# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 4- 17 60

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Uni te d S ta te s o f Am eri ca, ex rel . Chi ck oi y ah Mi ll er, ex rel . Cat hy Sill m an

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff

Ch ic ko iyah Mi ll er; Cat hy Sill m an

ll ll ll ll ll ll ll ll ll ll l Rela to rs - App el la nt s

v.

W es to n Ed uc at io na l, In c., do in g b us in es s as Heri ta ge Co ll eg e

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t
fo r th e Weste rn Dis tri ct of M is so ur i - Kan sa s C it y

__ __ __ __ __ __

Su bm it te d: Jan ua ry

14 , 20 15
Fil ed : Ap ril 29 , 20 15

__ __ __ __ __ __

Befo re SM ITH, BENTON, an d S HEPHERD, Circ ui t J ud ge s.

__ __ __ __ __ __

BENTON, Circu it Ju dg e.

Ch ic ko iyah Yeh ne e Mi ll er an d Cat hy Ly nn Si ll m an fil ed a qu i ta m Fal se

Cl ai m s su it ag ai ns t Heri ta ge Co ll eg e, al le gi ng it frau du le nt ly in du ced th e Dep art m en tof Edu cat io n (DOE) to pro vi de fun ds by fals el y pro m is in g t o k eep accu rat e st ud en t

reco rd s. Each rel at or al so al le ge d ret al ia ti on un de r th e FCA an d wro ng fu l di sc ha rg e

un de r st at e la w. The di st ric t co ur t gr an te d su m m ary jud gm en t to Heri ta ge

. Rel at or s

ap pe al

, ex cep t on Si ll m an ’s ret al ia ti on cl ai m

. Hav in g juri sd ic ti on un de r 28 U.S.C.
§ 12 91

, th is co ur t rev ers es an d rem an ds th e FCA cl ai m , an d affi rm s th e em pl oym en t

cl ai m s.

I.

Heri ta ge , a fo r- pr of

it co ll eg e, si gn ed a Pro gr am Part ic ip at io n Agr eem en t (PPA)

wit h th e DOE to pa rti ci pa te in pr og ram s un de r Tit le IV of th e Hig he r Edu cat io n Act

of 19 65

. Se e 20 U.S.C. §§ 10 70 -1 09 9d (2 01 2) (p ro vi di ng fed eral fin an ci al as si st an ce

to el ig ib le po st -s eco nd ary st ud en ts ). Und er th e P P A, Heri ta ge an d it s st ud en ts 1

su bm it ap pl ic at io ns fo r sp eci fic fed eral gr an ts

, lo an s, or sch ol ars hi ps

. Aro un d 97 %

of Heri ta ge st ud en ts rece iv e Tit le IV ai d, acco un ti ng fo r ab ou t 90 % of gr os s tu it io n.

Fro m 20 09 to 20 12 , th e DOE di sb ur se d $ 32 ,81 7,7 27 to Heri ta ge

.

The PPA ob li ga te s Heri ta ge to “ es ta bl is h an d m ai nt ai n su ch ad m in is tra ti ve an d

fis cal pr oc ed ur es an d reco rd s as may be ne ces sa ry to en su re pr op er an d effi ci en t

ad m i n i s tra ti on of fu nd s.” Se e al so 20 U.S.C. § 10 94 (a )(3 ) (s am e la ng ua ge ); 34

C.F.R. § 66 8.1 4( b)(4 ) (s am e la ng ua ge ). Th i s i n c l ud es “ [d ]ocu m en ta ti on ” of each

st ud en t’s el ig ib il it y an d of an y refu nd s du e on be ha lf of th e st u d e n t

. 34 C.F.R. §

66 8.2 4( c)(i ii )-(i v)

. To be el i g i b l e fo r fu nd s, a st ud en t m us t m ak e “ sa ti sf

act or y

pr og res s.” Id

. §§ 66 8.3 2( f)

, 66 8.3 4

. SP is m eas ur ed by cu m ul at iv e gr ad e po in t

av e rag e. Se e Heri ta ge Co ll

., ABHE S In st itu tio na l Sel f-Ev al ua tio n Repo rt 72
(2 00 7) (n ot in g st ud en t m us t a t t a i n 70 % GPA by en d of pr og ram to m ak e SP).

Exc ep t whe re ot he rwis e no te d, al l ci ta ti on s are to Tit le IV st at ut es an d 1

reg ul at io ns in effe ct whe n Heri ta ge si gn ed th e PPA in Feb ru ary 20 09

. Ci ta ti on to th e FCA i s t o t he cu rren t v ers io n, ex cep t wh ere o th erwi se no te d.

-2

-Refu nd s to th e DOE m ay be du e whe n a st ud en t wit hd raws , de pe nd in g on ho w m uc h

of a p r o g ram th e st ud en t co m pl et ed

. Se e 34 C.F.R. § 66 8.2 2( e) (n ot in g no refu nd

req ui red if s tu de nt co m

pl et es 60 % or m or e o f pr og ram ). W it hd rawal is de te rm in ed
by the “ la st da te of a cad em ic att en da nc e.” Id

. § 6 68 .22 (b)( 1)

.

Rel at or s, bo th fo rm er Heri ta ge em pl o y ees , cl ai m th at Heri ta ge al te red gr ad e

an d att en da nc e reco rd s fr om 20 06 to 20 12 to en su re s tu de nt s m ad e SP and to av oi d

refu nd s, th ereb y m ax im iz in g Tit le IV fu nd s. Mi ll er sa w an ad m in is tra to r in crea se

st ud en t gr ad es wit ho ut in st ru ct or kn owl ed ge or co ns en t, eras in g th e gr ad es in a pa pe r

gr ad e bo ok an d rep la ci ng th em

. Sh e id en ti fie s a nu m be r of he r own st ud en ts —fr om

be fo re an d aft er th e si gn in g of th e PPA— who se tra ns cri pt s refl ect hi gh er gr ad es th an

sh e award ed

. Sh e sa w ad m in is tra to rs al te r at te nd an ce reco rd s to m ark ab se nt st ud en ts

as pr es en t. At m eet in gs in 20 09 an d 20 10

, Mi ll er he ard a d mi n i s t r at or s di sc us s

ke ep in g st ud en ts at H e r i t a g e l o n g en ou gh to ge t al l Tit le IV fu nd s po ss ib le

. Two

ot he r pr og ram m an ag ers te st ifi ed th at ad mi n i s tra to rs or de red th em to go th ro ug h

in st ru ct or gr ad e bo ok s an d ch an ge fai li ng gr a d e s to pa ss in g. Oth er Heri ta ge

em pl oyees an d in st ru ct or s wit ne ss ed or pa rti ci pa te d in al te rin g gr ad e an d at te nd an ce

reco rd s, be fo re an d aft er th e s i g n i n g of th e PPA. Fo r th e pu rp os e of su m m ary jud gm en t, Heri ta ge do es no t d is pu te it alt ered reco rd s.

In Decem

be r 2 0 1 0

, Rel at or s co m

pl ai ne d to Heri ta ge ab ou t th is an d ot he r

al le ge d m is co nd uc t. Heri ta ge fir ed Si ll m an on Decem be r 27 , 20 10 , cit in g po or job

pe rfo rm an ce an d in te rp ers on al sk il ls

. Mi ll er q ui t o n J an ua ry 7, 2 01 1, cl ai m in g t ha t

sh e ha d be en ex cl ud ed fro m m eet in g s , r e mo v ed as pr og ram m an ag er, refu se d a

pr ev io us ly-offe red em

pl oym en t po si ti on , do ck ed Sat ur da y pa y , an d th reat en ed wit h

te rm in at io n.

Rel at or s fil ed a q u i ta m FCA act io n, al le gi ng nu m ero us th eo rie s of FCA

li ab il it y

. The fed e r a l go ve rn m en t de cl in ed to in te rv en e. Rel at or s ad de d cl ai m s fo r

ret al ia ti on un de r th e FCA an d wro ng fu l di sc ha rg e un de r Mi ss ou ri la w. The co u r t

-3

-gr an te d su m m ary jud gm en t to Heri ta ge on al l cl ai m s. Rel at or s ap pe al on on e th eo ry

of FCA li ab il ity

, frau du le nt in du cem en t. The y al so ap pe al th e jud gm en ts on wro ng fu l

di sc ha rg e an d M il le r’s ret al ia ti on cla im

.

II.

