United States ex rel. Coffman v. City of Leavenworth

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON CHIEF UNITED STATES DISTRICT JUDGE.

         Plaintiff-Relator Michele Coffman filed this qui tam action against Defendant the City of Leavenworth, Kansas (“the City”), alleging that it committed fraud on the federal government by making a false claim for reimbursement to the Federal Emergency Management Agency (“FEMA”) and fraudulently billing federal agencies for sewage service. This matter is before the Court on the parties' cross motions for summary judgment (Docs. 92 and 94). The motions are fully briefed and the Court is prepared to rule. For the reasons stated below, the Court denies Plaintiff's motion for partial summary judgment and grants in part the City's motion for summary judgment.

         I. SUMMARY JUDGMENT STANDARDS

         Summary judgment is appropriate if the moving party demonstrates “that there is no genuine dispute as to any material fact” and that it is “entitled to judgment as a matter of law.”^[1]In applying this standard, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.^[2] “There is no genuine [dispute] of material fact unless the evidence, construed in the light most favorable to the non-moving party, is such that a reasonable jury could return a verdict for the non-moving party.”^[3] A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.”^[4] A dispute of fact is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.”^[5]

         The moving party initially must show the absence of a genuine dispute of material fact and entitlement to judgment as a matter of law.^[6] In attempting to meet this standard, a movant who does not bear the ultimate burden of persuasion at trial need not negate the nonmovant's claim; rather, the movant need simply point out to the court a lack of evidence for the nonmovant on an essential element of the nonmovant's claim.^[7]

         Once the movant has met the initial burden of showing the absence of a genuine dispute of material fact, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”^[8] The nonmoving party may not simply rest upon its pleadings to satisfy its burden.^[9] Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.”^[10] In setting forward these specific facts, the nonmovant must identify the facts “by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.”^[11] To successfully oppose summary judgment, the nonmovant must bring forward more than a mere scintilla of evidence in support of his position.^[12] A nonmovant may not create a genuine issue of material fact with unsupported, conclusory allegations.”^[13]

         Finally, summary judgment is not a “disfavored procedural shortcut”; on the contrary, it is an important procedure “designed to secure the just, speedy, and inexpensive determination of every action.”^[14] “Where, as here, the parties file cross-motions for summary judgment, [the Court is] entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts.”^[15] The Court considers cross-motions separately: the denial of one does not require the grant of the other.^[16] “To the extent the cross-motions overlap, however, the Court may address the legal arguments together.”^[17] The material facts are undisputed in this case, and the legal issues asserted in both motions overlap. The Court will therefore address those issues together.

         II. UNCONTROVERTED FACTS

         The following material facts are either uncontroverted or, if controverted, are construed in the light most favorable to the nonmovant.

         A. The Parties and Relevant Entities

         The City is a municipal government in the State of Kansas. It operates a wastewater treatment plant (the “WTP”) that provides sewage and wastewater treatment services for its residents. It also provides wastewater treatment services to the Veterans Administration (“VA”), the United States Army (“Army”), and the United States Department of Justice Bureau of Prisons (“BOP”) pursuant to contracts it has with these federal agencies. The City entered into contracts with the Army and the BOP for sewage service in 1974, and with the VA in 1978.

         At all times relevant to this litigation, Charles Klingler was the WTP's Superintendent, Michael McDonald was the City Engineer and Director of Public Works (“Public Works Director”), and Scott Miller was the City Manager. Chad Lough was the WTP's Assistant Superintendent from July 22, 2010 until June 20, 2012.

         Plaintiff worked at the WTP from 2010 to 2013. She began as a Class I Operator, rose to the rank of Assistant Superintendent, and resigned after being demoted to a Class II Operator. She filed this qui tam action, alleging, inter alia, she was constructively discharged after she began asking questions about billing irregularities.

         B. Regulatory Overview

         The Clean Water Act prohibits “the discharge of any pollutant by any person” into waters of the United States, except in accordance with certain provisions of the Act.^[18] To comply with the Act, pollutant dischargers can obtain a permit through the National Pollutant Discharge Elimination System (“NPDES”) permit program, administered by the Environmental Protection Agency (“EPA”) and authorized states.^[19] “NPDES permits impose limitations on the discharge of pollutants, and establish related monitoring and reporting requirements, in order to improve the cleanliness and safety of the Nation's waters.”^[20] “Noncompliance with a permit constitutes a violation of the Act.”^[21]

         The EPA delegated to the Kansas Department of Health and Environment (“KDHE”) the authority to regulate wastewater discharge in the state of Kansas.^[22] The KDHE issues the NPDES permits in Kansas and monitors compliance with the permits.

