2011 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-6-2011

Tom Giunta v. Chubb Institute

Precedential or Non-Precedential: Non-Precedential

Docket No. 10-3907

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2011

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2011 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Tom Giunta v. Chubb Institute" (2011). 2011 Decisions. Paper 562.

http://digitalcommons.law.villanova.edu/thirdcircuit_2011/562
NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 10-3907

_____________

UNITED STATES OF AMERICA, ex rel. 

MARY BETH PILECKI-SIMKO and TOM GIUNTA,

 Appellants

v.

THE CHUBB INSTITUTE; THE CHUBB CORPORATION; CHUBB AMERICA

SERVICE CORPORATION and HIGH-TECH INSTITUTE, INC.

______________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(D.C. Civ. Action No. 2-06-CV-03562)

District Judge: Honorable Garrett E. Brown, Jr.

______________

Argued June 21, 2011

Before: CHAGARES, JORDAN, and GREENAWAY, JR., Circuit Judges

(Opinion Filed: September 6, 2011)

______________

Timothy J. Matusheski, Esq. (Argued)

Gary S. Graifman, Esq.

Kantrowitz, Goldhamer & Graifman, P.C.

747 Chestnut Ridge Road, Suite 200 

Chestnut Ridge, NY 10977

Michael S. Green, Esq.

Green & Associates, LLC

522 Route 18

P.O. Box 428 

East Brunswick, NJ 08816
2

Attorneys for Appellants

Thomas Hylden, Esq. (Argued)

Larry S. Gondelman, Esq.

Powers, Pyles, Sutter & Verville, P.C.

1501 M Street, N.W.

Seventh Floor 

Washington, DC 20005

Eric A. Savage, Esq.

Littler Mendelson, Esq.

One Gateway Center

Eighth Floor 

Newark, NJ 07102

Attorneys for Appellees The Chubb Institute and High-Tech Institute

Michael R. McDonald, Esq. (Argued)

Christine A. Amalfe, Esq.

Megan Frese Porio, Esq.

Gibbons P.C.

One Gateway Center 

Newark, NJ 07102

Attorneys for Appellee The Chubb Corporation

______________

OPINION

______________

GREENAWAY, JR., Circuit Judge

Plaintiffs Mary Beth Pilecki-Simko and Tom Guinta (“Appellants”) filed a qui tam

action against The Chubb Institute (“TCI”), The Chubb Corporation (“TCC”), Chubb 
3

America Service Corp.,1and High-Tech Institute, Inc. (“HTI”), pursuant to the False 

Claims Act (“FCA”),231 U.S.C. § 3729 et seq.3 Appellants alleged that TCI knowingly 

caused false claims to be presented to the Government and made or used false statements 

to get false claims paid by the Government. These claims are rooted in Appellants‟ 

allegation that TCI made misrepresentations to the Department of Education (“DOE”) 

that wrongfully enabled it to secure student financial aid in the form of loans and grants 

from the federal government. They also sought liability for this conduct against TCI‟s 

relevant corporate parents, HTI and TCC, on the basis of their alleged control of TCI‟s 

actions.

Appellants appeal the District Court‟s denial of their Motion for Reconsideration 

of the Court‟s denial of leave to amend their complaint and the order dismissing, with 

prejudice, their second amended complaint (“SAC”). For the reasons discussed below, 

we will affirm the orders of the District Court. Additionally, we will grant Appellee 

 

1 Chubb America Service Corporation was listed as a defendant in the case below. It 

does not appear that the entity was ever served below or that counsel entered an 

appearance for that entity. No appearance was entered on behalf of that entity on this 

appeal. 

2

“The FCA allows a private citizen, called a relator, to bring an action in the name of the 

United States, and the government may intervene if it so chooses. . . . The FCA permits 

the relator to bring the action in the absence of the government‟s intervention.” U.S. ex

rel. Quinn v. Omnicare Inc., 382 F.3d 432, 436 n.7 (3d Cir. 2004). As in Quinn, the 

government declined to intervene in this case. 

3

 The FCA reaches “all fraudulent attempts to cause the Government to pay out sums of 

money.” Quinn, 382 F.3d at 438 (internal quotation marks omitted) (quoting Harrison v. 

Westinghouse Savannah River, 176 F.3d 776, 788 (4th Cir. 1999)).
4

TCC‟s Motion for Damages and Costs, pursuant to Federal Rule of Appellate Procedure 

38. 