Rel at or s cl ai m th at Heri ta ge co m m it te d frau du le nt in du cem en t by si gn in g th e

PPA wit ho ut in te nd in g to m ai nt ai n “ reco rd s as m ay be ne ces sa ry to en su re pr op er an d

effi ci en t ad m in is tra ti on of f un ds .” The d is tri ct co ur t h el d Her it ag e d id no t pr om is e

to ke ep pe rfec t reco rd s an d an y pr om is e was no t m at eri al to th e di sb ur se m en t of

fu nd s. Thi s co ur t rev ie ws de no vo a gr an t of su m m ary jud gm en t. Tor

ge rs on v. Ci ty
of Ro ches te r , 64 3 F.3 d 10 31

, 10 42 (8 th Ci r. 20 11 ) (en ba nc ). Su m m ary jud gm en t is

pr op er whe n “ th ere is no ge nu in e di sp ut e as to a ny m at eri al fact an d th e m ov an t is

en ti tl ed to jud gm en t as a m at te r of la w.” Fed. R. Civ

. P. 56 (a )

. A co ur t “ m us t vi ew

th e ev id en ce in th e li gh t m os t fav or ab le to th e op po si ng pa rty” an d dr aw “ reas on ab le

in fere nc es ” in fav or of th at pa rty. To l a n v

. C ot to n , 13 4 S. Ct

. 18 61

, 18 66

, 18 68
(2 01 4) (pe r cu ria m ) (i nt ern al qu ot at io n m ark s o m it te d)

.

The FCA m ak es li ab le an y on e who “ kn owi ng ly m ak es , us es , or cau se s to be

m ad e or us ed

, a fal se reco rd or st at em en t m at eri al to a fal se or frau du le nt cl ai m .” 31

U.S.C. § 37 29 (a )(1 )(B)

. Und er frau du le nt in du cem en t, FCA li ab il it y a t ta ch es to 2

“ each cl ai m su bm it te d to th e go ve rn m en t un de r a co nt ract so lo ng as th e or ig in al

co nt ract was ob ta in ed th ro ug h fal se st at em en ts or frau du le nt co nd uc t.” In re Ba yco l

Pro ds

. Lit

ig

. , 73 2 F.3 d 86 9, 87 6 (8 th Ci r. 20 13 ), ci ti ng Unit ed St at es ex re l. Ma rc us

v. Hes s , 31 7 U.S. 53 7, 54 3- 44

, 55 2 (1 94 3) (fi nd in g co nt ract or s li ab le un de r FCA fo r

al l cl ai m s su bm it te d un de r go v e r n men t co nt ract ob ta in ed by co ll us iv e bi dd in g)

.

Thi s pr ov is io n ap pl ie s to cl ai m s pe nd in g o n o r a f t er Ju ne 20 08

. Fra ud 2

Enfo rcement a nd Reco ve ry Act of 20 09 (FERA)

, Pu b. L. No. 1 11 -2 1, § 4(f ), 12 3

St at . 16 17 , 16 25

, co di

fi ed at 31 U.S.C. § 3 72 9 n ot e.

-4

-Acco rd

, U

n i t e d S t a t e s v. Unit

ed Techs

. Co rp

. , 62 6 F.3 d 31 3, 32 0 (6 th Ci r. 20 11 )
(“ Fal se st at em en ts un de rlyin g m ul ti -y ear co nt ract s ge ne rat e a st ream of rel at ed

in vo ic es an d cau se th e go ve rn m en t to pa y al l of th e in vo ic es rel at ed to th e co nt ract .”);

Unit ed St at es ex re l. Long hi v

. Unit ed St at es , 57 5 F.3 d 45 8, 46 8 (5 th Ci r. 20 09 )
(“ [A]lth ou gh th e Defen da nt s’ su bs eq ue nt cl ai m s fo r pa y m en t m ad e un de r th e co ntr ac t

were no t li te ral ly fal se , [b ecau se ] th ey de riv ed fr o m th e or ig in al frau du le nt

m is rep res en ta ti on , t he y , t oo , b ec a me act io na bl e fal se cl ai m s.” (s eco nd al te rat io n in

or ig in al ) (in te rn al qu ot at io n m ark s om it te d) ); Unit ed St at es ex re l. Hen do w v. Univ

. of Phoe ni

x , 46 1 F.3 d 11 66

, 11 73 (9 th Ci r. 20 06 ) (“ [L]iab il it y wil l at ta ch to each

cl ai m su bm it te d to th e go ve rn m en t un de r a co nt ract

, w h e n th e co nt ract

. . . was

or ig in al ly ob ta in ed th ro ug h fal se st at em en ts or frau du le nt co nd uc t.”) ; Unit ed St at es

ex re l. Ma in v. Oak la nd Ci ty Univ

. , 42 6 F.3 d 9 1 4

, 9 1 6 ( 7 t h Ci r. 20 05 ) (“ If a fal se

st at em en t is in te gr al to a cau sa l ch ai n le ad in g to pa y m en t

, it is irr el ev an t ho w th e

fed eral bu reau crac y ha s ap po rti on ed th e st at em en ts am on g la y ers o f p ap erwo rk .”);

Ha rr is on v. Wes ti ng ho us e Sa va nna h Ri ver Co

. , 17 6 F.3d 77 6, 78 8 (4t h Cir. 19 99 )
(s ta ti ng “ an y ti m e a fa l s e st at em en t is m ad e in a tra ns act io n in vo lv in g a cal l on th e

U.S. fis c, Fal se Cl ai m s Act li ab il it y m ay at ta ch ” ev en if “ th e cl ai m s th at were

su bm it te d were no t in an d of th em se lv es fal se ”). Se e al so Unit ed St at es v. Neif er t-W hi te Co

. , 39 0 U.S. 22 8, 23 2 (1 96 8) (n ot in g FCA “ was in te nd ed to reac h al l

t yp e s o f frau d, wit ho ut qu al ifi cat io n, th at m ig ht res ul t in fin an ci al lo ss to th e

Gov ern m en t” ).

Frau du le nt in du cem en t req ui res a pl ai nt iff to sh ow: (1 ) th e de fen da nt m ad e a

“ fal se reco rd or s ta te m en t” ; (2 ) th e de fen da nt kn ew th e st at em en t was fal se ; (3 ) th e

st at em en t was m at eri al ; an d (4 ) th e de fen da nt m ad e a “ cl ai m ” fo r th e go ve rn m en t to

pa y m on ey or fo rfei t m on ey du e. Se e Ba yco l

, 73 2 F.3 d at 87 5- 76 (“ [A] cl ai m al le gi ng

frau d in th e in du cem en t of a go ve r n men t c o n t ract do es fo cu s on th e fal se or

frau du le nt st at em en ts whi ch in du ced th e go ve rn m en t to en te r in to th e co nt ract at th e

ou ts et .”); Unit

ed St at es ex re l. V

ig il v. Neln et

, In c. , 63 9 F.3 d 79 1, 79 6, 79 9 (8 th Ci r.

-5

-20 11 ) (req ui rin g m at eri al it y ). At iss ue is whe th er Herit ag e m ad e a k no win gl y fal se

st at em en t, an d wh et he r it was m at eri al

.

A.

Rel at or s cl ai m th at Heri ta ge fal se ly st at ed it wou ld ke e p a c c ur at e st ud en t

reco rd s. Heri ta ge arg ue s th at th e PPA do es no t req ui re th e mai n t e na nc e of th es e

sp eci fic gra di ng an d a tt en da nc e rec or ds

.

Fo r a st at em en t to be kn owi ng ly fal se , a pe rs on m us t ha ve “ act ua l kn owl ed ge

of th e in fo rm at io n,” or act in “ de li be rat e i g n o r a n c e ” or “ reck le ss di sr eg ard ” of th e

tru th or fal si ty of th e in fo rm at io n. 31 U

. S

. C

. § 37 29 (b)

. “ In no cen t m is ta ke s an d

ne gl ig en ce are no t of

fen se s un de r th e Act. In sh or t, th e cl ai m m us t be a li e.” Unit

ed

St at es ex re l. Onnen v. Si ou x Fa ll s In de p. Sch. Dis t. No. 49 -5

, 68 8 F.3 d 41 0, 41 3 n.2
(8 th Ci r. 20 12 ). A de fen da nt ’s “ reas on ab le in te rp ret at io n of an y am bi gu it y in he ren t

in th e reg ul at io ns be li es th e sc ie nt er ne ces sa ry to es ta bl is h a cl ai m of frau d.” Unit ed

St at es ex rel . Ket ro se r v. M

ay o F ou nd

. , 72 9 F .3d 82 5, 8 32 (8t h C ir. 2 01 3)

.

