensation van along with a lot of other requirements is a statutory correct was to getting into the program and becoming eligible to receive title four f the government's view it doesn't matter and there really is no distinction between conditions of participation and conditions of payment because ultimately you can't get the money at all unless you make this threshold representation which is alleged in this case to be false and to have been knowing clearly an allegation of the district court didn't like that allegation and that the defendant say well no it's not really false in may but these are matters of proof they're not a matter for a motion to dismiss and that's the way the case has been disposed i should note that the case is important to the government because as the seventh circuit recognized there are lots and lots of programs that require sort of an initial statement or series of statements about eligibility eligibility for instance to attain benefits under a small business administration loan we might have to prove that you are minority owned businesses that are made at the outset then you're in the program and then claims are being made to the government for money in various forms of algiers that don't have all the same representations at that point but  on some obscure provision you know in compiling your taxes it's a knowing violation that is material or relevant to the government's decision to pay or relevant to the government's decision to allow you into the program there's no question that th incentive compensation ban was quite relevant as this is not an obscure sort of thing buried somewhere in the defense would have you believe otherwise in one thousand nine hundred congress looked at the problem of incentive compensation being paid to recruiters and specifically added amendments to deal with this problem basically finding that because if recruiters you know had incentives salary incentives to go out and get students they would get students to unqualified and that would ultimately result in higher default rates by stage which this case will sort of cut off at the knees here and i'm just trying to suggest that you know there's probably a strong case for showing it to reality here but maybe i'm overstepping here and that's starting to argue you know what the the ladies would have to prove good morning may please the court my name is nancy cross and it is my honor and privilege to represent the whistleblower later in this case mary hend and julie albertson who are here in court with us today along with my co counsel daniel roberts partly  if i may jump ahead i wonder sponsor your question your honor on how do we stop every regulatory violation them coming on false claims that and your honor my response to that would be that hopper sets forth the test very clearly that there must be a ca it's in the funding statute of the higher education act itself states that institution must comply in order to be eligible to request funds so when you've got it let's stop right there in the funding statute there is your clear ca in eligible to participate in the program we're claiming it's in eligible to participate in a program that's directly as case we've got the university of phoenix requesting funds when is ineligible for to participate because it is paying these incentive compensation violations hopper this court recognized that same basis for liability saying false statements which create eligibility that otherwise would not exist state a false claim every request for funds after that is a false claim and that's where the district court lost like is quickly point out that just record also iran asli was focusing again on the what was the name of the false statement was it called a sort of the cation and i would direct you in requests that you just go back to the occasion the proper again was looking estimate case said that test is just a false statement and use the payment it was not looking for whether that false statement was called a certification occasions you've got the shock case where someone ghost or let's take pictures for the air force we will comply with the environmental laws and they had no intention to do that they did not do that they would question the funds they were not in compliance again they were implying compliance every time they question the funds but there are some simply executing documents contain these false statements that are not legal sort occasions unless you had questions only when he was growth yes you have three theories express theory you would need to prove that the statement right up front were false when made which we intend to allege but i'd it's my contention under the implied shiri for instance there are no allegations that the statements were made or false in the  abstract case when they signed that statement cooperation saying we're going to only work with small business small businesses what the actually alleged was that then they did not do so and requested the funds when they were not in compliance they never  statement was false so it is interesting to note that it will give the jury two avenues to impose liability one is whether the met when they made the statement did they intend to deceive the government at that time the courts that have to consider this issue whether it's false certification implied certification or promissary fraud have been very clear that the promise or certification that underlies the action must be a condition of payment or a prerequisite to pa that's one of the the ways that the courts have distinguished regulatory or statutory violations that can and should be actionable under the false claims act from those that are not  that it is directly contrary to this court's decision in hopper which is one of the leading cases across the country on both fault sort of occasion as well as promissary fraud and half her makes several points very clear one it makes very clear that not all regulatory violations should be actionable is fraud second it makes very clear that with regard to the promissary fraud the theory now being advanced vigorously by the by the relator is and the idea of day in light of the main decision it says  cases should be exceedingly rare and the exceedingly rare is because in order to advance that theory there has to be a very close nexus to payments now in this case one i'm not sure how much closer could it be if the statement form boilerplate agreement that all educational institutions from boston to rent to so it includes in its four corners or its true incorporation hundreds if not thousands of statutory regulatory and other requirements imposed upon educational institutions in order to be eligible for title for funding thus the application of any of the theories advanced by the related by the department of justice would mean that the violation of any of those steps ato you were aware of it you did it on purpose and you did it so you get the money that's i mean that isn't that where of the the difficulty for the government arises and it isn't actually proving it it certainly would be your honor that if this would proceed to department of justice has been bringing more and more regulatory statutory breach actions as