         During the relevant period, the City held two NPDES permits, one effective from 2008 through 2012, and the other effective from January 2013 through 2017. These permits allowed the City to discharge treated effluent from its wastewater treatment plant into the Missouri River. Under both NPDES permits, the City was required to report all bypasses to KDHE. A “bypass” is an intentional or unintentional diversion of a waste stream from any portion of a treatment facility.

         Standard Condition 8 of the City's 2008 NPDES permit required the City to “at all times maintain in good working order and efficiently and effectively operate all treatment, collection, control systems or facilities to achieve compliance with the terms of this permit . . . .”^[23] Standard Condition 6 of the 2013 permit required the City to “at all times properly operate and maintain all facilities and systems of treatment and control (and related appurtenances) which are installed or used by the permittee to achieve compliance with the requirements of this permit and Kansas and Federal Law.”^[24]

         C. The Broken Sewer Line

         On or around August 25, 2010, WTP operators discovered a break in a sewer line that crosses Five-Mile Creek in front of the WTP, between manholes AAB and ABA (also referred to as manholes 4284 and 4268). Then Assistant Superintendent Chad Lough reported the break to KDHE on August 25, 2010. His report stated: “Erosion caused large sections of concrete to slide down the hill and damage [the] pipe crossing the creek.”^[25] Under “Date Bypass Ended, ” Lough marked “N/A.”^[26]

         In response to the break, Superintendent Klingler directed operators to place an inflatable plug into the pipe inlet at Manhole AAB to stop backflow from the manhole from entering the line and escaping into the creek. The inflatable plug ruptured at some point and was replaced by sandbags.

         On August 27, 2010, EPA representative Mike Boeglin called Public Works Director McDonald to discuss a citizen complaint about the broken line. McDonald told him the City was aware of the break, had reported it to KDHE, and had already undertaken efforts to plug the line.

         On August 28, 2010, KDHE environmental scientist Vic Montgomery met with Superintendent Klingler at the WTP to inspect the broken pipe. Montgomery directed Klingler to discharge treated effluent from the final clarifiers into the creek to improve the smell and color of the creek. Montgomery considered the effluent discharge not a violation of the City's NPDES permit.

         On or about October 8, 2010, KDHE district engineer Helen Holm inspected the WTP for compliance with the City's NPDES permit.^[27] In her inspection report, she indicated, in pertinent part, that: 1) the laboratory data indicated compliance with permit effluent limitations since the last inspection, and 2) the City had reported all bypasses properly.^[28]

         On November 17, 2010, KDHE representative Chris Seeds sent Assistant Superintendent Lough an e-mail asking about the status of the broken line. Lough responded:

The bypass report dated . . . 8/25/10 was for the creek crossing located at the east side of our facility. This bypass was not a planned bypass. The pipe that crosses the creek is damaged. Flow from that line upstream is minimal (only one business on that service and it's an asphalt production plant). On our side of the creek[, ] there are 35-50 sand bags in place in front of the line minimizing flow back towards the creek. This project is currently under review for repair and or replacement of the pipe that crosses the creek.^[29]

         WTP operators were unable to successfully “camera” the broken line to determine the exact location of the break until January 25, 2011. In February 2011, the City contracted with Water Resource Solutions to prepare a design study for use in the project to repair the broken line and re-stabilize the creek bank.

         In April 2011, the City received notice from the Army Corps of Engineers that it would experience flooding. The City undertook certain mitigation measures in anticipation of the flood to prevent damage to the WTP.

         On June 7, 2011, Seeds asked Lough if the broken line had been repaired. Lough responded on June 13, “This repair has not been completed. I do believe that there are some proposals/plans available from the Engineering Dept. or Charles Klingler . . . .”^[30]

         On November 17, 2011, Linaweaver Construction capped the broken line by filling it with concrete. The work to cap the pipe took “a day or two.”^[31] Following this repair, the sewer line no longer leaked. The City notified KDHE the same day that the bypass had ended. The City paid $7, 021.00 for the repair.