By ex ecu ti ng th e PPA, Heri ta ge rep res en te d it wou ld “ es ta bl is h and m ai nt ai n

su ch ad m in is tra ti ve an d fis cal pr oc ed ur es an d reco rd s as m ay be ne ces sa ry to en su re

pr op er an d effi ci en t ad m in is tra ti on of fu nd s.” To de m on st rat e th is pr om is e was fal se , it is no t en o ug h to sh ow th at Heri ta ge di d no t co m pl y wit h th e PPA; Rel at or s m us t

sh ow th at Heri ta ge , whe n si g ni ng th e PPA, kn ew accu rat e gr ad e an d at te nd an ce

reco rd s were req ui red

, an d th at Heri ta ge in te nd ed no t to m ai nt ai n th os e reco rd s. Se e

Ma in

, 42 6 F.3 d at 91 7 (“ [I]f th e Uni ve rs it y kn ew ab ou t th e ru le an d to ld th e [DOE]

th at it wou ld co m

pl y , whi le pl an ni ng to do ot he rwis e, it is ex po se d to pe na lt ie s un de r

th e Fal se Cla im s Act .”).

Rel at or s po in t to th e fo ll owi ng ev id en ce of Heri ta ge ’s pr e-PP A kn owl ed ge an d

in te nt

. Fi rs t, th ey no te th at Heri ta ge ’s own po li cy st at es , “ It is vi ta ll y im po rta nt th at

-6

-th e sc ho ol m ai nt ai n accu rat e s t u d e n t reco rd s. W e are res po ns ib le to th e st at e, th e

accr ed it in g ag en cy , th e U.S. Dep art m en t of Edu cat io n

. . . . St ud en t reco rd s m us t be

accu rat e an d c om

pl et e. W e m

us t b e ab le to crea te an d k eep reco rd s o f al l s tu de nt ’s

en ro ll m en t act iv it ie s, acad em ic ach ie ve m en t, an d fi na nc ia l act iv it ie s.” Heri ta ge Co ll

. Heri ta ge In st

., Stud ent Reco rds Ope ra tio n Man ua l 3 (2 00 7)

. The y fu rth er no te th at

Heri ta ge kn ew it m

us t ke ep “ [d ]ocu m en ta ti on ” of st ud en t el ig ib il it y an d refu nd s, se e

34 C.F.R. § 66 8.2 4( c)(i ii )-(i v)

, to whi ch gr ad e an d at te nd an ce reco rd s are ne ces sa ry

. Rel at or s em

ph as iz e a fed eral reg ul at io n pr ov id i n g , “Fals ifi cat io n of an y do cu m en t

rece iv ed fro m

a st ud en t o r pe rta in in g t o a st ud en t’s el ig ib il it y fo r as si st an ce u nd er”

Tit le IV is an ex am

pl e of frau d th at “ cau se [s ] m is us e an d th e li ke ly lo ss of Tit le IV,

H EA p r og ram fu nd s.” Id

. § 66 8.8 3( c)(2 )(i ii )(A)

. W hi le th is reg ul at io n ad dr e s s e s

whe n DOE can ta ke em erg en c y a c t io n, a reas on ab le jury co ul d fin d it sh ows

Heri ta ge ’s un de rs ta nd in g of wha t reco rd s are “ ne ces sa ry to en su re pr o p e r a n d

effi ci en t ad m in is tra ti on of f un ds .” 3

Seco nd

, Rel at or s hi gh li gh t a pa tt ern of reco rd fal si fic at io n. The di st ric t co ur t

fo un d, “ Rel at or s h av e pr es en te d ev id en ce of nu m ero us in st an ces whe re Heri ta ge

ad m i n i s t r a t o r s ch an ge d a st ud en t’s fai li ng gr ad e to a pa ss in g gr ad e wit ho ut th e

in st ru ct or ’s kn owl ed ge an d co ns en t or in st ru ct ed a te ach er to ch an ge a fai li ng gr ad e

to a pa ss in g gr ad e.” It al so fo un d, “ Rel at or s ha ve su bm it te d ev id en ce of nu m ero us

in st an ces whe re st ud en ts were award ed at te n d a n c e ho ur s whe n th ey ap pa ren tl y di d

no t ph y si cal ly at te nd cl as s.” Fo r ex a mp l e , two in st ru ct or s at Heri ta ge be fo re th e

PPA’s ex ecu ti on , Reb ecca Bo om an d Lean ne S mith

, te st ifi ed th at ad m in is tra to rs

Rel at or s arg ue fal si fic at io n of re co rd s is in co ns is te nt wit h Heri ta ge ’s fid uc ia ry 3

du ty to ad m in is te r Tit le IV fu nd s wit h “ th e h ig he st st an da rd of c are a nd di li ge nc e.”

34 C.F.R. § 66 8.8 2 . Ho wev er, Rel at or s fa il to arg ue ho w Herit ag e’s kn owl ed ge of
th is ge ne ral du ty sh ows Heri ta ge ’s pr e-PP A kn owl ed ge an d in te nt fo r th e types of
al te rat io ns m ad e h e r e

. Rel at or s al so po in t to se ve ral st at em en ts of fact th at were

un co nt ro ve rte d on su m

m ary jud gm en t. The se st at em en ts refl ect Heri ta ge ’s c ur ren t
li ti ga ti on po si ti on an d d o n ot rev eal Heri ta ge ’s pre -PPA k no wled ge or p ol ic ie s.

-7

-or de red so m e st ud en ts ’ gr ad es ch an ge d fro m fai li ng to pa ss in g. Bo om al so te st ifi ed

sh e ga ve , un de r or de r s f r o m Heri ta ge ad m in is tra to rs , at le as t 25 to 30 st ud en ts

at te nd an ce whe n th ey di d no t fu lfi ll th e req ui rem en ts

. Sh e sa w an ot he r ad m in is tra to r

do th e sa m e. The di rect or of ed uc at io n in earl y 20 06

, All is on Bi lb rey, sa id th at th ere

was a pa tt ern of Heri ta ge em pl oyees fal si fy in g gr ad es an d at te nd an ce reco rd s (in cl ud in g th e la st da te of at te nd an ce). St ud en t Dan ie ll e L. Kim ba ll de cl ared th at he r

at te nd an ce reco rd refl ect s fal se ho ur s th ro ug ho ut 20 08 an d 20 09

. St ud en t Lon ni e T.

Bl ack swo re th at hi s tra ns cri pt ha s pa ss in g gr ad es fo r m ul ti pl e cl as se s th at he fai le d,

an d th at he was of

te n gi ve n at te nd an ce fo r da y s he was no t in cl as s. Mi ll er de cl ared

Heri ta ge reg ul arl y al te red reco rd s, and hi gh li gh ts 9 pre -PPA stu de nt s who se gr ad es

were in crea se d wit ho ut he r kn owl ed ge an d 7 who se at te nd an ce reco rd s were al te red

m ul ti pl e ti m es

. Sh e te st ifi ed th at in 20 08 an d 20 09 sh e sa w m or e th an 50 in st an ces

of ad m in is tra to rs ad di ng at te nd an ce fo r ab se nt st ud en ts by writ in g on th e ro st er

be fo re it wa s e l e c t r on ic al ly reco rd ed

. Heri ta ge ad m it te d th at al te red at te nd an ce

res ul te d in so m e st ud en ts rem ai ni ng in sc ho ol whe n th ey sh ou ld ha ve be en wit hd rawn

an d a refu nd cal cu la te d.

Rel at or s al so cal l at te nt io n to reco rd s fal si fie d in 20 09 to 20 12

, aft er th e PPA

was si gn ed

. Mi ll er witn es se d Herit ag e’s ne w di rect or of ed uc at io n eras e th e gr ad es

of an en ti re cl as s fro m th e in st ru ct or ’s pa pe r gr ad e bo ok

, an d rep l a c e t h em

. Sh e

id en ti fie s se ve ral ot he r st ud en ts who se gr ad e or at te nd an ce reco rd s were al t e r e d.

Pro gr am m an ag er Sh an a Hop ke reca l l e d m ul ti pl e m eet in gs whe re Heri ta ge

ad m in is tra to r s t o l d a ll pr og ram m an ag ers to go th ro ug h in st ru ct or gr ad e bo ok s an d

ch an ge fai li ng gr ad es to pa ss in g. Hop ke ch an ge d se ve ral st ud en ts ’ gr ad es by eras in g

an d rep la ci ng th em in th e p ap er b oo k, an d sa w a n ad m in is tra to r, m ul ti pl e ti m es , d o

th e sa m e. Sh e al so te st ifi ed th at hu nd r e d s of at te nd an ce reco rd s were fal si fie d.

