United States District Court, D. Hawaii
UNITED STATES OF AMERICA and THE STATE OF HAWAII ex rel. BETHANY J. LEWIS, Relator,
HONOLULU COMMUNITY ACTION PROGRAM, INC.; HONOLULU COMMUNITY ACTION PROGRAM dba HCAP HEAD START; ROBERT N.E. PIPER, in his individual capacity and as the Executive Director of HONOLULU COMMUNITY ACTION PROGRAM, INC.; LYNN K. CABATO, in her individual capacity and as Director of HCAP HEAD START; ROBYN ANTONUCCI, in her individual capacity and as Assistant Director of HCAP HEAD START; DONNA MANIBOG, in her individual capacity and as Assistant Director of HCAP HEAD START; SONIA CHAN, in her individual capacity and as Information Technology Manager of HCAP HEAD START, Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION TO DISMISS, ECF NO. 38 ORDER GRANTING
IN PART AND DENYING IN PART DEFENDANTS' MOTION TO
DISMISS, ECF NO. 38
Michael Seabright Chief United States District Judge.
Bethany J. Lewis (“Relator”), on behalf of
herself, the United States of America, and the State of
Hawaii, has filed a multicount qui tam action against
Defendants Honolulu Community Action Program, Inc.; Honolulu
Community Action Program, Inc., dba HCAP Head Start; Robert
N.E. Piper; Lynn K. Cabato; Robyn Antonucci; Donna Manibog;
and Sonia Chan (collectively, “Defendants”)
alleging various violations of the federal False Claims Act
(the “FCA”), under 31 U.S.C. § 3729, and
Hawaii's False Claims Act, under Hawaii Revised Statutes
(“HRS”) § 661-21. ECF No. 1. In the
Complaint, Relator alleges that Defendants used “ghost
children” - children who had applied to the program,
but were either not actually enrolled in the Head Start
program or had been dropped from the program - to increase
their enrollment levels to obtain Head Start funding.
Id. Defendants move to dismiss the Complaint for
failure to state a claim upon which relief can be granted.
ECF No. 38. For the following reasons, the Motion is GRANTED
IN PART and DENIED IN PART.
claims that HCAP Head Start, a private non-profit company,
received federal and State of Hawaii grants to provide
services to promote the school readiness of qualifying
children from low-income families. Compl. ¶¶ 24,
25, 27, 31. Relator alleges that from the 2010/2011 school
year to the 2015/2016 school year, HCAP Head Start was
required to enroll a certain number of children -
approximately 1, 650 children - to maintain its funding.
Id. ¶¶ 41-47. For these school years,
Relator alleges that HCAP Head Start increased the enrollment
numbers by wrongfully including the following groups in its
enrollment numbers: (1) children who applied but were never
enrolled; (2) children who applied but did not qualify; and
(3) children who were enrolled without completing the proper
enrollment procedures. Id. ¶¶ 48, 49.
Relator claims that Defendants used the term “ghost
children” to describe the children who fell into these
categories. Id. ¶¶ 49, 51. In the
Complaint, Relator alleges a number of different tactics that
Defendants used to falsify the enrollment numbers. See
Id. ¶¶ 52-58.
February 12, 2016, Relator filed the Complaint, on behalf of
herself, the United States of America, and the State of
Hawaii. ECF No. 1. Relator alleges: (Count I) Violation of
the Federal False Claims Act, 31 U.S.C. § 3729(a)(1)(A);
(Count II) Violation of the Federal False Claims Act, 31
U.S.C. § 3729(a)(1)(B); (Count III) Conspiracy to
Violate the Federal False Claims Act, 31 U.S.C. §
3729(a)(1)(C); (Count IV) Violation of the State False Claims
Act, HRS § 661-21(1); (Count V) Violation of the State
False Claims Act, HRS § 661-21(2); and (Count VI)
Conspiracy to Violate the State False Claims Act, HRS §
661-21(8). Id. The Complaint was unsealed by order
of the court on April 16, 2018 (order signed on April 13,
2018). ECF No. 31. Defendants filed their Motion to Dismiss
on June 18, 2018, ECF No. 38; Relator filed her Opposition on
August 20, 2018, ECF No. 49; and Defendants filed their Reply
on August 27, 2018, ECF No. 50. A hearing was held on
September 10, 2018.
STANDARD OF REVIEW
Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
for “failure to state a claim upon which relief can be
granted.” A Rule 12(b)(6) dismissal is proper when
there is either a “lack of a cognizable legal theory or
the absence of sufficient facts alleged.” UMG
Recordings, Inc. v. Shelter Capital Partners, LLC, 718
F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v.
Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)); see also Weber v. Dep't of Veterans
Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008). This tenet
- that the court must accept as true all of the allegations
contained in the complaint - “is inapplicable to legal
conclusions, ” and “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S.
at 678 (citing Twombly, 550 U.S. at 555). Rather,
“[a] claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). Factual allegations that
only permit the court to infer “the mere possibility of
misconduct” do not show that the pleader is entitled to
relief. Id. at 679.
argue that Counts I, II, IV, and V fail to allege fraud with
particularity under Federal Rule of Civil Procedure 9(b). The
court disagrees. Defendants also argue that Counts III and VI
fail to allege conspiracy between two or more legally
independent parties, and Relator concedes the issue.
Accordingly, the Motion is GRANTED in part and DENIED in
Counts Alleging Fraud ...