I. BACKGROUND

We write primarily for the parties and recount only the essential facts. 

This matter is a qui tam action brought by Appellants against their former 

employer, TCI. The FCA prohibits, in relevant part: 4

(1) knowingly present[ing], or caus[ing] to be presented, to an officer or 

employee of the United States Government . . . a false or fraudulent claim 

for payment or approval;

(2) knowingly mak[ing], us[ing], or caus[ing] to be made or used, a false 

record or statement to get a false or fraudulent claim paid or approved by 

the Government;

31 U.S.C. § 3729(a)(1)-(2). (West 2003 & Supp. 2008). In their claim, Appellants allege

that Appellees, with knowledge of their falsity, presented or caused to be presented to the 

United States Government claims, and caused payments for the claims to be made by the 

 

4

The Fraud Enforcement and Recovery Act of 2009 (“FERA”), Pub. L. No. 111-21, § 4, 

123 Stat. 1616 (2009) modified the FCA; it now imposes liability on 

[A]ny person who—

(A) knowingly presents, or causes to be presented, a false or fraudulent 

claim for payment or approval;

(B) knowingly makes, uses, or causes to be made or used, a false record or 

statement material to a false or fraudulent claim[.]

31 U.S.C. § 3729(a)(1). Neither party suggests that the revisions apply to this 

case, nor would it appear to materially affect our analysis. For those reasons, we 

have cited the pre-amendment subsections, § 3729(a)(1)-(2).
5

Government, pursuant to § 3729(a)(1); and knowingly made, used or caused to be made 

or used false records or statements to get a false or fraudulent claim paid by the 

Government, pursuant to § 3729(a)(2).5 Appellants allege that TCI knowingly caused 

false claims to be filed by making misrepresentations to the DOE, its accrediting 

agencies, and students that wrongfully enabled TCI to secure student financial aid 

pursuant to Title IV of the Higher Education Act (“HEA”). 

“When an educational institution wishes to receive federal subsidies under Title 

IV and the [HEA], it must enter into a Program Participation Agreement with the [DOE], 

in which it agrees to abide by a panoply of statutory, regulatory, and contractual 

requirements.” U.S. ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1168 (9th Cir. 

2006). Appellants claim that TCI knowingly violated Title IV requirements by falsely 

certifying compliance with the Program Participation Agreement (PPA)6and knowingly 

continuing to submit students‟ applications for financial aid, which included certifications 

that the students were eligible for Title IV financial aid, although TCI was allegedly in 

 

5 Appellants also alleged a) that Appellees were liable for conspiring to defraud the 

government under § 3729(a)(3); b) that TCC, Chubb America Services Corporation, and 

HTI were liable under a corporate veil-piercing theory; and c) that HTI was liable under a 

successor liability theory. Because Appellants do not raise these issues on appeal, the 

issues are waived.

6

Specifically, in their SAC, Appellants claims that one of the “terms and conditions” of 

the PPA that Chubb submits to the DOE in order to be eligible to receive Title IV funds is 

the incentive compensation ban. In the PPA, the educational institution certifies that “it 

will not provide . . . any commission, bonus or other incentive payment based directly or 

indirectly on success in securing enrollments . . .” (App. at 107, SAC ¶76.)
6

violation of the incentive compensation ban contained within the PPA.7

Appellees moved to dismiss Appellants‟ SAC for failure to state a claim, pursuant 

to Federal Rule of Civil Procedure 12(b)(6) and failure to satisfy the pleading 

requirements of Federal Rule of Civil Procedure 9(b). The District Court granted the 

motions. The District Court analyzed Appellants‟ claims under the implied false 

certification theory, which is premised “on the notion that the act of submitting a claim 

for reimbursement itself implies compliance with governing federal rules that are a 

precondition to payment.” U.S. ex rel. Willis v. United Health Grp., Inc., No. 10-2747, --

-F.3d ----, 2011 WL 2573380, at *7 (3d Cir. June 30, 2011) (citation and internal 

quotation marks omitted).8 The District Court found that Appellants‟ allegations of 

Appellees‟ misconduct failed to plead a FCA claim with particularity under Rule 9(b),

which governs pleading for special matters, including fraud. Alternatively, the District 

 

7 Appellants alleged other violations on TCI‟s part including permitting ineligible 

students to apply for Title IV financial aid, false certification of satisfactory progress of 

students, and misrepresentations regarding employment placement. These violations 

were not raised on appeal; we need not address them now. 