Pro gr am m an ag er Tess e Gr a h a m res ig ne d be cau se twi ce sh e was or de red to go

th ro ug h in st ru ct or gr ad e bo ok s an d in crea se gr ad e s b el ow 70 %. In st ru ct or s Lin da

Glo ve r, Mi nd y Hatt ey , Ren a Kell er, an d Terri ta Sm it h, as well as ad m in is tra to r Je nn y

Caru so , st at ed th at ad m in is tra to rs award ed at te nd an ce whe n a st ud en t was no t in cl as s

-8

-an d di d no t co m pl et e wor k in m ak eu p ti m e. Glo ve r id en ti fie d se ve ral st ud en ts who se

gr ad es were in cr ea se d w ith out her kn owl ed ge , an d Terri ta Sm it h sa id an ad m in is tra to r

ro ut in el y as ke d he r to in crea se gr ad es fro m fai li ng to pa ss in g (wh ic h sh e di d a co up le

of ti m es ). Rel at or s arg u e t h a t t he pr e- an d po st -PPA pa tt ern of al te red reco rd s

in di cat es He rit ag e in te nd ed to m an ip ul at e Tit le IV fu nd in g. Heri ta ge de ni es th is

in te nt , bu t o ffer s n o o th er re as on for ch an gi ng th e rec or ds

.

Thi rd

, Rel at or s po in t to ev id en ce th at Heri ta ge ai m ed to m ax im iz e it s Tit le IV

fu nd in g. One in st ru ct or te st ifi ed th at

, be twee n Sep te m be r 20 07 an d Sep te m

be r 20 09

, Heri ta ge ad m in is tra to rs “ m ad e it cl ear in a co up le of st aff m eet in gs th at ba si cal ly th ey

were rece iv in g fu nd s fro m th e fed eral go ve rn m en t fo r ev ery bu tt th at was in th e se at

an d i t was ve ry im

po rta nt th at we ke ep bu tt s i n t he sea t.” An ot he r in st ru ct or swo re

th at ad m in is tra to rs ex pl ic it ly li nk ed st ud en t at t e n d a nc e an d fin an ci al ai d, an d th at

re tent io n effo rts (in cl ud in g da il y cal ls fro m m ul ti pl e H er ita ge em

plo y ee s) w er e ge ar ed

to ward ge tt in g a st ud en t t hr ou gh 60 % of t he pro gr am so th e st ud en t wou ld no t l os e

fin an ci al ai d. (No refu nd s to D O E a re req ui red if a st ud en t co m pl et es 60 % of th e

pr og ram .) In 20 09 an d 20 10

, Mi ll er he ard ad m in is tra to rs di sc us s “ th e im po rta nc e of

ret ai ni ng st ud en ts a s l o n g a s po ss ib le in or de r to rece iv e th e m ax im um am ou nt of

fed e r a l s tu de nt lo an fu nd s” an d th at “ th e go al was to ke ep st ud en ts lo ng en ou gh to

gr ab th e en ti re am ou nt of t ui ti on pa id for by the ir f ed eral st ud en t l oa n fu nd s.”

Bas ed on th is ev id en ce, a reas on ab le jury co ul d fin d th at Heri ta ge kn ew it ha d

to ke ep accu rat e gr ad e an d at te nd an ce reco rd s an d in te nd ed no t to do so

. True

, th at

no ne of th e id en ti fie d al te red reco rd s im pa ct ed Tit le IV di sb ur se m en t s o r refu nd s

u n d e r mine s Rel at or s’ ev id en ce of in te nt

. So do es th e fact th at m os t of Rel at o r s ’

ex am pl es of al te red reco rd s co m e af te r th e si gn in g of t h e P P A

. Bu t at su m m ary jud gm en t th is co ur t ex am in es whe th er th ere is a ge nu in e is su e of m at eri al fact ; it do es

no t weig h th e ev id en ce o r de ci de cred ib il it y

. Tol an , 13 4 S. Ct

. at 18 66

. Viewe d

fav or ab ly to Rel at or s, He ri ta ge ’ s po li cy an d it s ag reem en t to co m pl y wit h cert ai n Tit le

IV reg ul at io ns refl ect it s kn owl ed ge th at accu rat e gr ad e an d at te nd an ce reco rd s were

-9

-ne ces sa ry to a d mi ni st er fu nd s; it ha d a pa tt ern of al te rin g reco rd s, bo th be fo re an d

aft er si gn in g th e PPA; an d it ai m ed to m ax im iz e Tit le IV fu nd s. Se e id

. at 18 66

, 18 68
(n ot in g ev id en ce an d reas on ab le in fere nc es are vi ewed in fav or of no nm ov in g pa rty).

The di st ric t co ur t ack no wled ge s th at Rel at or s’ ev id en ce “ gi ve s ris e to th e po ss ib il it y

th at so m e of th e in accu rat e at te nd an ce ho ur s were reco rd ed in or de r to de la y th e

st ud en t’s effe ct iv e wit hd rawal da te

, an d th ereb y in crea s e th e am ou nt of fed eral ai d

th at Heri ta ge co ul d ret ai n.” The re is a di sp ut e of m at eri al fact whe th er, whe n si gn in g

th e PPA, Heri t ag e in te nd ed to m an ip ul at e it s reco rd s in or de r to im pe de th e pr op er

ad m in is tra ti on of fu nd s, an d th us whe th er Heri ta ge m ad e a fal se pr om is e to th e DOE.

The di st ric t co ur t fo un d ot he rwis e be cau se “ Heri ta ge di d no t explici tl y pr om is e

to pr oh ib it adm in is tra to rs fro m ch an gi ng st ud en t gr ad es or to on ly award gr ad es gi ve n by in st ru ct or s. Nor di d Heri ta ge pr om is e to m ai nt ai n pe rfec t at te nd an ce reco rd s th at

, in ev ery in st an ce, are ba se d on th e st ud en t’s ph y si cal p r e s e n c e in th e cl as sr oo m .”

Rel at or s ci te no reg ul at io n es ta bl is hi ng sp eci fic at te nd an ce or gr ad in g po li ci es

. Bu t

th e gr ad e an d at te nd an ce reco rd s Heri ta ge ke pt are “ ne ces sa ry to en su r e t h e p r o pe r

an d effi c i en t ad m in is tra ti on of fu nd s” : The y de te rm in e el ig ib il it y (an d th us

di sb ur se m en ts ) an d refu nd s. Se e 34 C.F.R. §§ 66 8.3 4 (n ot in g GPA de te rm in es SP,

whi ch de te rm in e s el ig ib il it y ), 66 8.2 2( b) (s et ti ng wit hd rawal da te as “ la st da te of

acad em ic att en da nc e as de te rm in ed by th e in st it ut io n from it s at te nd an ce re co rd s” ).

W hi le no t ev ery gr ad e or da y of at te nd an ce i mp a c ts fu nd in g, th e DOE can no t

de te rm in e whe th er fu nd s w e re pr op erl y ad m in is te red if reco rd s are in accu rat e.

Heri ta ge , fo r th e pu rp os e of th is ap pe al

, do es no t di sp ut e th at it fa ls if ie d th es e reco rd s.

It do es no t arg ue th at it act ed in acco rd an ce wit h l e g i t i mat e gr ad e an d at te nd an ce

po li ci es , or o n l y f

a l si fie d reco rd s th at co ul d no t im pa ct Tit le IV fu nd in g. Bec au se

th ere is a di sp ut e of m at eri al fact ab ou t ho w Heri ta ge un de rs to od it s ob li ga ti on s an d

whe th er it in te nd ed to co m pl y wit h th e PPA, th e di st ric t co ur t erre d in gr an ti ng

su m m ary jud gm en t.

-1 0-B.

Heri ta ge as se rts th at th e fal si fie d gr ad e an d at te nd an c e reco rd s di d no t cau se

im pr op er d is bu rs em en t o r ret en ti on of Tit le IV fu nd s, an d t hu s wer e n ot m at eri al to

go ve rn m en t fu nd in g de ci si on s. The di st ric t co ur t ag reed th at an y fal se st at em en t by

Heri ta ge ab ou t re co rd ke ep in g was no t m at eri al

.

Mat eri al it y req ui res a “ cau sa l li nk be twee n th e ‘fals e st at em en t or reco rd ’ an d

th e Gov ern m en t’s pa y m en t of a fal se cl ai m .” V ig i l

, 6 3 9 F.3 d at 79 9 (n ot in g fal se

st at em en t is act io na bl e if it le ad s go ve rn m en t to m ak e pa y m en t it wou ld ot he rwis e no t

m ak e). The FCA is co nc ern ed ab ou t reg ul at or y no nc om pl ia nc e on ly if it cau se s th e 4

go ve rn m en t to pa y m on ey

. Id

. at 79 5

- 9 6

. S

e e B ay co l

, 73 2 F.3 d at 87 7 (fi nd in g

li ab il i t y s u f

f i ci en tl y al le ge d whe n go ve rn m en t pa id ou t on co nt ract s th at it li ke ly

wou ld no t h av e en te red wit ho ut de fen da nt ’s fal se st at em en ts ).

