United States ex rel. Manuel v. Livingston Management, Inc.

932 F. Supp. 2d 674, 2012 WL 1656283
CourtDistrict Court, M.D. Louisiana
DecidedMay 10, 2012
DocketCivil Action No. 09-45-FJP-CN
StatusPublished

This text of 932 F. Supp. 2d 674 (United States ex rel. Manuel v. Livingston Management, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Manuel v. Livingston Management, Inc., 932 F. Supp. 2d 674, 2012 WL 1656283 (M.D. La. 2012).

Opinion

RULING

FRANK J. POLOZOLA, District Judge.

Defendant Livingston Management, Inc. has moved to dismiss plaintiffs’ complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure.1 The Plaintiffs (or “Relators”) have opposed the motion.2 For reasons which follow, the Court finds that defendant’s motion should be denied.

1. Factual Background & Complaint Allegations

The United States Department of Agriculture (USDA) oversees the Rural Development Program (RDP) to provide loans to construct or rehabilitate rental housing in rural communities. The Rural Housing Service is a credit agency under the USDA whose mission is to increase the availability of affordable housing for rural residents. Residents of multi-family housing units may apply for the Rental Assistance Program, whereby certain residents may have a portion of their rent subsidized.

Plaintiffs’ Complaint alleges that the Rural Development Program property managers, such as the defendant LMI, are required to provide documentation to the United States to ensure that the property is operated in compliance with the program’s federal requirements and guidelines. Relators allege that a significant number of tenants that occupied multifamily housing units managed by LMI re[678]*678ceived federal rental housing assistance through the USDA’s Rental Assistance Program. LMI was required to sign “Tenant Income Certifications” to ensure that the tenants complied with the program requirements.

On June 23, 2009, the relators filed this False Claims Act Complaint under seal. In their complaint, relators set forth details regarding an alleged scheme by the defendant to present false claims to the Government. Relators allege the following three counts: Count 1, False Certifications and Verifications; Count 2, Conspiracy to Submit False Claims; and Count 3, Conspiracy to Defraud and Kickbacks.3 The defendant has now moved to dismiss the complaint under Rules 9(b) and 12(b)(6)4 of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted.5

A. Count I

Count I of the Complaint alleges that LMI employees Connie Widner, Janet Molinario, Shelia Dupre, and others, “routinely and falsely under reported tenants’ income and misrepresented that said applicants met the Rural Development Program’s income requirements.”6 The complaint further alleges that these employees routinely forged tenants’ and managers’ signatures to Tenant Income Certifications to ensure the rent would continue to be paid to LMI under the program. Relators also allege LMI used the forged Tenant Income Certifications to obtain federal income tax credits under the federal Low Income Housing Tax Credit program.

As part of this alleged scheme, Relators contend they themselves were routinely required to copy old Tenant Certification forms previously signed and change the dates on the old certifications to make it appear that a new certification had been completed by the tenants as required by the program’s guidelines. The identified employees then attested knowledge that the Tenant Certification forms were complete and accurate, subsequently submitting the knowingly altered certifications electronically to the Rural Development Program.

Livingston Management contends relators fail to allege a plausible FCA certification claim other than a “vague reference” that the named employees submitted forged certifications to the Rural Development Program.7 Defendant contends that count I lacks any allegations concerning how the certifications relate to any payments from the government. Defendant further argues there are no allegations that the allegedly false information resulted in LMI receiving any money other than what it was already entitled to under the program. Defendant further contends that plaintiffs have failed to allege that any payments from the government were conditioned upon certification of compliance with the income requirements, which is a prerequisite in the Fifth Circuit to establish FCA liability.

B. Count II

Count II, entitled “Conspiracy to Submit False Claims,” alleges that LMI, through its employees, leased apartments to per[679]*679sons who had applied for Rural Development Program Rental Housing Assistance, but never moved into the federally subsidized apartments. Count II further alleges that LMI rented apartments previously allocated to qualified disabled persons to non-disabled tenants, thereby increasing the amount of rental income paid by the Government.

Defendant moves to dismiss this count, arguing that plaintiffs have failed to allege a conspiracy, i.e., that two or more persons formed a conspiracy. Defendant also contends count II lacks any allegations regarding a false representation or that a false representation was even made. Defendant further argues plaintiffs fail in count II to allege the requisite state of mind to support an FCA claim, and also fail to allege any facts showing that the conduct alleged had the potential to influence government decisions. Finally, defendant contends count II does not adequately allege that the false claims caused the government to pay any money.

C. Count III

Count III, entitled “Conspiracy to Defraud and Kickbacks,” alleges that LMI employees received “kickbacks” or had an ownership interest in Interstate Builders, a Louisiana company paid for repairs allegedly made to LMI-managed properties. Count III also alleges that LMI apartment managers were routinely required to assign repair jobs to Interstate Builders who would then bill and be paid for work not performed. Relators allege the fraudulent billing by Interstate Builders resulted in LMI receiving more money from the apartment complexes than that to which it was legally entitled under the fixed management fee agreement.

Defendant argues that count III is likewise deficient for the same reasons given above, and further that plaintiffs fail to make a connection between the activities alleged in count III and any government payment or claim.

The Court now turns to a discussion of the relevant law to be applied under the facts of this case.

II. Law & Analysis
A. The False Claims Act (“FCA”)

The False Claims Act prohibits: “1) the presentment of a false claim to the Government, 2) the use of a false record or statement to get a false claim paid, and 3) conspiracies to get a false claim paid.8 Liability for violation includes a liquidated civil penalty and damages, which need not be shown to state a claim but which if shown will be doubled and may be trebled.”

A complaint filed under the False Claims Act “must meet the heightened pleading standard of Rule 9(b), which provides: ‘In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.’ Rule 9(b) is an exception to Rule 8(a)’s simplified pleading that calls for a ‘short and plain statement of the claim.’ ”9

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Bluebook (online)
932 F. Supp. 2d 674, 2012 WL 1656283, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-manuel-v-livingston-management-inc-lamd-2012.