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United States Court of Appeals for the Ninth Circuit
December 6, 2017, Argued and Submitted, San Francisco, California; August 24, 2018, Filed
[*1127] GRABER, Circuit Judge:
This qui tam action, brought under the False Claims Act [**6] , comes to us on interlocutory appeal from the district court's denial of summary judgment so that we can settle questions of law posed in the wake of Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 195 L. Ed. 2d 348 (2016). We affirm.
FACTUAL AND PROCEDURAL HISTORY3
Defendant Stephens Institute, doing business as Academy of Art University, is an art school in San Francisco that offers undergraduate and graduate degrees. Defendant receives federal funding [*1128] —in the form of federal financial aid to its students—through various funding programs available under Title IV of the Higher Education Act. To qualify for that funding, Defendant entered into a program participation agreement with the Department of Education ("Department"), in which it pledged to follow various requirements, including the incentive compensation ban. The incentive compensation ban prohibits schools from rewarding admissions officers for enrolling higher numbers of students. 20 U.S.C. § 1094(a)(20); 34 C.F.R. § 668.14(b)(22).
In 2006, Defendant's admissions department instituted a new policy to encourage admissions representatives to enroll more students. The policy established an enrollment goal for each admissions representative. If a representative succeeded in enrolling that number of students, he or she would receive a salary [**7] increase of up to $30,000. Conversely, a representative could have his or her salary decreased by as much as $30,000 for failing to reach the assigned enrollment goal. Defendant characterized those adjustments as dependent on both quantitative success, meaning a representative's enrollment numbers, and qualitative success, meaning the representative's non-enrollment performance. But, in practice, the employees understood that their salary adjustments rested entirely on their enrollment numbers. Defendant rewarded one team of representatives with an expense-paid trip to Hawaii. The team received that reward solely because of their enrollment numbers.
That enrollment incentive policy remained in place until 2009, when Defendant instituted new enrollment goals and a "scorecard" system for calculating salary adjustments. The scorecard system involved separate salary adjustment calculations for qualitative and quantitative performance. An admissions representative could receive an adjustment of as much as $23,000 for quantitative performance alone; adjustments related to qualitative performance topped out at $6,000. Managers were told not to share those scorecards with admissions representatives [**8] because of concerns about compliance with the participation agreement. The scorecard policy remained in effect until 2010.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
901 F.3d 1124 *; 2018 U.S. App. LEXIS 23977 **
UNITED STATES EX REL. SCOTT ROSE; MARY AQUINO; MITCHELL NELSON; LUCY STEARNS, Plaintiffs-Appellees, v. STEPHENS INSTITUTE, dba Academy of Art University, Defendant-Appellant.
Subsequent History: Petition denied by United States ex rel. Rose v. Stephens Inst., 2018 U.S. App. LEXIS 33177 (9th Cir. Cal., Nov. 26, 2018)
Modified by, Rehearing denied by, Rehearing, en banc, denied by, 11/26/2018
Substituted opinion at, Decision reached on appeal by United States ex rel. Rose v. Stephens Inst., 909 F.3d 1012, 2018 U.S. App. LEXIS 33176 (9th Cir. Cal., Nov. 26, 2018)
Prior History: [**1] Appeal from the United States District Court for the Northern District of California. D.C. No. 4:09-cv-05966-PJH. Phyllis J. Hamilton, Chief Judge, Presiding.
Rose v. Stephens Inst., 2016 U.S. Dist. LEXIS 59483 (N.D. Cal., May 4, 2016)
ban, violations, compliance, enrollment, noncompliance, schools, funds, False Claims Act, conditioned, rigorous, misrepresentation, regulation, false certificate, demanding, summary judgment, falsity, certification, cases, condition of payment, actual knowledge, contractual, quotation, salary, marks, participation agreement, district court, immateriality, terminating, clarified, questions
Education Law, Administration & Operation, Student Admissions, Student Financial Aid, Governments, Federal Government, Claims By & Against, Courts, Judicial Precedent