         D. Submissions to FEMA

         From May 19, 2011 to June 14, 2011, the Missouri River flooded due to record snow and rainfall.^[32] On September 23, 2011, FEMA declared the 2011 Missouri River flood to be a “Major Disaster, ” and designated the incident as “Kansas Flooding (DR-4035).”^[33] Following a natural disaster, FEMA representatives work with cities to prepare a standardized “Project Worksheet” (“PW”) document that FEMA prepares as part of a formal request for reimbursements.^[34]

         Kansas Department of Emergency Management (“KDEM”) project specialist Les Money acted as the liaison between the City and FEMA, and was responsible for gathering the information compiled by FEMA for the PW. On December 11, 2011, FEMA representative Thomas Montgomery sent Les Money an email advising of his decision to include the broken sewer line in the PW and asked for: 1) a description of work completed; 2) copies of invoices for work completed; 3) manhole numbers at each end of the break; 4) size of the damaged pipe; 5) length of pipe to replace; 6) brief description of repair/replacement process; and 7) estimated cost of repair/replacement.^[35] Montgomery's request was forwarded to Superintendent McDonald, who responded via email on December 12, 2011.

         City Finance Director Dan Williamson decided not to submit a claim for repairs to the broken sewer pipe because that project had been on the City's improvement list prior to the flood. Ultimately, on December 13, 2011, the City submitted a claim to FEMA requesting $22, 966.73, which was the cost of: 1) removing debris in the bar screen building; 2) removing excessive grit in the clarification chamber building; and 3) unclogging sewer lines in approximately 20 locations.^[36]

         E. Plant Maintenance

         The WTP consists of primary clarifiers, trickling filters, final clarifiers, holding tanks for sludge, a belt press to dewater sludge, and a UV treatment building. The WTP utilizes three large vertical towers called “trickling filters, ” which contain microorganisms utilized in the wastewater treatment process. At some point in 2012, operators discovered that the bearings in Trickling Filters #1 and #2 were deteriorating, which periodically caused the distributor arms to stop turning. This, in turn, periodically caused water from inside the filters to escape through the bottom air vent, which was a bypass event.

         Trickling Filter #1 was eventually taken out of service because parts necessary to repair it were unavailable. The WTP placed Trickling Filter #2 on an aggressive maintenance schedule. Following implementation of the maintenance schedule in July 2013, there were no further bypasses. KDHE district engineer Helen Holm made specific note of the issues with Trickling Filters #1 and #2 in her December 2014 inspection report, and determined that because the City had properly notified KDHE of the issues and was attempting to remedy them, the City was not in violation of Standard Condition 6 of its NPDES permit. Plaintiff's expert disagrees with Holm; he believes the City violated its 2008 permit any time a piece of equipment used in the treatment process malfunctioned and was unable to be fixed within a matter of a few days.^[37]

         The WTP's holding tank mixers also experienced mechanical issues. Without operational mixers, the heaviest parts of the sludge sat at the bottom of the holding tank, while the lighter parts remained at the top. Consequently, sludge being processed by the belt press was inconsistent. After October 2013, the City replaced the mechanical mixers with an air bubbling system. The broken mixers had no effect on the City's compliance with its NPDES permit. Plaintiff's expert opines that the City's failure to promptly repair or replace the mixers constituted a violation of the 2008 and 2013 permits.

         F. The Vactor Truck and Improper Dumping

         The City owns a large industrial truck equipped with a high-pressure water jet cleaning system, as well as a vacuum system for clearing out objects (the “Vactor Truck”). When the vacuum component was used, operators drained some, but not all, of the truck's liquid contents into a manhole inside the plant for processing. From approximately 2007 to some point in 2012, operators deposited the solids and whatever liquid remained in the truck on the ground in one of two areas behind the gates of the WTP. Solids from the truck typically consisted of items such as personal hygiene products, plastic razors, gravel, rocks, and raw septage.

         The area where solids were dumped was not enclosed, was not a lined pit, and contained no warning signs. The City never performed any laboratory analysis on the dumped material. The City did not inform the Army, the VA, or the BOP of its practice of dumping materials from the Vactor truck.

         At some point, WTP operator Kris Bennetts called KDHE with concerns about the above procedure. According to Bennetts, KDHE's response was that the procedure he described was “no big deal” and was “an affirmation of this is not as big as what I'm thinking it is.”^[38]

         KDHE inspector Vic Montgomery performed a plant inspection on April 4, 2012. He observed operators dump the contents of the Vactor truck on the ground, before being removed. In his inspection report, Montgomery noted: “Vac trucks are dewater[ed] then the septage is dumped on the ground to be processed, please make sure to check that water does not migrate from the area.”^[39] In a letter accompanying the report, Montgomery clarified, “Solids [from the Vactor truck] are being collected and handled properly but please make sure any excess water does not migrate from the site.”^[40]

