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United States v. Honolulu Community Action Program, Inc.

United States District Court, D. Hawaii

September 27, 2019





         Defendants Honolulu Community Action Program, Inc. (“HCAP”); Honolulu Community Action Program, Inc., dba, HCAP Head Start (“HCAP HS”); and certain individual Defendants[1] affiliated with HCAP or HCAP HS (collectively, “Defendants”) move for summary judgment on all remaining counts in this qui tam action brought under 31 U.S.C. § 3730(b) by Relator Bethany J. Lewis (“Relator”).[2] ECF No. 76. After fully considering all written and oral argument, the court GRANTS the motion.


         HCAP HS is a private non-profit company that receives federal grants to provide services promoting the school readiness of qualifying children from low-income families through a Head Start program. Compl. ¶¶ 23 to 27, ECF No. 1 at PageID #8-9; Kogami Decl. ¶ 3, ECF No. 76-5 at PageID #641-42. As summarized in the September 13, 2018 Order, this action alleges violations by Defendants of the federal False Claims Act (the “FCA”), 31 U.S.C. § 3729 et seq., and Hawaii’s False Claims Act, Hawaii Revised Statutes § 661-21 et seq., regarding enrollment levels of students in HCAP HS. Specifically, Relator alleges a scheme whereby Defendants used “ghost children”-described as children who had applied to the Head Start program but were either not actually enrolled in the program or had been dropped from the program-to increase falsely HCAP HS’s enrollment levels to obtain Head Start funding from the United States Department of Health and Human Services. ECF No. 1 at PageID #4-5, 11-17.

         Relator alleges that from the 2009-10 to 2015-16 school years, HCAP HS was required to enroll from 1, 650 to 1659 children (as indicated in its grant awards) to maintain its funding. Id. at PageID #11 to 12; see also ECF No. 76-9. For these school years, Relator alleges that HCAP HS inflated the enrollment numbers by wrongfully including the following groups in its enrollment: (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. ECF No. 1 at PageID #12. Relator alleges several different tactics that Defendants used to falsify the enrollment numbers. See Id . at PageID #12 to 17. The court discusses specific evidence (or lack thereof) supporting Relator’s claims, and the specific legal and regulatory context, only as necessary when addressing the arguments of the parties in the Discussion section to follow.

         The counts remaining after the September 13, 2018 Order are:

• Count One (violations of the False Claims Act, 31 U.S.C. § 3729(a)(1)(A));
• Count Two (violations of the False Claims Act, 31 U.S.C. § 3729(a)(1)(B));
• Count Four (violations of the Hawaii False Claims Act, Haw. Rev. Stat. § 661-21(a)(1)); and
• Count Five (violations of the Hawaii False Claims Act, Haw. Rev. Stat. § 661-21(a)(2)).

         On June 10, 2019, Defendants filed their Motion for Summary Judgment, arguing that they are entitled to judgment as a matter of law and that Relator has insufficient evidence, if any, to support all elements of her claims. ECF No. 76. On August 26, 2019, Relator filed her Opposition, ECF No. 79, and Defendants filed their Reply on August 30, 2019, ECF No. 81. The court heard the motion on September 17, 2019.


         Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Rule 56(a) mandates summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to the party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).

         “A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see also Jespersen v. Harrah’s Operating Co., 392 F.3d 1076, 1079 (9th Cir. 2004). “When the moving party has carried its burden under Rule 56[(a)] its opponent must do more than simply show that there is some metaphysical doubt as to the material facts [and] come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citation and internal quotation marks omitted).

         “An issue is ‘genuine’ only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is ‘material’ only if it could affect the outcome of the suit under the governing law.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). When considering the evidence on a motion for summary judgment, the court must draw all reasonable inferences in the light most favorable to the nonmoving party. Friedman v. Live Nation Merch., Inc., 833 F.3d 1180, 1184 (9th Cir. 2016).


         A. The State Law Claims Fail

         Initially, Counts Four and Five-the Hawaii False Claims Act claims-fail as a matter of law.[3] Defendants proffer undisputed evidence that no State of Hawaii funds were ever at issue. See Kogami Decl. ¶ 4, ECF No. 76-5 at PageID #642 (“[T]he State does not pay any amount to HCAP and HCAP HS does not bill the State for any amounts related to the Head Start program. The State of Hawaii did not provide any funding for HCAP’s Head Start grants for the School years . . . 2014 through 2018.”); Piper Decl. ¶ 7, ECF No. 76-6 at PageID #646 (“Head Start grants do not and never have included any monetary payments from the State of Hawaii.”); Cabato Decl. ¶ 6, ECF No. 76-7 at PageID #649 (“[F]rom 2010 to 2017, Head Start grants did not include any monetary payments from the State of Hawaii.”).

         Relator offered no evidence contradicting these statements in her opposition, and she acknowledged at the September 17, 2019, hearing that she has no such evidence. Accordingly, Defendants cannot be liable for violating Hawaii’s False Claims Act-they could not have made a “claim” under the Hawaii Act. See Haw. Rev. Stat. § 661-21(e) (defining “claim” as requiring, among other things, that “the State provides or has provided any portion of the money or property that is requested . . . or will reimburse the contractor, grantee, or other recipient for any portion of the money or property that is requested”) (emphasis added). The motion is GRANTED as to Counts Four and Five.

         B. The Federal False ...

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