ILNews

7th Circuit reverses sanctions against Plews Shadley, other firms in False Claims Act case

Back to TopCommentsE-mailPrintBookmark and Share

After finding that a federal court in Indianapolis erred in dismissing a former ITT Educational Services Inc. employee’s False Claims Act lawsuit, the 7th Circuit Court of Appeals reversed the nearly $350,000 in sanctions imposed against three law firms representing the woman.

Debra Leveski worked at ITT for more than 10 years – first as an inside recruitment representative, then as a financial aid administrator. After she left the company following the settlement of a sexual harassment suit she filed against ITT, she was contacted by Mississippi attorney Timothy J. Mathusheski. The attorney sought former ITT employees to bring an FCA suit.

Leveski, who had been told by supervisors and other employees that her pay increases as a recruit representative and financial aid administrator depended on the numbers of students who, among other things, enrolled and received financial aid, decided to file the suit on behalf of the government in 2007. Indianapolis firm Plews Shadley Racher & Braun LLP and Motley Rice LLP, headquartered in Charleston, S.C., later joined as Leveski’s attorneys along with Mathusheski.

The suit alleges that ITT, headquartered in Carmel, knowingly submitted false claims to the Department of Education in order to receive funding from federal student financial assistance programs. The suit survived two motions to dismiss in District Court, although the timeframe in the suit was limited to July 2001 to July 2007. But when the case was transferred to Judge Tanya Walton Pratt, she dismissed it for want of jurisdiction. Walton Pratt said Leveski’s allegations had already been publicly disclosed in United States ex rel. Graves v. ITT Educ. Servs. Inc., 284 F. Supp. 2d 487 (S.D. Tex. 2003), and she was not the original source of her allegations. The judge also sanctioned the three firms and Mathusheski $394,998.33 for filing a suit she deemed frivolous.

The 7th Circuit found Leveski’s allegations are not substantially similar to the relators’ allegations in Graves. In Graves, two former employees who worked for ITT as inside recruitment representatives for less than two years alleged ITT violated the Higher Education Act by illegally paying incentive compensation to its RRs. The law in effect at the time of the lawsuit prohibited adjusting compensation for student recruiters and financial aid officers based solely on the number of students recruited, admitted, enrolled or awarded financial aid.

The sham compensation scheme and the financial aid violations alleged by Leveski are different than the outright quota system alleged by the Graves relators, Judge John Daniel Tinder wrote in Debra Leveski v. ITT Educational Services, Inc. and Appeals of: Motley Rice LLP, Plews Shadley Racher & Braun LLP, The Law Offices of Timothy J. Matusheski and Timothy J. Matusheski, 12-1369, 12-1967, 12-1979, 12-2008, 12-2891.

And those allegations are different enough from the Graves allegations to bring her suit outside the public disclosure bar of 31 U.S.C. § 3730(e)(4).

“We believe that Leveski’s case is yet another instance of a district court dismissing an FCA suit after viewing the allegations at too high a level of generality,” Tinder concluded.

Her case rests on genuinely new and material information, so the District Court had subject-matter jurisdiction over her case under Section 3730(e)(4)(A). The judges also found that Leveski has direct and independent knowledge of her allegations, and thus, is the original source of them.

Because the 7th Circuit found the case merits further development and Leveski’s allegations are sufficiently distinct from prior public disclosures, the sanctions against the law firms also were reversed.

“We do not know whether Leveski will ultimately prevail, nor do we state any opinion as to whether Leveski should ultimately prevail. But we do believe that Leveski should be allowed to litigate her case on the merits, and thus, sanctions for bringing a frivolous lawsuit are inappropriate,” Tinder wrote. If it turns out Leveski made up all of her allegations and supporting evidence, then sanctions may be warranted.

After the ruling Monday, PSRB managing partner John Ketcham said in a statement, “We are gratified that the Seventh Circuit has held this case is ‘substantial’, which is what our client has contended all along, and reversed the sanctions.”

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. No second amendment, pro life, pro traditional marriage, reagan or trump tshirts will be sold either. And you cannot draw Mohammed even in your own notebook. And you must wear a helmet at all times while at the fair. And no lawyer jokes can be told except in the designated protest area. And next year no crucifixes, since they are uber offensive to all but Catholics. Have a nice bland day here in the Lego movie. Remember ... Everything is awesome comrades.

  2. Thank you for this post . I just bought a LG External DVD It came with Cyber pwr 2 go . It would not play on Lenovo Idea pad w/8.1 . Your recommended free VLC worked great .

  3. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  4. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

  5. I have no doubt that the ADA and related laws provide that many disabilities must be addressed. The question, however, is "by whom?" Many people get dealt bad cards by life. Some are deaf. Some are blind. Some are crippled. Why is it the business of the state to "collectivize" these problems and to force those who are NOT so afflicted to pay for those who are? The fact that this litigant was a mere spectator and not a party is chilling. What happens when somebody who speaks only East Bazurkistanish wants a translator so that he can "understand" the proceedings in a case in which he has NO interest? Do I and all other taxpayers have to cough up? It would seem so. ADA should be amended to provide a simple rule: "Your handicap, YOUR problem". This would apply particularly to handicapped parking spaces, where it seems that if the "handicap" is an ingrown toenail, the government comes rushing in to assist the poor downtrodden victim. I would grant wounded vets (IED victims come to mind in particular) a pass on this.. but others? Nope.

ADVERTISEMENT