Magistrate to conduct settlement conference in an attempt to resolve the dispute involving potential millions of dollars in damages to College and other defendants
The six-year multi-million dollar lawsuit between the former director of aviation programs at Yavapai Community College, Dan Hamilton, and the College, is headed for a magistrate settlement conference in Flagstaff. The lawsuit was sent there by Federal District Court Judge Murray Snow who presides in Phoenix. The action against the College will be consolidated with the lawsuit involving NorthAire Aviation and Mr. Hamilton.
Members of the Community College District Governing Board met in executive session Wednesday, March 20 where they received legal advice regarding the lawsuit. They had no comment regarding the executive session. If the matter is not settled, it will go to trial in federal district court.
In the original action there were eleven parties including the plaintiff, nine defendants, and the United States Government. (Note that some named defendants are sued in different capacities, thus the extended list of parties.)
The Complaint was filed in federal court 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 a 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.
The lawsuit exposes the Community College, its partners and their agents to tens of millions in damages. (Any settlement funds agreed to by the College would apparently come from an insurance trust fund set up for public entities.)
Under the False Claims Act, the statute that allows whistle-blowers to sue on behalf of the federal government, those who defraud the government must repay three times the amount they fraudulently took, plus penalties. Whistle-blowers, like Dan Hamilton, if successful, can recover up to 30% of any moneys obtained for the government under the False Claims Act.
You may read Judge Snow’s most recent ruling (April 2018) by clicking here. 620 ORDER on MSJs[5372]