Thi s co ur t fo un d m at eri al it y req ui red by th e pr e d e ces so r to 31 U.S.C. § 4

37 29 (a)( 1) (B), whi ch m ad e li ab le an y on e who us ed fal se st at em en ts or reco rd s “ to ge t

a fal se or frau du le nt cl ai m pa id or ap pr ov ed by th e Gov ern m en t.” Se e V ig il

, 63 9 F.3 d

at 79 9 (in te rp ret in g § 37 29 (a)( 2) ). Afte r Heri ta ge si gn ed th e PPA in Feb ru ary 20 09

, Co ng res s am en de d th is se ct i o n t o e x p li ci tl y in cl ud e m at eri al it y

. Se e FERA

, § 4( a)(1 ), 12 3 St at

. at 16 21

, co di fi ed at 31 U.S.C. § 37 29 (a)( 1) (B) (p ro vi di ng li ab il it y fo r an y on e who “ kn owi ng ly m ak es , us es , or cau se s to be m ad e or us ed

, a fal se reco rd

o r st at em en t mat er ia l to a fal se or frau du le nt cl ai m ” (em ph as is ad de d) ). C o n g r e s s al so de fin ed m at eri al it y : A st at em en t i s “ m at eri al ” if it ha s “ a na tu ral te nd en cy to
in flu en ce, or be cap ab le of in flu en ci ng , th e pa y m en t or rece ip t of m on ey or pr op ert y .”

Id

. § 4( a)(2 ), 12 3 St at

. at 16 23

, co di fi ed at 31 U.S.C. § 37 29 (b )(4 ). Heri ta ge su gg es ts
th at th is cas e sh ou ld be go ve rn ed by th e pr e-am en dm en t cas e la w on m at eri al it y , be cau se th e st at ut or y de fin it io n i s o nl y ap pl ic ab le to co nd uc t on or aft er May 20 09

. Id

. § 4( f), 12 3 St at

. at 16 25

. Howev er, Heri t a g e d o e s n o t ad dr es s th e am en de d

li a b i l it y pr ov is io n, whi ch ap pl ie s to cas es pe nd in g on or aft er Ju ne 20 08

. Id

. , 12 3

St at

. at 16 25

. Thi s co ur t co nc lu de s Heri ta ge ’s reco rd ke ep in g pr om is e in th e PPA is

m at eri al un de r ei th er st an da rd of m at eri al it y

. Se e V ig il

, 63 9 F.3 d at 79 9 (n ot in g bo th
ol d an d ne w ve rs io ns of FCA req ui re cau sa l li nk be twee n fal se s t a t e men t an d

pa y m en t o f fal se cla im ).

-1 1-The Sev en th an d Nin th Ci rcu it s ha ve ex am in ed m at eri al it y in ci rcu m st an ces

ve ry si m il ar to th is cas e. Each ci rcu it fo un d m at eri al a un iv ers it y ’s kn owi ng ly fal se

pr om is e in it s PPA (in bo th

, to refr ai n fro m gi vi ng in cen ti ve co m pe ns at io n to

recr ui te rs ). Hen do w , 46 1 F.3 d at 11 77 ; Ma in

, 42 6 F.3 d at 91 6. Cf

. Onnen

, 68 8 F.3 d

at 41 5 (ci ti ng Hen do w an d Mai n whe n di sc us si ng m at eri al it y ). The Sev en th Ci rcu it

fo un d th at th e fal se st at em en t i n t h e PPA was “ in te gr al to a cau sa l ch ai n le ad in g to

pa y m en t,” ev en th ou gh it was a st ep rem ov ed fro m th e act ua l pa y m en t. Ma in , 4 26

F.3 d at 91 6 (“ The Uni ve rs it y ‘use s’ it s p ha se -o ne ap pl ic at io n [t he PPA] .

. . whe n it

m ak es (o r ‘caus es ’ a st ud en t to m ak e or us e) a ph as e

- t w o a p pl ic at io n fo r pa y m en t.

No m or e i s req ui red un de r th e st at ut e.”). The Nin th Ci rcu it hi gh li gh te d th ree

pr ov is io ns in th e PPA an d as so ci at ed la ws th at ex pr es sl y co nd it io n Tit le IV el ig ib il it y

on ba nn i n g i nc en ti ve co m pe ns at io n. Hen do w , 46 1 F.3 d at 11 75 -7 6. The Nin th

Ci rcu it reject ed a di stinc tio n be tw ee n co ndi tio ns of pa rti ci pa ti on an d pa y m en t, no ti ng ,

“ The se co nd it io ns are al so ‘prere qu is it es ,’ an d ‘the si ne qu a no n ’ of fed eral fu nd in g,

fo r on e ba si c reas on : if th e Uni ve rs it y ha d no t ag reed to co m pl y wit h th em , it wou ld

no t ha ve go tt en pa id .” Id

. at 11 76 (n ot in g PPA “ is th e co nd it io n of pa y m en t th at th e

fed eral go ve rn m en t req ui res —a pr om is e th at th e Uni ve rs it y sh al l no t br eak th e la w”).

Heri ta ge do es no t di sp ut e th e st an da rd fo r m at eri al it y , bu t fo cu se s on th e li nk

be twee n in di vi du al fal si fie d reco rd s an d sp eci fic Tit le IV di sb ur se m en ts or refu nd s.

Thi s fo cu s co nf

la te s th eo rie s of li ab il it y , an d ig no res Bay co l an d cas es fro m th e ot he r

ci rcu it s. As no te d, frau du le nt in du cem en t ex am in es th e fal se st at em en ts th at in du ced

th e go ve rn m en t to en te r th e co nt ract —l i a b i l i t y fo r th e sp eci fic cl ai m s fo r pa y m en t

at ta ch es “ so lo ng as th e or ig in al co nt ract was ob ta in ed th ro ug h f a ls e st at em en ts or

frau du le nt co nd uc t.” Ba yco l

, 73 2 F.3 d at 87 5- 76 (rejec ti ng th at pl ai nt i f f mu s t ti e

“ al le ga ti on s of [d efen da nt ’s] frau d to sp eci fic frau du le nt cl ai m s fo r pa y m en t

, ” an d

at ta ch in g li ab il it y to ev ery cl ai m su bm it te d un de r frau du le nt ly in du c e d c o nt ract ).

Acco rd

, Unit

ed Techs

. Co rp

. , 62 6 F.3 d at 32 0; Lo n g h i

, 57 5 F.3 d at 46 8; Hen do w , 46 1 F.3 d at 11 73 ; Ma in

, 42 6 F.3 d at 91 6; Ha rr is on , 17 6 F.3 d at 78 8. Here, th e fo cu s

-1 2-m

us t be on Heri ta ge ’s rep res en ta ti on th at it wou ld m ai nt ai n reco rd s ne ces sa ry to th e

ad m in is tra ti on of Ti tl e IV fu nd s.

As wit h th e in cen ti ve co m pe ns at io n ba n, pa rti ci pa ti on in Tit le IV is “ exp li ci tl y

co nd it io ne d, i n th ree di ffer en t way s, on co m pl ia nc e” wit h ad eq ua te reco rd ke ep in g.

Se e Hen do w , 46 1 F.3 d at 11 75

. Fi rs t, to be el ig ib le fo r Tit le IV an in st it ut io n “ sh al l”

en te r in to a PPA th at “ sh al l co nd it io n th e in it ia l an d co nt i n u in g el ig ib il it y of an

in st it ut io n to pa rti ci pa te in a pr og ram up on co mpl ia nc e wit h” cert ai n re qu ire m en ts

, in cl ud in g th at th e “ in st it ut io n wil l es ta bl is h an d m ai nt ai n su ch ad m i n i s t r a t i ve an d

fis cal pr oc ed u r es an d reco rd s as m ay be ne ces sa ry to en su re pr op er an d effi ci en t

ad m in is tra ti on of f

un ds .” 20 U.S.C. § 10 94 (a ) (em ph as es ad de d)

.

Seco nd , a fed eral reg ul at io n s pe ci fie s:

An in st it ut io n m ay pa rti ci pa te in an y Tit le IV, HEA pr og ram

. . . on ly if
th e in st it ut io n en te rs in to a writ te n pr ogr am pa rt ic ipati on ag reem en t wit h
th e Secr et ary

. . . . A pr og ram pa rti ci pa ti on a g r eem en t co nd it io ns th e in it ia l an d co nt in ue d pa rti ci pa ti on of an el ig ib le in st it ut io n in an y Tit le IV, HEA pr og ram up on co mpl ia nc e wit h th e p r o v i s io ns of th is pa rt [in cl ud in g m ai nt ai ni ng reco rd s ne ces sa ry to en su re pr op er an d effi ci en t
ad m in is tra ti on of f

un ds ].