8

Since the District Court‟s ruling, our Court has recognized the application of the 

implied false certification theory of an FCA claim in the Medicare context. See Willis, --

-F.3d ----, 2011 WL 2573380, at *7. In that case, we also clarified that under the express 

false certification theory, “an entity is liable under the FCA for falsely certifying that it is 

in compliance with regulations which are prerequisites to Government payment in 

connection with the claim for payment of federal funds,” and under an implied false 

certification theory, liability attaches “when a claimant seeks and makes a claim for 

payment from the Government without disclosing that it violated regulations that affected 

its eligibility for payment.” Id.
7

Court also found that TCI‟s salary compensation policy fell within the FCA‟s safe 

harbor; thus, saving TCI from liability. 

Additionally, the Court found insufficient support in Appellants‟ pleading for their

corporate liability and veil-piercing claims against TCC and HTI. The District Court 

dismissed the SAC, without prejudice, and permitted Appellants to explain why they 

should be given a third opportunity to amend, ordering Appellants to show cause why the 

SAC should not be dismissed with prejudice. 

Appellants responded to the Order to Show Cause with two allegations--that TCI 

(1) falsely certified compliance with the incentive compensation ban imposed by Title 

IV‟s incentive compensation ban and (2) misrepresented employment placement 

statistics. The District Court found that Appellants‟ submissions did not cure their

previous pleading deficiencies and determined that further amendment would be futile. 

The Court dismissed the SAC with prejudice.9

Appellants then moved for reconsideration of the District Court‟s dismissal with 

prejudice to the extent that it dismissed Appellants‟ claim that TCI falsely certified 

compliance with Title IV‟s incentive compensation ban. For the first time, Appellants

argued that (1) the safeharbor is an affirmative defense not appropriately raised in a 

motion to dismiss; (2) the safeharbor regulation had only been in effect since 2003 and 

 

9

The District Court‟s May 17 Order conditioned dismissal of the SAC upon the 

Government‟s consent, pursuant to 31 U.S.C. § 3730. The Government filed a 

supplemental statement of interest on June 14, 2010 stating that its consent is not required 

for that type of involuntary dismissal. This is not an issue on appeal.
8

therefore did not apply to allegations about TCI‟s conduct prior to that time; and (3) the 

safe harbor did not cover appropriations such as gifts and offers of trips to its top 

admissions officers.

The District Court denied Appellants‟ Motion for Reconsideration, finding that it 

was procedurally improper and Appellants had not demonstrated a clear error of law 

resulting in manifest injustice. Appellants timely appealed and now challenge the 

District Court‟s dismissal of their claims and its denial of the request for leave to 

amend.10 Also before us is TCC‟s Motion for Costs and Fees, filed pursuant to Federal 

Rule of Appellate Procedure 38.

11

II. ANALYSIS

A. Motion to Dismiss

Appellants initially claim that the District Court erred because it applied the 

heightened pleadings standard of Rule 9(b), reserved for claims of fraud, to their 

 

10 Appellants‟ Notice of Appeal states that they appeal the District Court‟s Order denying 

their Motion for Reconsideration. Federal Rule of Appellate Procedure 3(c) provides that 

a notice of appeal must “designate the judgment, order or part thereof being appealed.” 

FED. R. APP. P. 3(c)(1)(B). We liberally construe Rule 3(c)‟s requirements. See Pacitti v. 

Macy‟s, 193 F.3d 766, 776 (3d Cir. 1999); Drinkwater v. Union Carbide Corp., 904 F.2d 

853, 858 (3d Cir. 1990). We have reviewed orders not specified in the notice of appeal 

where: “(1) there is a connection between the specified and unspecified order, (2) the 

intention to appeal the unspecified order is apparent, and (3) the opposing party is not 

prejudiced and has a full opportunity to brief the issues.” Pacitti, 193 F.3d at 777 (citing 

Polonski v. Trump Taj Mahal Assocs., 137 F.3d 139, 144 (3d Cir. 1998)). Therefore, we 

will consider the District Court‟s dismissal with prejudice of Appellants‟ SAC. 

