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Tuesday, July 09, 2013

Ind. Decisions - "7th Circuit Panel Reinstates False Claims Suit Against ITT "

Yesterday's 7th Circuit opinion in DEBRA LEVESKI v. ITT EDUCATIONAL SERVICES (see ILB summary here) is the subject of a brief InsideHigherEd story today. Some quotes:

A federal appeals court on Monday reinstated a federal False Claims Act lawsuit brought against ITT Educational Services, Inc. by a former enrollment official. A federal judge in Indiana dismissed the suit against the for-profit higher education provider last year, saying the court did not have jurisdiction because the plaintiffs in the case were not the original source of the allegations against the company, as is required under the false claims law. The court also slapped the plaintiffs with nearly $400,000 in fines for having brought, in the judge's words, a "frivolous" lawsuit.

A unanimous three-judge panel of the U.S. Court of Appeals for the Seventh Circuit sharply disagreed Monday. * * *

In directing the lower court to consider the case, and in at least temporarily reversing the financial penalties against her lawyer, the court said: "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."

The ILB has also received this statement from the Indianapolis law firm of Plews Shadley Racher & Braun LLP (PSRB):
INDIANAPOLIS – The Seventh Circuit Court of Appeals has ruled that a lawsuit brought against ITT Educational Services, Inc. should be allowed to proceed. The Seventh Circuit has reversed a decision by U.S. District Court Judge Tonya Walton Pratt dismissing the lawsuit brought against ITT by former employee Debra Leveski, represented in part by Indianapolis-based Plews Shadley Racher & Braun LLP (PSRB).

Leveski alleges that ITT Educational Services knowingly submitted false claims to the U.S. Department of Education to receive funding from federal student financial assistance programs. The district court dismissed the lawsuit saying that Leveski’s claims had already been publicly disclosed and she was not the original source of her allegations. However, the Seventh Circuit says Leveski’s allegations merit further development and are distinct from prior public disclosures.

At the time the lawsuit was dismissed by Judge Walton Pratt, she also issued sanctions against all of the lawyers involved in the suit. The Seventh Circuit has reversed the decision, including an action directed against PSRB.

“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,” said PSRB Managing Partner John Ketcham.

Posted by Marcia Oddi on July 9, 2013 08:54 AM
Posted to Ind. (7th Cir.) Decisions