         Public Works Director McDonald first learned about the operators' practice of depositing the solids from the Vactor truck on the ground around the time he reviewed KDHE's 2012 inspection report. During the preliminary treatment process, wastewater passes through a large grate, referred to as a bar screen, which is designed to catch large items such as plastics or rags. These items, referred to as “screenings, ” are then typically placed into a bin to dry, before being sent to a landfill. Scott Huismann, Plaintiff's expert, has expressed the opinion that the contents of the Vactor truck were “sewage sludge, ” which, under 40 C.F.R. Part 503, was allowed to be dumped on the ground for up to two years without restriction or control. Although Huismann did not visit the site where the Vactor truck solids were allegedly dumped, he believes some of the material deposited on the ground may still remain there, in violation of 40 C.F.R. Part 503. Huismann admitted the distinction between preliminary treatment and removal of the Vactor truck solids was confusing and unclear, and could lead an operator to mistakenly equating the two.

         G. Plaintiff's Employment

         Plaintiff began working at the WTP on April 29, 2010, as a Wastewater Treatment Class I Operator. Superintendent Klingler exempted Plaintiff from carrying an “on call” pager and sent her to training. She became a Level II Operator on June 23, 2011. In January 2012, she was appointed to be the project representative for the construction of the UV Building. In 2012, the City selected her as the “Employee of the Second Quarter.” In December 2012, she received the City's award for “Employee of the Year.” On August 16, 2012, Plaintiff was promoted to Assistant Superintendent. Upon her promotion, Klingler became her direct supervisor. She was also informed that she was required to pass the KDHE Class IV certification exam within twelve months, and that her failure to do so would result in demotion or termination. KDHE's Class IV certification exam had a pass rate of approximately 33 percent at that time.

         On March 26, 2013, City Manager Miller met with Plaintiff to discuss concerns raised by James Bennetts, a WTP operator, who had just resigned and raised concerns about operations at the WTP and unfair treatment by Klingler. The parties disagree about what was discussed at this meeting. Plaintiff says she told Miller that she believed the City had submitted a fraudulent claim to FEMA regarding the broken Pipe. Miller says she did not talk to him about a fraudulent claim to FEMA. He says their discussion was about Klingler's management style and operation issues at the plant.

         On April 1 and 2, 2013, Miller visited the plant, talked to Klingler, and interviewed several other employees. On April 3, 2013, Klingler told Plaintiff that he would be busy with other things and she should contact him about plant-related matters by email.

         On April 16, 2013, Klingler wrote a memo to Plaintiff about four issues: 1) the failure to follow bypass guidelines on April 1, 2013; 2) a request for a timeline regarding a complaint call; 3) new trickling filter procedures; and 4) a request for documentation for sick leave taken on March 18 through March 20, 2013 (the “Memo”).^[41] Plaintiff responded to the memorandum by email on April 18, 2013. She addressed each issue and concluded with the following sentence, “I feel the Memo you gave me on 4/16/2013 is not justified and I will be contacting your Supervisor, Mr. Bob Patzwald, to discuss this issue with him.”^[42]

         On April 18, 2013, Public Works Director McDonald met with Klingler to address concerns about his management style. McDonald directed Klingler to focus on listening to staff, communicating his expectations clearly, and allowing staff to do their jobs.

         On April 19, 2013, Plaintiff met with Klingler and McDonald to discuss her response. McDonald told Coffman he had assisted Klingler in drafting the memo, and reiterated it had been sent for training. Plaintiff responded that she felt the memo had been sent as retaliation for meeting with Miller, which McDonald denied. The parties dispute what was said at the meeting. The meeting ended with Plaintiff asking to speak with City Manager Miller.

         After this meeting, Plaintiff began receiving weekly “To Do” lists from Klingler, which contained tasks to be completed in addition to everyday operations. The items on the “To Do” lists fell within the scope of Plaintiff's job duties, but Plaintiff believes the lists included unnecessary work because Klingler never followed up on them. She also believes this was a scheme to cause her to work long hours to prevent her from studying and passing the Class IV exam.

         On June 12, 2013, Plaintiff met with Klingler and Lona Lanter, the Director of Human Resources (“HR Director”), regarding what would happen if she failed to pass the Class IV exam. Plaintiff had taken the Class IV exam in December 2012 and on May 9, 2013, failing both times. Lanter suggested Plaintiff take the Class III test as a “fall back.” Plaintiff rebuffed the idea. She complained of retaliation and explained that her increased workload, which was filled with meaningless tasks, made it impossible for her to study for either tests. The City agreed to extend the deadline from August 16, 2013 to August 29, 2013, which would allow her to take the test scheduled on the 29^th if necessary.

