NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS DEC 28 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

DANIEL HAMILTON, ex rel United States No. 21-16732 of America, D.C. Nos. 3:12-cv-08193-GMS Plaintiff-Appellant, 3:15-cv-08095-GMS

v.

MEMORANDUM*

YAVAPAI COMMUNITY COLLEGE

DISTRICT; et al.,

Defendants-Appellees,

and

UNITED STATES OF AMERICA,

Real-party-in-interest.

DANIEL HAMILTON, ex rel United States No. 22-15414 of America, D.C. Nos. 3:12-cv-08193-GMS Plaintiff-Appellee, 3:15-cv-08095-GMS v.

YAVAPAI COMMUNITY COLLEGE

DISTRICT; et al.,

Defendants,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. NORTH-AIRE AVIATION LLC, an Arizona limited liability company; et al.,

Defendants,

UNITED STATES OF AMERICA,

Real-party-in-interest,

and

JOHN MORGAN; APRIL MORGAN,

Defendants-Appellants.

Appeal from the United States District Court for the District of Arizona G. Murray Snow, Chief District Judge, Presiding

Argued and Submitted December 5, 2022 Phoenix, Arizona

Before: WARDLAW and BUMATAY, Circuit Judges, and SCHREIER,** District Judge.

Daniel Hamilton sued Yavapai Community College District, Guidance

Academy, LLC, John and April Morgan, and others (collectively, the “Defendants”),

for allegedly violating the False Claims Act (“FCA”), § 31 U.S.C. § 3729 et seq. On

appeal, Hamilton challenges three rulings: (1) the district court’s denial of his motion

** The Honorable Karen E. Schreier, United States District Judge for the District of South Dakota, sitting by designation.

2 for judgment as a matter of law (“JMOL”) concerning FCA violations in Summer

2013 and 2014; (2) the district court’s refusal to provide a certain jury instruction on

materiality; and (3) the district court’s dismissal of FCA claims alleging violations

between Spring 2010 and Summer 2011. We have jurisdiction under 28 U.S.C. §

1291, and we affirm in part and vacate and remand in part.

1. Hamilton appeals the district court’s denial of JMOL. We review such

motions de novo. EEOC v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir.

2009). We conclude that, based on the evidence offered at trial, a jury could have

reasonably found that compliance with the 85/15 Rule, under which funds are

available to college programs with 85 percent or fewer veteran enrollment, was not

material to the Department of Veteran Affairs’ (“VA”) continued payment of claims

for the summer semesters in 2013 and 2014. See Universal Health Servs., Inc. v.

United States ex rel. Escobar, 579 U.S. 176, 195 (2016) (“[I]f the Government pays

a particular claim in full despite its actual knowledge that certain requirements were

violated, that is very strong evidence that those requirements are not material.”). For

example, the jury heard evidence that the VA audited both summer semesters. The

audits found that the Defendants were not compliant with the 85/15 Rule, yet neither

audit indicated that the Defendants were not entitled to reimbursements for the

classes. The jury also heard evidence of the VA’s knowledge of the Defendants’

prior noncompliance with the 85/15 Rule through Hamilton’s whistleblowing.

3 Based on this evidence, a reasonable jury could infer that compliance with the 85/15

Rule was not material to the Government’s continued payments for the two summer

semesters. We thus agree with the district court that a reasonable jury could find in

favor of the defense and JMOL was properly denied.

2. Hamilton also challenges the district court’s refusal to provide a jury

instruction that the government’s “actual knowledge” of a FCA violation must mean

the “decision-maker’s, the paying agent’s knowledge,” for purposes of materiality.

In general, a “party is entitled to an instruction about his [] theory of the case if

supported by law.” Gantt v. City of Los Angeles, 717 F.3d 702, 706 (9th Cir. 2013)

(internal quotation marks omitted). But, we have never held that FCA defendants

must establish the knowledge of a specific government “paying agent” or “decision-

maker” to establish the lack of materiality for a FCA claim. When addressing

materiality under the FCA, the Supreme Court refers broadly to the knowledge of

“the Government.” See, e.g., Escobar, 579 U.S. at 194. And when we have

discussed the government’s knowledge of a violation for purposes of materiality, we

have considered the knowledge of the “government” or the “Department” generally.

See, e.g., Winter ex rel. United States v. Gardens Reg'l Hosp. & Med. Ctr., Inc., 953

F.3d 1108, 1122 (9th Cir. 2020); United States ex rel. Rose v. Stephens Inst., 909

F.3d 1012, 1020–21 (9th Cir. 2018). And although in United States ex rel. Hagood

v. Sonoma Cty. Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991), we referred to

4 the knowledge of the “relevant government official,” that was in the context of the

defendants’ knowledge element—not materiality. Thus, the district court did not err

in declining to give this instruction.

3. Hamilton finally appeals the district court’s dismissal of his FCA claims

related to the Spring 2010 through Summer 2011 semesters because Hamilton failed

to adequately allege “knowledge” under the FCA. At oral argument, responses to

the panel’s questions indicated that Hamilton’s complaint could be amended to show

Defendants acted in reckless disregard of their obligations to comply with the VA’s

85/15 Rule during this time period. Reckless disregard or deliberate indifference of

the truth is sufficient to plead knowledge under the FCA. See Hooper v. Lockheed

Martin Corp., 688 F.3d 1037, 1050 (9th Cir. 2012). When a complaint can be cured,

leave to amend should be freely given. See AE ex rel. Hernandez v. Cty. of Tulare,

666 F.3d 631, 636 (9th Cir. 2012). We remand this case to the district court with

instructions to grant Hamilton leave to amend.

AFFIRMED in part and VACATED and REMANDED in part.

5