Federal court again refuses to dismiss various claims brought by former employee
Yavapai Community College and other defendants have been fighting the lawsuit in Federal District court in Phoenix brought by former director of aviation programs at Yavapai College, Dan Hamilton, for five years. United States District Judge G. Murray Snow issued his latest 31-page detailed order on April 13, 2018, and allowed all fraud claim counts to proceed to trial against all defendants. Hamilton has alleged several theories of fraud and any one of them exposes the College to potentially tens of millions of damages. The judge approved all but one of Hamilton’s theories for trial.
Shortly after the April order was issued by Judge Snow, the College moved the court to reconsider one of the theories of Hamilton’s retaliation claims. Judge Snow denied the motion for reconsideration, meaning Hamilton’s retaliation claims also go forward.
The Complaint was filed by the former director of aviation programs at Yavapai College, Dan Hamilton, and alleges, among other things, that Yavapai College and its airplane program partner, NorthAire Aviation, violated the Veteran’s Administration funding rule that limits VA beneficiary enrollment to 85% in any program. (In other words, the program must have at least 15% of its enrollees as civilians.)
The Complaint alleges schemes wherein NorthAire improperly paid for students whom the program certified were not receiving any institutional aid and that the program improperly counted students who were not in the airplane program including part-time, non-flight training, high school students for whom YC waived tuition. The 85% enrollment limitation is the VA’s safeguard to guarantee that the programs have real world relevance, demand and market driven pricing.
In an earlier ruling made December 6, 2016, Judge Murray Snow denied a motion to dismiss filed by Yavapai College’s partner NorthAire. NorthAire argued that because it was a mere contractor with the College who did not, itself, submit the claims or certifications to the VA, it could not be held liable for the program’s fraud.
The Court disagreed, holding that “liability extends to any person who knowingly assisted in causing the government to pay claims which were grounded in fraud, without regard to whether that person had direct contractual relations with the government.” The Court found that Hamilton’s Complaint amply alleged details of how NorthAire knew the YC airplane program was violating VA regulations and thus defrauding the VA. Indeed, the Court said Hamilton could proceed on his claim that NorthAire and YC conspired to defraud the VA. The Court dismissed the alternative theory that the airplane program improperly retained overpayments finding that the Complaint alleged more than a mere retention of an overpayment. “Rather, the Complaint alleges that the Defendants mislead the VA to receive funds that they did not have a right to.” This ruling follows the Court’s earlier decision denying summary judgment in a case against YC’s Helicopter Program. Both cases are now on proceeding toward trial. Both expose the college, its partners and their agents to $10s of millions in damages.
Under the False Claims Act, the statute that allows whistleblowers to sue on behalf of the federal government, those who defraud the government must repay three times the amount they fraudulently took, plus penalties. Whistleblowers, like Dan Hamilton, can recover up to 30% of any moneys obtained for the government under the False Claims Act.