11 The District Court had subject matter jurisdiction, pursuant to 31 U.S.C. § 3732(a) and 

28 U.S.C. § 1331. We have jurisdiction, pursuant to 28 U.S.C. § 1291. 
9

complaint, which they assert does not make allegations of fraud or mistake. Even if their 

complaint did not make such allegations, which is itself an implausible argument, 

Appellants failed to raise this argument before the District Court and offer no explanation 

for that failure. Therefore, it is waived and we will not address it. See In re DVI, Inc. 

Sec. Litig., 639 F.3d 623, 643 n.30 (3d Cir. 2011) (citing Srein v. Frankford Trust Co., 

323 F.3d 214, 224 n.8 (3d Cir. 2003) (“we will not consider issues that are raised for the 

first time on appeal absent compelling reasons”) (internal quotation marks omitted)).12 

Appellants next argue that even if Rule 9(b) applies to their FCA claim, the 

District Court misapplied the rule because it required Appellants to plead knowledge at a 

level reserved for private securities fraud cases, requiring Appellants to allege more facts 

about Appellees‟ scienter than it should have.

13

 

We exercise plenary review of the District Court‟s grant of a motion to dismiss 

under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which 

 

12 We also noted in Willis that we have previously held that plaintiffs must plead FCA 

claims with particularity in accordance with Rule 9(b). ---F.3d ----, 2011 WL 2573380, 

at *10 n.9 (citing U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs., 149 F.3d 

227, 234 (3d Cir. 1998)). 

13 In their Motion for Reconsideration, and on appeal, Appellants only raise the claim of 

TCI‟s alleged violation of the incentive compensation plan. Thus, arguments relating to 

other grounds for liability in their SAC are waived. 
10

relief can be granted. See Santiago v. Warminster Twp., 629 F.3d 121, 128 (3d Cir. 

2010).14 

We have held that a prima facie claim under the FCA requires a plaintiff to show 

that “(1) the defendant presented or caused to be presented to an agent of the United 

States a claim for payment; (2) the claim was false or fraudulent; and (3) the defendant 

knew the claim was false or fraudulent.” Willis, ---F.3d ----, 2011 WL 2573380, at *6 

(quoting U.S. ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir. 2004)).

The FCA states that the terms “knowing” and “knowingly” --

(A) mean that a person, with respect to information--

(i) has actual knowledge of the information; 

(ii) acts in deliberate ignorance of the truth or falsity of the information; or 

(iii) acts in reckless disregard of the truth or falsity of the information; and 

(B) require no proof of specific intent to defraud; 

31 U.S.C. § 3729(b)(1). 

Our Court has not yet analyzed the knowledge pleading requirement under Rule 

9(b) for an FCA claim of this nature; however, we need not resolve the question of 

whether Appellants sufficiently pled an FCA claim under Rule 9(b) because Appellants 

fail to state a plausible claim for relief under the more lenient standards of Rule 8. See

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (“To survive a motion to dismiss, a 

 

14 This is the same standard of review pertaining to a dismissal under Rule 9(b) for failure 

to satisfy the pleading with particularity requirement. Frederico v. Home Depot, 507 

F.3d 188 (3d Cir. 2007).

 
11

complaint must contain sufficient factual matter, accepted as true, to state a claim to relief 

that is plausible on its face.” (quotation and citation omitted)). “Rule 9 does not give [a 

plaintiff] license to evade the less rigid-though still operative-strictures of Rule 8 . . . 

[a]nd Rule 8 does not empower respondent to plead the bare elements of his cause of 

action, affix the label „general allegation,‟ and expect his complaint to survive a motion 

to dismiss.” Id. at 1954; see also Cafasso ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 

F.3d 1047, 1055 (9th Cir. 2011) (explicitly recognizing that Iqbal‟s plausibility 

requirement applies to FCA claims subject to Rule 9(b) because they must comply with 

Rule 8(a), which requires the pleading of a plausible claim under Iqbal).

When reviewing a motion to dismiss, we construe the complaint “in the light most 

favorable to the plaintiff.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d 

Cir. 2010) (internal quotation marks omitted) (quoting Gelman v. State Farm Mut. Auto. 

Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009). A motion to dismiss, pursuant to the 

plausibility standard, should be granted if the plaintiff is unable to plead “enough facts to 

state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 

U.S. 544, 570 (2007).15 A complaint satisfies the plausibility standard when the factual 

pleadings “allow[] the court to draw the reasonable inference that the defendant is liable 

 

15 In their January 27, 2011 appellate brief, Appellants cite to the rule articulated prior to 

Iqbal and Twombly: that “the [c]ourt should not dismiss a complaint under Rule 12(b)(6) 

unless it appears beyond doubt that plaintiff can prove no set of facts in support of his 

claims which would entitle him to relief.” (Appellant‟s Br. at 16 (quoting Schmidt, 386 

F.3d at 240).) The Supreme Court rejected this standard. See Twombly, 550 U.S. at 561-

63.
12

for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). 

