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NOT FOR PUBLICATION (Doc. Nos. 115, 119, 129, 131, 134, 165, 166) 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

CAMDEN VICINAGE 

UNITED STATES OF AMERICA, ex rel. 

LAPORTE, et al., 

Relators, 

v. 

PREMIERE EDUCATION GROUP, L.P., 

et al., 

Defendants. 

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Civil. No. 11-3523 (RBK/AMD) 

OPINION 

KUGLER, United State District Judge: 

 This matter comes before the Court upon its June 16, 2016 Order directing the parties to 

file briefs addressing the impact of Universal Health Services, Inc. v. United States ex rel. 

Escobar, 136 S. Ct. 1989 (2016), on its previous decision regarding Defendants’ motion to 

dismiss. (Doc. No. 119). For the following reasons, the Court finds that its May 11, 2016 

Opinion and Order granting in part and denying in part Defendants’ motion to dismiss the Fourth 

Amended Complaint does not require further reconsideration due to intervening changes in the 

law. Defendants’ motion for certification for interlocutory appeal (Doc. No. 115) is DENIED. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

The Court need not recite the facts of this case, as they have been laid out in great detail 

in this Court’s previous opinion addressing Defendants’ motion to dismiss the Fourth Amended 

Complaint. See May 11, 2016 Opinion at 1-8 (Doc. No. 111). The Court previously dismissed a 

number of counts, but found that Plaintiff’s stated False Claims Act claims under the “implied 
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certification theory” for Defendants’ allegedly misleading career placement performance 

numbers, violations of the Incentive Compensation Ban related to providing bonuses based on 

enrollments, and altering students’ grades and attendance records. Id. at 26-35. Defendants filed 

a Motion for Certificate of Appealability on May 23, 2016, asking this Court to certify a question 

to the Third Circuit asking “[w]hether [Program Participation Agreements] and [Higher 

Education Act] Title IV statutes and regulations are conditions of participation rather than 

conditions of payment such that the [False Claims Act] Remaining claims asserted by Plaintiffs 

should have been dismissed?” Defs.’ Mot. Br. for Interlocutory Appeal at 5 (Doc. No. 115-11). 

This Court denied Defendants’ request on June 16, 2016, finding that certification would not 

materially advance the outcome of the litigation, nor would certification be appropriate in light 

of the (then) recent decision in Universal Health Services, Inc. v. United States ex rel. Escobar. 

June 16, 2016 Order. The parties have submitted substantial briefing and supplemental briefing 

regarding Escobar and subsequent Circuit decisions. 

II. LEGAL STANDARD 

Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to 

state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts 

accept all factual allegations as true, construe the complaint in the light most favorable to the 

plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff 

may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) 

(quoting Phillips, 515 F.3d at 233). In other words, a complaint is sufficient if it contains enough 

factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). It is not 

for courts to decide at this point whether the moving party will succeed on the merits, but 
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“whether they should be afforded an opportunity to offer evidence in support of their claims.” In 

re Rockefeller Ctr. Props., Inc., 311 F.3d 198, 215 (3d Cir. 2002). Yet, while “detailed factual 

allegations” are unnecessary, 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 (alteration in original) 

(citations omitted). 

To make this determination, a court conducts a three-part analysis. Santiago v. 

Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must “tak[e] note of the 

elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the 

court should identify allegations that, “because they are no more than conclusions, are not 

entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 680). 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.” Id. (quoting Iqbal, 556 U.S. at 680). 

This plausibility determination is a “context-specific task that requires the reviewing court to 

draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. A complaint cannot 

survive where a court can infer only that a claim is merely possible rather than plausible. Id. 

III. DISCUSSION 

A claim under the False Claims Act requires a showing of four elements: falsity, 

causation, knowledge, and materiality. United States ex rel. Petratos v. Genentech Inc., 855 F.3d 

481, 487 (3d Cir. 2017). Defendants claim that the Fourth Amended Complaint fails to 

adequately allege both misrepresentation and materiality. Defs.’ Br. at 3-10 (Doc. No. 125). 

 The Supreme Court in Escobar held that “the False Claims Act encompasses claims that 

make fraudulent misrepresentations, which include certain misleading omissions.” Escobar, 136 
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S. Ct. at 1999. “When . . . a defendant makes representations in submitting a claim but omits its 

violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for 

liability if they render the defendant’s representations misleading with respect to the goods or 

services provided.” Id. At issue in Escobar was whether the Defendant’s payment claims were 

more than mere requests for payments that actually constituted misleading half-truths. Defendant 

submitted reimbursement claims to Medicaid that used payment codes which were linked to 

specific services that patients allegedly received. Id. at 1997. In some instances, the services that 

the defendant claimed to provide were not rendered by an employee with the appropriate 

credentials or licenses. Id. The Supreme Court held that “[b]y using payment and other codes 

that conveyed [employee qualifications] without disclosing Arbour’s many violations of basic 

staff and licensing requirements for mental health facilities, Universal Health’s claims 

constituted misrepresentations.” Id. at 2000-01. 

