Escobar Test for Implied Certification Liability Is Mandatory

In a major 9th Circuit opinion issued on August 24, 2018, US ex rel Rose vs. Stephens Institute, a trial court’s denial of summary judgment brought by Stephens Institute was affirmed. In this qui tam action, the realtors (parties bringing the claim on behalf of the United States) presented evidence that the school paid illegal compensation to its recruiters to enroll students. This included incentive payments of up to $30,000 and in some cases a free trip to Hawaii. Citing to previous cases such as Hendow vs. University of Phoenix and US ex rel Escobar, the panel said the key question is whether the false certification of compliance with the Department of Education’s incentive compensation ban (“ICB”) was relevant to the granting of federal student loans. This panel concluded that Escobar’s essential standard of materiality could result in the fact finder concluding that payment was conditioned on adherence to this standard. In determining the materiality of the government’s payment, the court included factors such as: 1) Was the payment of DOE funds conditioned on compliance; 2) did the DOE generally ban and/or fine schools that violated the ICB; 3) were the payments of a large amount or trivial.
       Stephen Danz & Associates (SD&A) represents whistleblowers (“realtors”) throughout the United States, in such fields as health care Medicare Part D, aerospace, finance and in all other major industries. The firm’s co-counsel is proud to have won judgments in the hundreds of millions of dollars for its clients over the past 30 years.
As California’s leading employee-side advocacy firm with offices in ten California cities, SD&A  is routinely selected as the law firm of choice by major qui tam law firms such as Phillips and Cohen and Michael Hirst, PC, seeking individual representation for their whistleblower clients needing separate representation for individual retaliation claims under 31 United States Codes 3730(h)(1). This law prevents employees, contractors and agents who complain about fraud from being “discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment.”
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