Opinion ID: 723865
Heading Depth: 2
Heading Rank: 3

Heading: claim of promissory fraud

Text: 26 Hopper next argues that the School District's submission of a triennial certification, containing general assurances that the School District will generally comply with applicable federal law, is an actionable false certification under the Act. Every three years, each California school district must prepare a Local Plan to submit to the CDOE. The Local Plan is an agreement between the school district and the district's community detailing how the district is going to implement its special education programs. This Local Plan includes the Certification of Participation, Compatibility, and Compliance Assurances (Certification of Assurances), which the district superintendent signs to indicate that a district will operate its special education programs in a manner consistent with both state and federal law. The affected school district certifies: 27 that the agency(ies) herein represented will meet all applicable requirements of state and federal laws and regulations, including general compliance with Public Law 94-142, Section 504 of Public Law 93-112 and the provisions of the California Education Code, Part 30. 28 Every three years, the CDOE conducts a comprehensive review of school districts' special education programs and outlines problem areas. If the review reveals areas of noncompliance with law or regulation, a school district must propose a solution to the problem acceptable to the CDOE. 29 However, this Certification of Assurances is not a prerequisite for the School District to receive annual IDEA funds. This is partly because IDEA funding has been assigned to California before the state has apportioned the funding among its districts. Thus, even if false, the LASUD certificate fails the test of being the cause of the Government's providing the benefit. See Boese at 1-29. 30 In addition, although promissory fraud may be actionable in rare circumstances under the FCA, the promise must be false when made. See U.S. v. Shah, 44 F.3d 285, 290 (5th Cir.1995) (holding a promise of nondisclosure made after the defendant had made a specific promise to another party to disclose the information was actionable). For a certified statement to be false under the Act, it must be an intentional, palpable lie. Hagood, 81 F.3d at 1478. Innocent mistakes, mere negligent misrepresentations and differences in interpretations are not false certifications under the Act. Id. For a qui tam action to survive summary judgment, the relator must produce sufficient evidence to support an inference of knowing fraud. United States ex rel. Anderson v. Northern Telecom, 52 F.3d 810, 815 (9th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 700, 133 L.Ed.2d 657 (1996). 31 Here, the record is devoid of any such showing. In fact, the undisputed evidence leads to the opposite conclusion concerning the School District's intent to be in general compliance with applicable laws. LAUSD is one of the largest public school districts in the United States, serving nearly 640,000 students on a $4 billion annual budget. It has one of the largest special education programs in the country, providing services beyond those required by law. While the School District receives a significant amount of funding from the federal government for special education programs under the IDEA, it spends routinely between 15 and 20 times this amount on special education programs. 8 The School District spends 100% of its IDEA funding on special education programs and services as provided under 20 U.S.C. § 1411(c). To meet state and federal requirements, LAUSD must also take money from the fund intended for general education for all students. This is called encroachment, and the amount of encroachment typically falls between $160-180 million annually, or roughly 32-36% of the approximate $500 million total budget for special education. With 64,000 students eligible for special education, LAUSD receives 15 complaints of noncompliance every year. This number is consistent with the number of complaints submitted against other California school districts. 32 The undisputed facts show that it is the School District's general policy to comply with all applicable state and federal laws and regulations and that it has an elaborate administrative structure to do so. The CDOE also monitors LAUSD's compliance with state and federal special education laws. The School District has a policy of curing items of noncompliance with laws or regulations when noted by the CDOE. When the CDOE on February 16, 1990 found the School District out of compliance by excluding classroom teachers from IEP meetings, the CDOE and the School District negotiated over the course of the next two years to solve the problem. 33 Hopper argues that past regulatory noncompliance creates an inference that the School District lied when certifying future compliance. This is not sufficient evidence to establish knowing fraud under the Act.