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United States ex rel. Ruotsinoja v. Board of Governors of Colorado State University System

United States District Court, D. Colorado

May 19, 2014



R. BROOKE JACKSON, District Judge.

Before the Court is a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) filed by defendant, the Board of Governors of Colorado State University ("the Board"). The case arises under the qui tam provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3730, and therefore the Court has jurisdiction pursuant to 28 U.S.C. § 1331. The Court concludes that the Board is an "arm-of-the-state" immune from qui tam lawsuits where the United States has declined to intervene and therefore grants the motion.

I. Factual Background

This case was filed by Mr. Edwin Ruotsinoja, the former Director of Business and Financial Services for Colorado State University ("CSU"). He alleges that CSU has presented false claims for payment to the federal government, causing the university to collect more money than it was entitled to receive under federal grant programs administered by the Department of Health and Human Services. [ECF No. 36 at 1-3.] CSU is a land-grant university in Colorado, and it is designated as the exclusive university to offer agricultural and forestry programs in the state. Colo. Rev. Stat. § 23-31-101.

II. Procedural Background

On February 1, 2012, Mr. Routsinoja filed under seal his complaint against CSU. The U.S. Department of Justice investigated this initial complaint but ultimately declined to intervene on July 3, 2013.[1] Defendant filed a motion to dismiss on January 16, 2014 stating that the Board of Trustees was the only entity capable of being sued in this case. In response, Mr. Routsinoja amended his complaint on February 6, 2014, substituting the Board as the defendant. The Board now moves to dismiss the amended complaint on the grounds that the Board is not a person for purposes of the FCA when the United States has declined to intervene, and that alternatively, the Eleventh Amendment provides immunity from suit.

III. Discussion

a. Standard of Review.

In the context of qui tam litigation, whether the court has subject matter jurisdiction is often only answered by considering the merits. For that reason, courts treat motions to dismiss for lack of subject matter jurisdiction in qui tam actions as motions to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6). United States ex rel. Fine v. MK-Ferguson Co., 99 F.3d 1538, 1543 (10th Cir. 1996) ("When a court's subject matter jurisdiction depends upon the same statute that creates the substantive claims, the jurisdictional inquiry is necessarily intertwined with the merits.... This court has determined that these intertwined' jurisdictional inquiries should be resolved under Federal Rule of Civil Procedure 12(b)(6)....") (citations omitted).

When reviewing a factual attack on subject matter jurisdiction, a district court may not presume the truthfulness of the complaint's factual allegations. A court has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1). In such instances, a court's reference to evidence outside the pleadings does not convert the motion to a Rule 56 motion.

Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995) (citations omitted).

b. CSU is an Arm-of-the-State for Purposes of the False Claims Act.

The False Claims Act creates civil penalties for submitting false claims for payment to the United States government. 31 U.S.C. § 3729. The Act may be enforced by the Attorney General, but the statute also authorizes civil suits by private citizens on behalf of the United States. 31 U.S.C. § 3730. These private actions are referred to as qui tam actions. Yet when a private citizen brings suit under these provisions, certain limitations apply. One limitation in particular is relevant to this motion: in cases where a private individual brings the suit "the False Claims Act does not subject a State (or state agency) to liability in such actions." Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 778 (2000).

The United States Supreme Court created this exception for States after recognizing the "virtual coincidence of scope" between the statutory question of whether an entity is a "person" for purposes of the FCA and the constitutional question of whether the entity is immune from suit under the Eleventh Amendment. Id. at 780. Because of this "coincidence of scope" the Tenth Circuit has "conclude[d] that the appropriate approach to determine if a state-related entity is subject to liability under the FCA is to apply Eleventh Amendment arm-of-the-state analysis." United States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 718 (10th Cir. 2006). This analysis exists to immunize those entities that ...

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