false claims that that's not appropriate and there has to be a threshold at the outset and that's threshold is it has to be a condition of payment in this case your honor i'd like to i'd like  to be some tort either regulatory statutory or other provision that makes the compliance much more explicit and specifically related to the funding decision for example in the eighth that requires that the educational institution will not provide any statement to any student or certification to any lender under the federal stafford loan program that qualifies the student for a loan or loans in excess of the amount that the institutions taking that has a direct impact on the funds that would be dispersed by the government now also in the p p a among the hundreds if not thousands of other provision requirements that the institutions make efforts to distribute mail voter registration that they have standards of administrative paper ability that they provide annual security reports students that they report on intercollegiate athletic competitions if their schools offer athletic programs all of these requirements under any of the theories being advanced strong there are already of administrative actions and remedies that are available to deal with all of those that color should be dealt with not as f c a actions i would go on your honor the point first as a matter of policy of the deputy secretary of education prepared a memorandum instructing the department on how to deal with issues relating to violation of incentive compensation it's the hanson memo before the court and the deploy that deputy secretary of education said the preferable approach is to view a violation of the incentive compensation prohibition as not resulting in monetary loss to the department improper recruiting does not render a recruite education with who has responsibility for administer ing and in forcing the higher education act would would you know have the say in that the second thing goes even further than that that's a matter of policy in this case the issues  a request to take your dish will notice which was granted by the court the settlement agreement between the department of education and the university of phoenix makes very clear that this resolves all issues relating to issue and the department expressly states that it will not impose on you all p any penalty repayment liability administrative fine or other sanctions isn't that a matter for defense at trial where it normally a settlement agreement put before the the court here the department of education has said we have considered we have a we have investigated we have reported on these issues and we are not going to do anything with regard to your the incentive comp provision in the p p a is a condition of eligibility we will acknowledge that but so are again all of the hundreds if not thousands of other provisions we believe that this issue was addressed and rejected by this court in the hopper case the hopper case as you may recall involved local plans that school districts had assumed that in connection with i d e a i d e a funding and i think we're all very much were a condition of eligibility twenty u s c fourteen thirteen states that a local education agency is eligible for assistance under this part for a  plan that provides assurances that the state educational agency that the local education agency meets each of the following conditions that's exactly what we have here that that that the statute required that participants in ideate program to be eligible for participation had to submit a plan the plan was submitted the night that we can relate has attempted to argue the violations of that plan which contained a very comparable assurance that the participants will have determined that that's not a basis for withdrawing or going beyond that you're going to be on the complaint but i'm going i'm not going beyond the record that's before this court well meaning look you can file anything with the district court the district judge is required to look at the four corners of the  often i don't understand how that helps you know well because in hopper hopper involved those local plans that we just talked about local plans which we contend are really indistinguishable from the p p a hopper examined those and found that violations of those local plans which were conditions of eligibility to participate in that program were not sufficient upon which to base promissary fraud cause of action under the u judgment stage where there was no factual record and so what the court was commenting on was the state of what had actually been proved rather than what is premiss of all to be proved in the abstract or so we're sort of one back yes i but i believe on the issues that we're addressing here especially with regard to the elements in the scope of a false certification cause of action or a promissary fraud cause of action under the false claims act there really weren't factual questions such as see answer or intent or knowledge those issues really weren't relevant to what the court was ruling with regard to those causes of action important that the that the that the promise or the certification has to be so closely connected to the funding decision and how that that many regulate regulatory statutory violations don't a is a broad boilerplate certification not unlike the participation agreement that all health care or at least hospital health care providers have to execute in connection with medicare and yet of course routinely reject at the motion to dismiss they just false claims that positive actions with regard to health provision of health care services in compliance with the medicare regs you know courts have routinely gone through that process the latest counsel  and then the requirements about knowledge in the court seems to recognise and i don't want to pound on that too much but that's a matter for proof at a later stage and that knowledge you know that the person had knowledge that they were is to meaning things that were in precisely why the department education is even on notice about this case because the later is have a financial incentive to come forward it's it takes guts to be a whistleblower and congress has made a call that you get to share in the recovery and it's because of the false eligibility doesn't make any sort of distinction like that it just says that as a general matter we think that these police probably don't result in loss to the government or the false claims act as this court is recognizing a good in other cases doesn't require a loss to the government requires false claims and the seventh circuit certainly on a motion to dismiss can't trump congress has considered judgment in describing the incentive compensation van among other things as a prerequisite to receiving benefits here i don't want to take up too much more time but i do really want to emphasize that this is important the government extraordinary case where they've alleged that promised is false when made but it doesn't matter for the government's institutional interest in implied certification cases that that theory at least not in some way the preclude we think hopper clearly allows that theory to continue