This standard requires that plaintiff allege “more than a sheer possibility that a defendant 

has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556.) “[A] plaintiff‟s obligation 

to provide the „grounds‟ of his „entitle[ment] to relief‟ requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Twombly, 550 U.S. at 555 (citation omitted) (alteration in Twombly). 

To determine the sufficiency of a complaint under Twombly and Iqbal, we must 

“tak[e] note of the elements a plaintiff must plead to state a claim,” identify allegations 

that, “because they are no more than conclusions, are not entitled to the assumption of 

truth,” and finally, “where there are well-pleaded factual allegations, a court should 

assume their veracity and then determine whether they plausibly give rise to an 

entitlement for relief.” Santiago, 629 F.3d at 130 (citing Iqbal, 129 S.Ct. at 1947, 1950) 

(internal quotation marks omitted); see also Great Western Mining & Min. Co. v. Fox 

Rothschild LLP, 615 F.3d 159, 177 (3d Cir. 2010).16

In this case, Appellants claim that they sufficiently pled knowledge for FCA

liability because they alleged that TCI (1) violated the incentive compensation ban; and 

 

16 Iqbal describes the process as a “two-pronged approach” but the Supreme Court took 

note of the elements a plaintiff must plead to state a claim before proceeding to its twostep approach. In Santiago, this Circuit deemed the process a three-step approach. 629 

F.3d at 130.
13

(2) signed the PPA stating compliance with the ban.

17 Appellants claimed at oral 

argument that paragraphs 73-79 of their SAC contained their allegations of facts 

supporting Appellees‟ knowledge. These paragraphs include a description of “Chubb‟s” 

alleged violation of the incentive compensation ban through its “Admission 

Compensation Plan” and ranking of counselors based on their enrollment numbers (¶ 73);

that Admission Representatives are graded with “scorecards” earning points for their 

percentage of enrollments (¶ 74); that the top ranking counselors are among the highest 

paid, receiving the highest salary as well as trips, awards, and gifts based on their 

enrollment numbers (¶ 75); a description of the PPA conditions (¶ 76); and a description 

of the student applications submitted by Chubb containing certification of eligibility 

under Title IV. (¶ 78.)

However, the facts alleged therein, or anywhere else in the SAC, do not state a 

plausible claim to relief that TCI knew that its claims were false or fraudulent, an element 

 

17 Appellants contend that under Rule 9(b), they were permitted to plead knowledge 

“generally.” Rule 9(b) states that “[i]n alleging fraud or mistake, a party must state with 

particularity the circumstances constituting fraud or mistake. . . . Malice, intent, 

knowledge, and other conditions of a person‟s mind may be alleged generally.” FED. R.

CIV. P. 9(b). “‟[G]enerally‟,” as stated in Rule 9(b), “is a relative term.” Iqbal, 129 S.Ct. 

1937, 1954 (2009). In that context, “[generally] is to be compared to the particularity 

requirement applicable to fraud or mistake.” Subsequently, “Rule 9 merely excuses a 

party from pleading discriminatory intent under an elevated pleading standard. It does 

not give him license to evade the less rigid-though still operative-strictures of Rule 8.” 

Id. 
14

of Appellants‟ FCA claims.

18

 Instead, they contain conclusory allegations that “Chubb 

knows that this claim . . . is false because Chubb knows its students are not eligible under 

the Title IV program due to Chubb‟s violations of the HEA incentive compensation ban” 

and is “ineligible for those funds because of its intentional violations of the HEA funding 

statute.” It adds that “Chubb also knowingly uses the false records or statements 

provided to the [DOE]” in their PPA that certifies compliance. (App. at 108, ¶¶ 78-79.) 