34 C.F.R. § 66 8.1 4( a) (1 ), (b)( 4) (em ph as es ad de d)

. Thi rd

, th e PPA in co rp or at es th e

sa m e reco rd ke ep in g req ui rem en t, an d st at es , “ The ex ecu ti on of th is Agr eem en t by th e

In st it ut io n an d th e Secr et ary is a pr er eq ui si te to th e In st it ut io n’s in it ia l or co nt in ue d

pa rti ci pa ti on in an y

Tit le IV, HEA Prog ram .” (em ph as is ad de d)

.

Heri ta ge co ul d no t ha ve ex ecu te d th e P P A w i t h o ut st at in g it wou ld m ai nt ai n

ad eq ua te reco rd s. Se e Hen do w , 46 1 F.3 d at 11 76 (n ot in g st at ut e, reg ul at i o n, an d

ag reem en t “al l ex pl ic it ly co nd it io n pa rti ci pa ti on an d pa y m en t on co m pl ia nc e wit h,

am on g ot he r th in gs , th e pr eci se req ui rem en t th at rel at or s al le ge th at [d efen da nt ]

kn owi ng ly di sr eg ard ed ”). A nd wit ho ut th e PPA, Heri ta ge co ul d no t ha ve rece iv ed

-1 3-an y Tit le IV fu nd s. Thi s fo rm s a “ cau sa l li nk ” be twee n th e pr om is e an d th e

go ve rn m en t’s d is bu rs em en t o f fu nd s. Se e V ig il , 63 9 F .3d at 7 99

.

Heri ta ge pr ot es ts th at a fin di ng of mat eri al it y he re m ak es an y reg ul at or y

vi ol at io n act io na bl e un de r th e FCA. The Nin th Ci rcu it reject ed a si m il a r arg um en t

in Hen do w :

The Uni ve rs it y arg ue s t h a t th e in cen ti ve co m pe ns at io n ba n is no th in g

m or e th an on e of hu nd red s o f bo il erp la te req ui rem en ts wit h whi ch it

pr om is es co m

pl ia nc e. Thi s m ay be t r u e , bu t frau d is frau d, reg ard le ss of ho w “ sm al l.” The Uni ve rs it y is wor rie d th at ou r ho ld in g to da y op en s it up to gr eat er li ab il it y fo r in no cen t reg ul at or y vi ol at io ns , bu t th at is no t
th e cas e—a s we he ld ab ov e, in no cen t or un in te nt io na l vi ol at io ns do no t
le ad to Fal se Cl ai m s Act li ab il it y

. Bu t th at is no reas on to in n o c u l a te
in st it ut io ns of hi gh er ed uc at io n fro m li ab il i t y whe n th ey kn ow in gl y

v i o l a t e a reg ul at or y co nd it io n, wit h th e in te nt to de cei ve , as is al le g e d
he re.

Hen do w , 4 61 F

. 3 d a t 1 1 75

. The Sev en th Ci rcu it ag reed : “ The Uni ve rs it y pr ot es ts

th at th is ap pr oa ch wou ld t r e a t an y vi ol at io n of fed eral reg ul at io ns in a fu nd in g

pr og ram as act io na bl e frau d, bu t th at ’s wro ng

. A un iv ers it y th at acce pt s fed eral fu nd s

th at are co nt in ge nt on fo ll owi ng a reg ul at io n , whi ch it th en vi ol at es , ha s br ok en a

c o n t ract

. Bu t frau d req ui res m or e th an br each of pr om is e: frau d en ta il s m ak in g a

fal se rep res en ta ti on

. . . . Tr i p pi ng up on a reg ul at or y co m pl ex it y do es no t en ta il a

kn owi ng ly fal se rep res en ta ti on .” Ma in

, 42 6 F.3d at 91 7 (in te rn al ci ta ti on om it te d)

. If Heri ta ge in te nd ed to de cei ve th e DOE to acce ss Tit le IV fu nd in g, it di d m or e th an

co m m it a reg ul at or y

vi ol at io n: It co m

m it te d fr au d.

To th e ex te nt Heri ta ge as se rts th at it s st at e men t s , e ve n if fal se , d id no t cau se

an y act ua l ha rm , t h i s i s n o t an el em en t of m at eri al it y

. Se e Ba yco l , 7 32 F.3 d at 87 7
(n ot req ui rin g pr oo f th at frau du le nt ly in du ced co nt ract cau se d go ve rn m en t to pa y

m or e f o r p il ls th an it wou ld ha ve ot he rwis e). Se e al so id

. at 88 0- 81 (Lok en , J.,

-1 4-di ss en ti ng ) (d is cu ss in g whe n da m ag es are warra nt ed ); Unit ed St at es ex re l. Fel

dm an

v. V an G o r p , 6 9 7 F.3 d 78

, 87 -8 8, 91

, 93 (2 d Ci r. 20 12 ) (fi nd in g fal se st at em en ts

m at eri al to gr an t r e n e w a ls

, an d ad dr es si ng go ve rn m en t’s rece ip t of qu al it at iv el y

di ffer en t pr og ram un de r da m ag es ); Unit ed Techs

. Co rp

. , 62 6 F.3 d a t 32 0, 32 2
(fi nd in g fa ls e st at em en ts m at eri al bu t no ti ng go ve rn m en t i s n ot en ti tl ed to da m ag es

if it rece iv ed fai r m ark et va lu e) ; Lo n g h i

, 57 5 F.3 d at 47 2- 73 (fi nd in g li ab il it y fo r

frau du le nt ly in du ced gr an t ev en th ou gh de fen da nt pr od uc ed sa ti sf act or y pr od uc t, an d

a w a r d i ng as da m ag es th e fu ll am ou nt pa id ). Cf

. Unit ed St at es ex re l. Sa nd

er s v

. Am .-Am ic a b l

e Li f e In s. Co

. of Tex

. , 54 5 F.3 d 25 6, 25 9 (3 d Ci r. 20 08 ) (“ [A] pa rty

can be su bjec t to FCA li ab il it y (i.e

. ci vi l pe na lt ie s) ev en whe re th e go ve rn m en t su ffer s

no m on et ary in

jury.”); Ha rr is on , 17 6 F.3 d at 78 5 n.7 (“ [T]here is no req ui rem en t th at

th e go ve rn m en t ha ve su ffer ed da m ag es as a res ul t of th e frau d.” ). The co ur t erre d in

ru li ng Heri ta ge ’s pr om is e was no t m at eri al to th e go ve rn m en t’s di sb ur se m en t

de ci si on s.

III.

Mi ll er cl ai m s th at Heri ta ge ret al ia te d ag ai ns t he r in fo u r w a ys : (1 ) ex cl us io n

fro m m eet in gs , (2 ) de m ot io n, (3 ) do ck in g of Sat ur da y pa y , an d (4 ) wit hd rawal of an

of fer fo r a care er se rv ic es po si ti on

. The di st ric t co ur t gr an te d su m m ary jud gm en t to 5

Heri ta ge , fin di ng th at Mi ll er fa il ed to pro ve it en ga ge d i n re ta li at or y co nd uc t.

The F C A p r o v i de s a cau se of act io n to an em pl oyee th at is “ di sc ha rg ed

, de m ot ed

, su sp en de d, th reat en ed

, ha ras se d, or in an y ot he r m an ne r di s cri m in at ed

ag ai ns t in th e te rm s an d co nd it io ns of em pl oym en t be cau se of la wfu l act s do ne by th e

em pl oyee

. . . in fu rth eran ce of an [FCA] act io n.” 31 U.S.C. § 37 30 (h) (p ro vi di ng fo r

In he r s t a t e men t of fact s an d di sc us si on of wro ng fu l di sc ha rg e, Mi ll er al so 5

as se rts th at sh e was th reat en ed wit h te rm in at io n. Mi ll er do es no t pr ov id e an y de ta il
of th is al le ge d th reat —fo r ex am pl e, who m ad e it

, w h e n i t w a s m ad e, an d wha t was

sa id —o r ci te to th e rec or d.

