Opinion ID: 171442
Heading Depth: 5
Heading Rank: 1

Heading: Lack of Scienter-Based Evidence

Text: We are initially struck by what is not in the record. For instance, relators identify no deposition testimony from any defendant relevant to the issue of scienter. Nor did relators submit any such testimony in response to defendants' summary judgment motion. [17] Moreover, although relators alleged that each defendant made at least one false certification, they adduced virtually no evidence of defendants' conductor knowledgeprior to April 19, 2000. Indeed, there is no evidence that defendants intentionally ignored the statutory criteria; that they appreciated the significance of, yet disavowed, statistical data foreclosing NMSU's eligibility as a minority institution; or that they purposefully refused to verify the relevant demographics of NMSU's student body. And there is certainly no evidence of a conspiracy to defraud. We find these evidentiary failures to be particularly significant in light of relators' obligation at the summary judgment phase to produce sufficient evidence that each individual defendantnot the PSL as an institutional wholeknowingly submitted a false claim. See Madonna Towers, 278 F.3d at 769 (affirming summary judgment for the operator of a nursing facility because relator's sole evidence of scienterdeposition testimony by facility officials that they did not seek legal advice concerning the propriety of their billing practices,failed to even suggest that anyone suspected something [was] wrong but deliberately avoided learning more so that a fraudulent scheme could continue). Relators cite several pieces of evidence that purportedly raise an inference of scienter as to all defendants: (1) the list attached to the April 1994 memorandum which identified NMSU as having a minority enrollment of 35.25%; (2) a December 1, 1999, e-mail discussing NMSU's capacity to track the first-generation and low-income data of its student body; and (3) Mr. Rogers's report of his April 19, 2000, meeting with Mr. Birx. None of these documents supports an inference of the requisite scienter. The April 1, 1994, list was issued in conjunction with a memorandum that informed NMSU that, if it appeared on the DoE's list, it was eligible for the DoD set-aside program. We fail to see how NMSU's appearance on a list confirming DoD set-aside eligibility generates knowledgeor avoidance of knowledgeof ineligibility. The record is also barren as to whether any of the defendants recognized the significance of the minority enrollment statistic in 1994 or in any subsequent year. More importantly, even if certain defendants should have known from the April 1, 1994, list that NMSU did not qualify under 20 U.S.C. § 1135-d5(3), which imposed the 50% minority-enrollment threshold, the list did not foreclose NMSU from qualifying under 20 U.S.C. § 1059c(b)(1). In fact, it revealed that NMSU had a Hispanic enrollment of nearly 30%, one of three relevant conditions for eligibility as a Hispanic-serving institution. See 20 U.S.C. § 1059c(b)(1)(B) (1994). Relators next cite a December 1, 1999, e-mail from an employee of NMSU to relator Donald Bustamante. The e-mail stated that because it was only in the past few years that a `first generation' question has appeared on the undergraduate admission application form[,] .... [t]he student file has no information regarding this status for students who were admitted to NMSU before this question was asked, nor for most graduate students. App. at 851. The e-mail further stated that the only method we have of determining low income status for students at NMSU is to review the student's financial aid record for household income and size, and compare that to national low income guidelines. Id. If no financial aid report was filed, then no determination was made. Id. No reasonable jury could infer actual knowledge, reckless disregard, or deliberate indifference from this e-mail. For starters, Ms. Meyer was the only defendant copied on the e-mail, and relators present no evidence that any other defendant was aware of its content. Nor is this content, on its own, particularly suggestive. By the time Ms. Meyer received the e-mail, [18] the first-generation status of Hispanic students was no longer a criterion in qualifying as a Hispanic-serving institution. 20 U.S.C. § 1101a(a)(5) (2000) (requiring 25% of undergraduate students to be Hispanic and at least 50% of Hispanic students to be low-income individuals). And the e-mail does not concede that NMSU never collected information about low-income status, but that NMSU had only one method, however partial, of doing so. Id. Relators' final piece of evidenceMr. Rogers's report memorializing Mr. Birx's comments in April 2000also fails to carry their burden of proof. According to Mr. Rogers's report, Mr. Birx acknowledged that he learned through recent conversations with Miriam Meyer of NMSU's failure to track statistics concerning low-income, first-generation Hispanic students. Id. at 813 (emphasis added). He further admitted that the evidence presented to him `raised significant doubts (in his mind) that NMSU correctly certified itself as a minority institution.' Id. These comments, without more, offer no insight into Mr. Birx's state of mindor his conduct prior to his recent conversation (of an undisclosed date) with Ms. Meyer. Furthermore, Mr. Birx's comments say nothing about the scienter of the other defendants (with the exception of Ms. Meyer), nearly all of whose false claims were submitted prior to 2000. And, with respect to Ms. Meyer, Mr. Rogers's report attributes to her, through multiple levels of hearsay, no more than what she knew through the December 1, 1999, e-mail. In summary, we believe that the evidence cited by relatorswhether analyzed individually or collectivelyfails to create a genuine issue of material fact as to scienter. But, even if this evidence somehow did raise a weak inference that a particular defendant, such as Ms. Meyer or Mr. Birx, knowingly misrepresented NMSU's eligibility, this would not be enough to reach a jury. Relators' evidence cannot be evaluated in a factual and legal vacuum. As we now explain, the government knowledge inference, coupled with the applicable statutory and regulatory scheme, preclude a reasonable jury from finding scienter.