These are not sufficient facts to state a plausible claim to relief as they do not 

allow us to “draw the reasonable inference” that TCI was liable for the misconduct 

alleged, which required knowledge that the claims were false. See Iqbal, 129 S.Ct. at 

1949. Further, Appellants‟ submissions in their response to the Court‟s Order to Show 

Cause, which failed to include a proposed third amended complaint (an omission that we 

 

18 The Ninth Circuit‟s decision in Hendow, which reviewed an allegation of a false 

certification claim under the FCA through violation of the Title IV incentive 

compensation ban, also suggests that Appellants‟ knowledge pleading is deficient. There, 

although that court reversed the district court‟s 12(b)(6) dismissal of the relators‟ 

complaint and articulated the essential elements of a FCA claim under a false 

certification theory slightly differently than we have—(1) a false statement or fraudulent 

course of conduct, (2) made with scienter, (3) that was material, causing (4) the 

government to pay out money or forfeit moneys due—it found that relators properly 

alleged scienter.

The relators there “allege[d] that University staff openly bragged about 

perpetrating a fraud, that the University had an established infrastructure to deceive the 

government, and that the University repeatedly changed its policies to hide its fraud.” 

Hendow, 461 F.3d at 1175. They further “allege[d] that the University provided 

statements to the government that were intentional, palpable lie[s], made with knowledge 

of the falsity and with intent to deceive.” Id. (internal citations and quotation marks 

omitted). In allaying relators‟ concerns about broadening liability for regulatory 

violations, the court noted that “innocent or unintentional violations do not lead to False 

Claims Act liability.” Id.
15

have held “is fatal to a request for leave to amend,” Fletcher-Harlee Corp. v. Pote 

Concrete Contractors, Inc., 482 F.3d 247, 252 (3d Cir. 2007)), did not remedy this 

obvious pleading deficiency. The submissions relevant to Appellants‟ arguments on 

appeal include declarations from Appellants explaining the nature of TCI‟s incentive 

compensation plan, rather than asserting facts which allow an inference that their 

knowledge pleading is plausible.

Appellants‟ SAC does not state facts supporting a reasonable inference that TCI 

knew, acted in reckless disregard, or deliberately ignored that its submissions were false 

due to their alleged violation of the incentive compensation ban, and therefore did not 

survive Appellees‟ motion to dismiss under Rule 12(b)(6). Cf. U.S. ex rel. Lemmon v. 

Envirocare of Utah, Inc., 614 F.3d 1163, 1169 (10th Cir. 2010) (finding that relators‟ 

complaint contained sufficient factual allegations to support their implied false 

certification claims where they documented, among other things, the alleged violations 

and how defendant government contractor was aware of the violations, “listing specific 

instances in which Plaintiffs documented and/or informed their superiors of the 

violations.”) 

Here, Appellants do not allege similar facts, such as how Appellees documented, 

or were aware or informed of the violations, that would support a plausible claim that 

they knowingly submitted false claims. Because we resolve the dismissal on this ground, 
16

we need not make a determination with respect to the District Court‟s allegedly 

heightened knowledge standard.19 

B. Denial of Leave to Amend and Motion to Reconsider

“We review a denial of a motion for reconsideration for abuse of discretion, but 

we review the District Court‟s underlying legal determinations de novo and factual 

determinations for clear error.” Howard Hess Dental Labs. Inc. v. Dentsply Intern., Inc., 

602 F.3d 237, 245 (3d Cir. 2010) (citing Max‟s Seafood Café v. Quinteros, 176 F.3d 669, 

673 (3d Cir. 1999)) (internal quotation marks omitted).

20

The purpose of such a motion is to correct a clear error of law or to prevent a 

manifest injustice in the District Court‟s original ruling. Id. at 677. Such motions “are 

 

19 Appellants also claim that the District Court erred in ruling that only the implied 

certification theory applied to Appellants‟ claims against “Chubb” under the FCA, and 

that, in fact, under § 3729(a)(2), “Chubb caused [false statements] to be made by the 

Chubb institutions to the government and accrediting agencies that Chubb did not employ 

a compensation scheme wherein it compensated employees based directly or indirectly 

upon those employees‟ success in securing enrollments at a Chubb institution.” 

(Appellant‟s Br. at 21.) 

Presumably, Appellants reference to “Chubb” causing claims to be filed is to TCC 

or HTI. They claim that the District Court committed “reversible error” by ruling that 

only the implied certification theory applied to Appellants‟ claims against Chubb under 

the FCA, or just under § 3729(a) subsection one of the FCA, instead of recognizing that § 

3729 (a) subsection two also applied under the express certification theory. (Id.) 