-1 5-rei ns ta te m en t, ba ck pa y , an d sp eci al da m ag es fo r ret al ia te d

- a g ai ns t em pl oyee). “ A
pl ai nt iff m

us t pr ov e th at (1 ) th e p l a i n ti ff was en ga ge d in co nd uc t pr ot ect ed by th e FCA; (2 ) th e pl ai nt iff ’s em pl oyer kn ew th at th e pl ai nt if f en ga ge d in th e pr ot ect ed

act iv it y ; (3 ) th e em

pl oyer ret al ia te d a ga in st th e p la in ti ff; an d (4 ) th e ret al ia ti on was

m ot iv at ed so l e l y b y th e pl ai nt iff ’s pr ot ect ed act iv it y .” Schu ha rd t v. Wa sh in gt on

Univ

. , 39 0 F .3d 56 3, 5 66 (8t h C ir. 2 00 4)

. 6

The di st ric t co ur t di d no t err i n f in di ng th at Heri ta ge ’s act io ns were no t

ret al ia to ry

. Alt ho ug h on e m eet in g was he ld wit ho ut Mi ll er’s kn owl ed ge , th e su bjec t

of th e m eet in g was no t pa rt of he r job an d s h e co nc ed es sh e was no t ex cl ud ed

. Mi ll er’s cl ai m th at sh e was de ni ed Sat ur da y pa y is sp ecu la ti ve : it is ba se d on a si ng le

da y whe n Mil le r can no t reca ll if sh e was pa id or no t. Thi s is in su ffi ci en t to su pp or t

a cl ai m for ret al ia ti on

.

Mi ll er as se rts sh e was de m ot ed be cau se sh e was to ld b y t w o H eri ta ge

ad m in is tra to rs th at sh e wou ld no lo ng er be a pr og ram m an ag er and sh ou ld fo cu s on

ge tt in g he r de gr ee. Sh or tl y aft er th is co nv ers at io n, th e vi ce pr es id en t as su red Mi ll er

th at it was “ no t tru e,” th ere wou ld be no ch an ge in he r po si ti on , an d sh e di d no t ne ed

a de gr ee. The di st ric t co ur t no te d th at Mi ll er was no t de m ot ed : Her sa la ry an d he r job

res po ns ib il it i e s d i d no t ch an ge , an d no de m ot io n was fo rm al iz ed or pu t in writ in g.

Mi ll er ar gu es th at ev en if s he was n ot de m ot ed , bei ng to ld th at sh e wou ld be is st il l

ret al ia ti on —p res um ab ly as a “thr eat []” or “ ha ras s[ m en t].” Mi ll er do es no t ex pl ai n why th is qu al ifi es as a th reat or ha ras sm en t whe n sh e was so on to ld sh e wou ld no t be

To es ta bl is h th e st an da rd fo r ret al ia to ry co nd uc t, Mi ll er ci te s a Nin th Ci rcu it 6

cas e ho ld in g t h a t a n e m

pl oyer’s act io n is no t ret al ia ti on un de r th e FCA un le ss it

wou ld be an ad ve rs e act io n un de r Tit le VII. Se e Mo or e v. Ca l. In st

. of Te ch. Je t
Pro pu ls io n Lab

. , 27 5 F.3 d 83 8, 84 7- 48 (9 th Ci r. 20 02 ). Thi s co ur t ha s ci te d Tit le VII

cas e la w whe n ex am in in g FCA ret al ia ti on

. Se e, e.g

. , Tow ns end v. Ba yer Co rp

. , 77 4

F.3 d 44 6, 45 7 (8 th Ci r. 20 14 ), ci ti ng Tor ge rs on , 64 3 F.3d at 10 46

. Bu t Mi ll er ci te s

no cas e whe re th is co ur t ad op ts th e Tit le VII st an da rd fo r FC A ret al ia ti on cl ai m s. Mi ll er al so fai ls to ex pl ai n ho w Heri ta ge ’s act io ns are ad ve rs e act io ns un de r Tit le VII.

-1 6-de m ot ed an d ex pe rie nc ed no ad ve rs e im pa ct (fo r ex am

pl e, n o d e c reas e in pa y ).

Mi ll er arg ue s th at Heri ta ge fai le d to pr ov e he r job was no t ta ke n away, bu t th e bu rd en

is on Mi ll er t o s ho w ret al ia to ry co nd uc t. Se e Schu ha rd

t , 39 0 F .3d at 5 66

.

Mi ll er al so cl ai m s th at Heri ta ge of fere d he r a ne w po si ti on wit h care er se rv ic es , bu t wit hd rew th e of

fer aft er sh e co m

pl ai ne d ab ou t frau d. Mi ll er fai ls to ex pl ai n, an d

ci te s no au th or it y , t ha t th is co ns ti tu te s ha ras sm en t or di sc rimin a ti on in th e te rm s of

co nd it io ns of em

pl oym en t. Alt ho ug h sh e se em s to di sp ut e th at th is wou ld ha ve be en

a l a t e ral m ov e, Mi ll er arg ue s no ad va nt ag es or in crea se in sa la ry fo r th e care er

se rv ic es po si ti on

. Sh e as se rts th at wit ho ut th e care er se rv ic es po si ti on , sh e effe ct iv el y

ha d no job

. As di sc us se d, ho wev er, sh e ha s no t de m on st rat ed s h e w a s r e mov ed as

pr og ram m an ag er. The di st ric t co ur t pr o p e r l y di sm is se d Mi ll er’s ret al ia ti on cl ai m

ba se d o n h er fa il ur e to de m on st rat e ret al ia to ry act io n b y Heri ta ge

.

IV.

Mi ll er an d Si ll m an bo th cl ai m th at th ey were wro ng fu ll y di sc ha rg ed

. Mi ss ou ri

reco gn iz es a “ ‘very na rro wly dr awn ’” pu bl ic po li cy ex cep ti on to at -wil l em pl oym en t.

Fr ever t v. Fo rd Mo to r Co

. , 61 4 F.3 d 46 6, 47 1 (8 th Ci r. 20 10 ), qu ot in g Ma rg io tt a v.

Chr is ti an H

o s p

. N e

. Nw.

, 31 5 S.W .3d 34 2, 34 6 (Mo

. ba nc 20 10 ). “ An at -wil l

em pl oyee m ay no t be te r mi n a t ed fo r refu si ng to pe rfo rm an il le ga l act or rep or ti ng

wro ng do in g or vi ol at io ns of la w to su pe rio rs or th i r d pa rti es .” Ma rg io tt a , 31 5

S.W .3d at 3 46

.

A.

Mi ll er cl ai m s s he was con st ru ct iv el y di sc ha rg ed

. Sh e res ig ne d on Ja nu ary 7,

20 11

. “ Co ns tru ct iv e di sc ha rg e oc cu rs whe n an e mp l o ye r de li be rat el y ren de rs an

em pl oyee’s wor ki ng co nd it io ns so in to le rab le th at th e em pl oyee is fo rced to qu it hi s

or he r job

. . . . [T]he wor ki ng co nd it io ns m us t be su ch th at a reas on ab le pe rs on wou ld

-1 7-fin d th em i n t o l e r ab le .” Wa ll in gs fo rd v. Ci ty of Ma

pl ewo od

, 28 7 S.W .3d 68 2, 68 6
(Mo

. ba nc 20 09 ) (in te rn al qu ot at io n m ar ks om itt ed ), ci ti ng Gam be r v. Mi ss ou ri Dep ’t

o f H e a lt h & Seni or Ser vs

. , 22 5 S.W .3d 47 0, 47 7 (Mo

. App

. 20 07 ). Co ns tru ct iv e

di sc ha rg e “ req ui res m or e th an a si ng le in ci de nt ; rat he r, th e cl ai m req ui res pr oo f of a

co nt in uo us pa tt ern of d is cri m in at or y tre at m en t.” Id

.

A r eas on ab le pe rs on wou ld no t fi nd Mi ll er’s wo rk in g c on di ti on s in to le rab le :

Sh e was no t de m ot ed

, di d no t rece iv e a red uc t i o n in sa la ry , was no t ex cl ud ed fro m

m eet in gs , an d di d no t lo se an y job res po ns ib il it ie s. The re is no ev id en ce sh e wou ld

ha ve ex pe rie nc ed th es e act io ns ha d sh e no t res ig ne d. W hi le Mi l l e r was de ni ed th e

care er se rv ic es po si ti on , sh e do es no t ex pl ai n why th is crea te s ob jecti ve ly in to le rab le

wor ki ng co nd it io ns

. Se e Gam be r , 22 5 S.W .3d at 47 9 (fi nd in g th at in fo rm in g pl ai nt iff

of in ab il it y to tra ns fer to an ot he r co un ty di d no t ren de r co nd it io ns in to le rab le ). The

di st ric t co ur t d id no t er r in di sm is si ng Mi ll er’s wro ng fu l d is ch arg e cl ai m

.

B.

