United States v. Corinthian Colleges

Nyoka Lee and Talala Mshuja (“Relators”), qui tam relators who bring this action on behalf of the United States government, appeal the district court’s judgment dismissing, without leave to amend, their original complaint (“Complaint”) against Corinthian Colleges, Inc. (“Corinthian”); David Moore, Jack D. Massimino, Paul St. Pierre, Alice T. Kane, Linda A. Skladany, Hank Adler, and Terry 0. Hartshorn (collectively “Individual Defendants”); and Ernst & Young LLP (“EY”), under Federal Rule of Civil Procedure 12(b)(6). Relators allege that Corinthian, with the help of EY, falsely certified to the Department of Education (“DOE”) its compliance with the Higher Education Act’s (“HEA”) ban on recruiter-incentive compensation in order to receive federal education funds, thereby violating the False Claims Act (“FCA”). The district court granted Corinthian’s and EY’s motions to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). The district court concluded that Relators had failed to allege a false statement and scienter, two elements of the FCA, because Corinthian’s recruiter Compensation Program as alleged falls within the HEA Safe Harbor Provision promulgated…