Although they cite no Third Circuit or other authority for this argument, we need not 

consider this argument as (1) it appears to have been raised for the first time on appeal; 

and (2) Appellants still would not state a claim under either § 3729(a)(1) or (2), as both 

require knowledge on the part of the party accused of fraud.

20 We also review a denial of leave to amend for abuse of discretion. See Travelers 

Indem. Co. v. Dammann & Co., 594 F.3d 238, 243 n.3 (3d Cir. 2010). 
17

granted for compelling reasons, such as a change in the law which reveals that an earlier 

ruling was erroneous, not for addressing arguments that a party should have raised 

earlier.” United States v. Dupree, 617 F.3d 724, 732 (3d Cir. 2010) (citation and internal 

quotation marks omitted).

Appellants moved the District Court to reconsider its denial of leave to amend 

their SAC. However, the only specific arguments Appellants raise in their appeal, which 

does not discuss the standard of review for denial of leave to amend or denial of 

reconsideration, are unavailing, either because they were waived or otherwise have no 

impact on our alternate ground for dismissal.21 

Appellants have not shown that the District Court abused its discretion in denying 

their Motion to Reconsider. The District Court, in its discretion, rejected Appellants‟ 

arguments about the safeharbor provision because they were untimely and Appellants

 

21 Appellants‟ motion focused on the District Court‟s alternate ground for dismissal—that 

Appellees‟ incentive compensation plan was saved by the safe harbor within Title IV, and 

therefore, they could not have the requisite intent to violate the ban. Specifically, 

Appellants argued that: (1) the safeharbor is an affirmative defense not appropriately 

raised in a motion to dismiss; (2) the safeharbor regulation has only been in effect since 

2003 and therefore did not encompass TCI‟s conduct before that date; and (3) 

appropriations such as gifts and “President‟s Club” trips to its top admissions 

representatives were not subject to the safeharbor. 

The District Court rejected Appellants‟ arguments, finding first that the motion 

was procedurally improper for seeking to reargue matters previously argued before the 

Court and raising new arguments not presented in response to either the original motion 

to dismiss or Order to Show Cause. “These defects, alone, warrant denial of Relators‟ 

motion.” (App. at 53.) Furthermore, none of Appellants‟ arguments about the safe 

harbor, repeated on appeal, cure their pleading deficiency to survive a Rule 12(b)(6)

motion to dismiss. Lastly, they do not offer any explanation for their delay in raising 

their arguments about the safe harbor.
18

offered no explanation for this delay. 

C. TCC‟s Rule 38 Motion for Attorney‟s Fees and Costs

In its dismissal of Appellants‟ SAC, the District Court determined that Appellants

failed to sufficiently plead veil-piercing or successor liability, as alleged against TCC and 

HTI. In their appeal, Appellants do not raise the issue of the District Court‟s dismissal of 

their claims for imposition of liability on TCC and HTI, nor did they raise this issue 

before the District Court in either their attempt to amend their SAC or their Motion for 

Reconsideration. However, both of these parties were included in this appeal. Based on 

its belief that its inclusion in the appeal was frivolous, TCC moved for attorney‟s fees and 

costs. Appellants responded to this motion on April 11, 2011. 

“This court employs an objective standard to determine whether or not an appeal 

is frivolous” which “focuses on the merits of the appeal regardless of good or bad faith.” 

Kerchner v. Obama, 612 F.3d 204, 209 (3d Cir. 2010) (citation and internal quotation 

marks omitted). In this case, the appeal—specifically against TCC—is frivolous. Even if 

we reversed the District Court‟s decision on any of the arguments that Appellants have 

made on appeal regarding the application of Rule 9(b), the sufficiency of Appellants‟ 

pleading under Rule 9(b), or the application of the safeharbor provision of Title IV, there 

is no possibility of reversal on the corporate liability claims. Appellants make no 

argument on appeal as to why their corporate liability claims were improperly dismissed. 

Further, no argument is advanced about the District Court‟s dismissal of these claims in 

their subsequent motions and pleadings before the District Court, including in their 
19

Motion for Reconsideration. Additionally, Appellants‟ proposed Third Amended 

Complaint, attached to their Motion for Reconsideration, did not name TCC as a 

defendant. (App. at 547-67.) 