Heri ta ge ter m in at ed Sil lm an on Decem be r 27 , 20 10

. Si ll m an cl ai m s sh e was

wro ng fu ll y di sc ha rg ed be cau se sh e rep o rte d m is co nd uc t. The di st ric t co ur t fo un d

Si ll m an fai le d to de m on st rat e th at th e rep or te d m is co nd uc t vi ol at ed an y la w or cl ear

pu bl ic po li cy

.

To de m on st rat e wr on gf

ul di sc ha rg e, a pl ai nt iff “ ‘m us t sh ow th at he rep or te d

to su pe rio rs or to pu bl ic au th or it ie s se ri ou s m is co nd uc t th at co ns ti tu te s a vi ol at io n of

th e la w an d of wel l es ta bl is he d an d cl ea rl y man da te d pu bl ic po li cy .’ ” Fr ever t

, 61 4

F.3 d at 47 1, qu ot in g Ma rg io tt a , 31 5 S.W .3d at 34 7. The rep or te d vi ol at io n m us t be

ba se d on “ ‘exp li ci t au th or it y ’” su ch as “ ‘a co ns ti tu ti on al pr ov is io n, a s t a t ut e, a

reg ul at i on ba se d on a st at ut e or a ru le pr om ul ga te d by a go ve rn m en ta l bo dy.’ ” Id

. ,

qu ot in g Ma rg io tt

a , 31 5 S.W .3d at 34 6. “ [I]t m us t affi rm at iv el y ap pe ar fro m th e face

of th e pe ti ti on th at th e le ga l pr ov is io n in qu es ti on in vo lv es a cl ear m an da te of pu bl ic

-1 8-po li cy .” I

d

. (in te rn al qu ot at io n m ark s om it te d)

. “ A va gu e or ge ne ral st at ut e,

reg ul at io n, or ru le can no t be su cces sf ul ly pl ed un de r th e at -wil l wro ng fu l te rm in at io n

th eo ry , be cau se i t w o ul d fo rce th e co ur t to de ci de on it s own wha t pu bl ic po li cy

req ui res .” Ma rg io tt

a , 31 5 S.W .3d at 34 6. Se e al so Fl es hner v. Pep os e V

is io n In st ., P.C.

, 30 4 S.W .3d 81

, 96 (Mo ba nc

. 20 10 ) (“ Pu bl ic po li cy is no t to be de te rm in ed by

th e va ry in g pe rs on al op in io ns an d whi m s of jud ge s or co ur ts

. . . .” (in te rn al qu ot at io n

m ark s o m it te d) ).

Si ll m an se nt a le tt er to Heri ta ge on Decem be r 16

, 20 10

, rep or ti ng th at Heri ta ge

was fai li ng to “ ret ur n an y rem ai ni ng fin an ci al ai d fu nd s ov er to st ud en ts ” an d fai li ng

to “ te ll th e st ud en ts th ey ex is t.” The le tt er cl ai m ed th at th is “ go es be y on d i nn oc en t

m is ta ke s an d cro ss es th e li ne in to st ud en t lo an frau d th at m ay ge t so m eo ne in ve ry

ba d tro ub le .” (The le tt er rep or te d th ree ot he r pu rp or te dl y un la wfu l pr act ic es , whi ch

Si ll m an do es no t di sc us s on ap pe al .) The le tt er di d no t ad dr es s fal si fic at io n of gr ad e

or att en da nc e rec or ds

.

Heri ta ge arg ue s th at Si ll m an li nk s th e rep or te d m is co nd uc t to le ga l vi ol at io ns

f o r t h e fir st ti m e on ap pe al

. Bu t Si ll m an ’s co m pl ai nt ci te d nu m ero us “ ex pl i c i t

au th or it [ie s].” Fr ever t , 61 4 F .3d at 47 1. On ap pe al , Sil lm an po in ts to 34 C.F.R. §

7

66 8.1 4( b) (2 5) (2 01 0)

, whi ch pr ov id es th at an in st it ut io n is li ab le fo r “ [i] mp r o pe rly

sp en t or uns pe nt fu nd s,” and § 66 8.8 2( a)-( b)

, whi ch pr ov id es th at an in st it ut io n is a

f i d u c i a ry su bjec t to “ th e hi gh es t st an da rd of care an d di li ge nc e.” The se pr ov is i o n s

do no t in vo lv e cl ear pu bl ic po li cy : Bo th of fer on ly ge ne ral st a n da rd s. Co mpa re

Ma rg io tt a , 31 5 S.W .3d at 34 8 (fi nd in g reg ul at io n pr ov id in g “ pa ti en t ha s th e rig ht to

rece iv e care in a sa fe se tt in g” is to o va gu e to su pp or t cl ear pu bl ic po li cy ), wi th Bo yl e

v. V is ta Eye wea r, In c. , 70 0 S.W .2d 85 9, 87 6 (Mo

. App

. 19 85 ) (req ui rin g ey eg la ss es

Thi s co ur t do es no t co ns id er 34 C.F.R. § 68 5.3 09 (g ), wh i ch was no t in 7

Si ll m an ’s co m

pl ai nt or rai se d be fo re th e di st ric t co ur t. Se e Ho ll an d v. Sa m ’s Cl ub

, 48 7 F.3 d 64 1, 64 4 (8 th Ci r. 20 07 ) (n ot in g th is co ur t or di na ril y do es n o t co ns id er

arg um en ts rai se d fo r th e fi rs t t im e o n a pp eal ).

-1 9-m an uf

act ur ers to ha rd en an d te st ey eg la ss es m an da te s cl ear pu bl ic po li cy ). Fu rth er,

Si ll m an ha s no t sh own ho w th e rep or te d m is co nd uc t vi ol at es th es e two reg ul at io ns

. Se e Ba zz i v. Tyco Hea lt

hca re Grp

. , 65 2 F.3 d 94 3, 94 8 (8 th Ci r. 20 11 ) (n ot in g pu bl ic

po li cy ex cep ti on do es no t ex te nd to “ co m pl ai nt s ab ou t act s or om is si on s [p la in ti ff]

su bjec ti ve ly bel ie ve s t o b e v io la ti on s o f th e la w or p ub li c p ol ic y ”).

Si ll m an arg ue s th at th ere “ sh ou ld be no do ub t th at st eal in g st ud en t lo an m on ey

is se rio us m is co nd uc t th at vi ol at es th e l aw an d pu bl ic po li cy .” Sh e po in ts to 34

C.F.R. § 66 8.1 4( b) ( 1 ) ( 20 10 ), whi ch req ui res co m pl ia nc e wit h al l rel ev an t st at ut es

an d re la te d re gu la ti on s o f Tit le IV. It is in su ffi ci en t to cl ai m “ th eft ” or vi ol at io n o f

un sp eci fie d Tit le IV reg ul at io ns , a nd § 6 68 .14 (b )(1 ) is to o va gu e to su pp or t cl earl y

man d a te d pu bl ic po li cy

. Se e Fr ever t

, 61 4 F.3 d at 47 1- 72

, ci ti ng Link v. K- M a r t

Co rp

. , 68 9 F. Su pp

. 98 2, 98 5 (W. D. Mo

. 19 88 ) (fi nd in g refe ren ces to “ th eft ” wit ho ut

“ im pl ic at [in g] ” a ny st at ut e are in su ffi ci en t to es ta bl is h cl ear pu bl ic po li cy ), an d

Ad ol ph se n v. Ha ll

m ar k Ca rd

s, In c. , 90 7 S.W .2d 33 3, 33 8 (Mo

. App

. 19 95 ) (h ol di ng

vi ol at io n of “ fed eral sa fet y reg ul at io ns ” wit ho ut sp eci fy in g whi ch on es is

in su ffi ci en t). The Dun n v. Ent er pr is e cas e rel ie d u po n b y Si ll m an do es no t su gg es t

ot he rwis e, as th e pl ai nt iff th ere rel ie d up on sp eci fic reg ul at io ns de ta il in g th e fo rm an d

co nt en t of fil in gs wit h th e Secu rit ie s an d Exc ha ng e Co m m is si on

. Dunn v. Ent

er

. Rent -A-C ar Co

. , 17 0 S .W .3d 1, 8 (Mo . Ap p. 20 05 ) (fi nd in g S ecu rit ie s Act of 1 93 3

an d Secu rit ie s Exc ha ng e Act of 19 34 es ta bl is h cl earl y m an da te d pu bl ic po li cy ). The

di st ric t co ur t d id no t er r in di sm is si ng Sil lm an ’s wron gf ul di sc ha rg e cl ai m

.

* * * * * * *

The jud gm en t i s re ve rs ed in pa rt and affi rm ed in pa rt, and th e cas e rem an de d

fo r pr oc eed in gs co ns is te nt wit h t hi s o pi ni on

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-2 0-