 Defendants claim that the Fourth Amended Complaint fails the first half of the “strict” 

two-prong test laid out in Escobar.

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 Defs.’ Br. at 2-3. Defendants claim that, unlike the 

Defendant in Escobar, “Premier’s alleged submission of claims contained no specific 

representation about any services and therefore, no misleading half-truths.” Defs.’ Br. at 3. The 

Court disagrees. 

 The Court finds that the United States District Court for the Northern District of 

California’s opinion in Rose v. Stephens Institute is particularly relevant to the instant case. 2016 

WL 5076214 (N.D. Cal. Sep. 20, 2016). Rose is similar to the instant case; the Relators in Rose

 

1. Plaintiffs refute Defendants’ contention that Escobar creates a strict test. Rather, they assert 

that the Supreme Court merely held that an FCA claim can be stated under section 3729(a)(1)(A) 

“at least” where the two factors are plead, rather than only when those factors are plead. Pl.’s Br. 

at 2 (Doc. No. 126). 
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alleged that the defendant institution had submitted fraudulent claims for payment because the 

institution had violated Title IV’s incentive compensation ban (“ICB”). Id. at *1. Defendant filed 

a motion for reconsideration addressing the impact of Escobar on the Northern District of 

California’s earlier order. Id. at 3. The Rose court found that the request for payment at issue 

“represent[ed] that the student-borrower is ‘eligible’ and is enrolled in an ‘eligible program.’ If 

[the institution] was not in compliance with the ICB, failure to disclosure (sic) this fact would 

render the loan forms misleading because [the institution] would not have been an ‘eligible 

institution.’” Id. at 5. 

 This Court has previously noted that Defendants’ initial and continued eligibility for 

participation in Title IV programs, and by extension, the receipt of Title IV HEA funding was 

conditioned on compliance with the terms of the Program Participation Agreement (“PPA”) and 

the federal regulations therein. May 11, 2016 Op. at 36. This Court has also previously found 

that Relators have adequately alleged that Defendants violated the following regulations: 34 

C.F.R. section 668.74 (which prohibits “misrepresentations regarding the employability of an 

eligible institution’s graduates); 34 C.F.R. section 668.14(22)(i) (which prohibits incentive 

payments based directly or indirectly upon success in securing enrollments); 34 C.F.R. section 

668.16(e) (which requires a school to apply reasonable standards to evaluate students’ progress); 

and 34 C.F.R. section 668.22(b) (which requires institutions to take attendance if required by an 

outside agency). May 11, 2016 Op. at 28, 31-35. Compliance with these regulations was a 

condition for Defendants’ continued Title IV eligibility. Relators have alleged that Defendants 

were violating these regulations, which would mean that Defendants were not eligible to receive 

Title IV funds. Therefore, Relators have alleged that Defendants’ requests for payment were 

misleading because they represented that Defendants were eligible to receive Title IV funds 
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when they were ineligible. Accordingly, the Court finds that Relators have sufficiently alleged 

that Defendants’ requests for payment made “specific representations about the goods and 

services provided” which constituted misleading half-truths. See Escobar, 136 S. Ct. at 2001. 

 The Escobar Court also explained how courts should view the materiality requirement. 

“It explained that a misrepresentation is not material ‘merely because the Government designates 

compliance with a particular statutory, regulatory, or contractual requirement as a condition of 

payment . . . [or because] the Government would have the option to decline to pay if it knew of 

the defendant’s noncompliance.’” Petratos, 855 F.3d at 489 (quoting Escobar, 136 S. Ct. at 

2003). Defendants argue that Relators have also failed to adequately allege that the United States 

would have refused payment had it known of PEG’s regulatory violations. Defs.’ Br. at 6-10. 

 This Court already addressed the sufficiency of the Fourth Amended Complaint with 

regard to allegations that the United States would have refused payment. See May 11, 2016 Op. 

at 36-37. The Court does not find it necessary to rehash this analysis in light of Escobar. This 

Court previously found that “Relators have plead with sufficient particularity that the United 

States would have refused payment had it known of PEG’s regulatory violations. Defendants are 

welcome to defeat liability at the motion for summary judgment stage, if it can be shown that 

United States would not have refused payment.” Id. at 36 (citation omitted). The Court renews its 

invitation to Defendants to show that the United States would not have refused payment. 

IV. CONCLUSION 

For the foregoing reasons, the Court finds that that its May 11, 2016 Opinion and Order 

granting in part and denying in part Defendants’ motion to dismiss the Fourth Amended 

Complaint does not require further reconsideration in light of Universal Health Services, Inc. v. 
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United States ex rel. Escobar. Defendants’ motion for certification for interlocutory appeal is 

DENIED. 

Date: 08/11/2017 s/ Robert B. Kugler 

 ROBERT B. KUGLER 

 United States District Judge