Thus, the appeal against TCC is frivolous and, as TCC argues, “th[e] appeal never 

had any possibility of resulting in a reversal of the dismissal of The Chubb Corporation,” 

(Appellee TCC‟s Br. at 2). See, e.g., Nagle v. Alspach, 8 F.3d 141, 145 (3d Cir. 1993) 

(finding appeal frivolous where appeal “never had any possibility of resulting in a 

reversal” because appellants challenged only two of the four conclusions asserted by the 

district court to support its summary judgment for defendants and so, even if the court 

held for appellants on both asserted allegations of error, two unchallenged bases would 

remain and the district court‟s judgment would still be affirmed). 

Appellants‟ response to the motion is unavailing. Without addressing the District 

Court‟s corporate liability findings, Appellants assert, without any support, that the 

standard for a motion for reconsideration “does not necessitate that every claim 

previously claimed be appealed in order to obtain a favorable outcome.” (Appellant‟s 

Resp. Br. at 7.) In this case, their only claims against TCC were not raised on appeal, and 

are therefore waived. See Graden v. Conexant Sys., Inc., 496 F.3d 291, 296 n.7 (3d Cir.

2007) (“Absent compelling circumstances not present here, failing to raise an argument 

in one‟s opening brief waives it.”) They have not presented any explanation, let alone a 

compelling explanation, for why their claim against TCC is not waived. 

 Appellants‟ assertion at oral argument that their reference to “Chubb” includes 
20

“all the Chubbs,” and they therefore raised these issues in the appeal, is not persuasive, as 

they do not actually make any argument about their successor liability or corporate veil 

piercing claims that the District Court dismissed in its very first dismissal without 

prejudice.22 

Appellants also argue that TCC‟s motion is premature since frivolousness of the 

appeal had not been decided. Rule 38 provides that “„[i]f a court of appeals determines 

that an appeal is frivolous, it may, after a separately filed motion or notice from the court 

and reasonable opportunity to respond, award just damages and single or double costs to 

the appellee.‟” Kerchner, 612 F.3d at 209 (quoting FED. R. CIV. P. 38). We have 

determined that the appeal against TCC was frivolous, TCC filed a separate motion, and 

Appellants were given the opportunity to—and did—respond to TCC‟s Motion, as is 

required. Appellants present no authority supporting their argument that TCC‟s Motion 

was too early. 

“The purpose of an award of attorneys‟ fees under Rule 38 is to compensate 

appellees who are forced to defend judgments awarded them in the trial court from 

appeals that are wholly without merit, and to preserve the appellate court calendar for 

cases worthy of consideration.” Huck v. Dawson, 106 F.3d 45, 52 (3d Cir. 1997) 

 

22 Also telling is the District Court‟s statement in its opinion denying reconsideration that 

the Court “dismissed Relators‟ veil-piercing and successor liability claims without 

prejudice on March 22, 2010, and Relators did not seek leave to amend th[ose] claims in 

response to the Court‟s accompanying Order to Show Cause. Accordingly, the Court 

dismissed th[ose] claims with prejudice on May 17, 2010.” U.S. ex rel. Pilecki-Simko v. 

Chubb Inst., No. 06-3562, 2010 WL 3463307, *1 n.1 ((D.N.J. Aug. 27, 2010) Appellants 

offer no meaningful response to this statement or the Court‟s conclusions therein. 
21

(citation and internal quotation marks omitted). “Damages [under Rule 38] are awarded 

by the court in its discretion . . . as a matter of justice to the appellee.” Beam v. Bauer, 

383 F.3d 106, 108 (3d Cir. 2004) (citation and internal quotation marks omitted). An 

“important purpose [of a damages award] is to discourage litigants from unnecessarily 

wasting their opponents‟ time and resources.” Nagle, 8 F.3d at 145. Because the appeal 

against TCC is frivolous and Appellants have not shown cause why just damages and 

costs should not be imposed, pursuant to Fed. R. App. P. 38, we will award to TCC, as a 

matter of justice, its requested damages and costs. 

IV. CONCLUSION

For the foregoing reasons, we will affirm the District Court‟s order denying 

reconsideration of its denial of leave to amend Appellants‟ SAC, as well as its dismissal 

of Appellants‟ SAC. Additionally, we will grant Appellee TCC‟s Rule 38 Motion for

Damages and Costs. TCC is directed to provide an itemized list of damages, including 

attorneys‟ fees associated with responding to this appeal, and a bill of costs, pursuant to 

Federal Rules of Appellate Procedure 38 and 39, within 14 days after the entry of the 

accompanying judgment in this case.