         On August 2, 2013, Plaintiff took the Class IV exam again and failed. On August 8, she asked Klingler to extend the Class IV certification deadline from 12 months to 18 months.^[43] On August 16, Klingler denied the request, stating the City had already agreed to extend the deadline to the end of August 2013.^[44]

         On August 16, 2013, Klingler also presented Plaintiff with her first performance evaluation as assistant superintendent. On a scale from 0 (lowest) to 2 (highest), Klingler rated Plaintiff's performance as a “1, ” defined to mean “[a] totally competent employee, ” “[a] good steady contributor, ” and “[a]n employee that completes all stated job requirements in a timely and efficient manner” on each of the ten categories of review.^[45] Based on her evaluation, Coffman received a two percent raise, the highest performance-based raise during her tenure with the City.

         Plaintiff appealed Klingler's denial of her requested extension and her evaluation scores to Public Works Director McDonald and HR Director Lanter. Both McDonald and Lanter affirmed Klingler's decisions. McDonald explained that it was the City's policy not to extend certification deadlines other than for a few days to meet a testing schedule, which was exactly what the City did when it extended her deadline from August 16 to August 29.^[46] As for her evaluation scores, McDonald concluded that he had no reason to change them because: 1) a rating of 2 required additional documentation, and 2) expectations for a management position are different than for a regular worker.^[47] Lanter stated that Klingler's denial of her extension was “a consistent application of the related criteria used for all employees within [the plant], ” and that performance evaluations were not grievable.^[48]

         On September 3, 2013, KDHE notified the City and Plaintiff that she had failed the August 29th Class IV exam. On September 12, 2013, the City notified Plaintiff she had been demoted to Operator II for failing to pass her KDHE Class IV certification exam within 12 months of her promotion. Plaintiff submitted her letter of resignation on October 4, 2013.

         H. Billing to Federal Agencies

         Ruby Maline is the City's Finance Director. Effective July 1, 1995, the City renewed its 1974 contract with the Army for the provision of sewage service, which is still in effect. The “Sewage Service Specifications” section of the contract states:

SERVICE TO BE RENDERED. The [City] shall furnish a sanitary sewer connection and sanitary sewage service as required by the Government and shall receive, carry, treat, and dispose of all sanitary sewage originating at the project in such amounts as the Government desires to release into Contractor's sewer system and in a manner and by such means as will constitute no hazard to the public health. The [City] shall operate [its] sewage disposal and treatment facilities in conformity with applicable laws, rules, and regulations promulgated by Federal, state and local authorities.^[49]

         Each month from at least 2008 to present, the City has sent the Army an invoice for sewage service. The amount billed is based on three components: (a) annual operating and maintenance expenses; (b) overhead; and (c) reserves for repair and replacement.

         The “annual operating and maintenance expenses” component has three sub-parts: (1) the total budget for operating the treatment plant for the current year, multiplied by the Army's percentage of plant flow; (2) the total budget for operating the collection system for the current year, multiplied by a percentage specified by the contract; and (3) adjustments to account for the difference between the Army's share of the prior year's budget and the actual amount spent during the prior year to operate the treatment plant and collection system, which is then prorated over 12 months. Because the Army receives a credit for any amount budgeted but not spent, the City does not retain money from the Army that is budgeted for the operation of the treatment plant or collection system, but not spent. The “overhead” component of the bill is calculated, pursuant to the contract, at 13 percent of the Army's annual charge for budgeted treatment plant and collection system expenses, subject to the same adjustment to account for the difference between budgeted and actual costs for the prior year, and then prorated over 12 months. The “reserves for repair and replacement” component is calculated at 21 percent of the replacement value of the treatment plant, divided by a projected useful life of 25 years and then prorated over 12 months.

         On August 1, 1978, the City entered into a contract with the VA to provide it sewage services, which is still in effect today. An addendum to the VA contract states that the City agrees to comply with Section 308 of the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) “relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in . . . section 308 of . . . the Water Act . . . and all regulations and guidelines issued thereunder before the award of this contract.” However, the section is preceded by the following language:

(Applicable only if the contract exceeds $100, 000 or the contracting officer has determined that orders under an indefinite quantity contract in any one year will exceed $100, 000, or a facility to be used has been subject of a conviction under the Clean Air Act (42 U.S. 1857c-8(c) (1) or the Federal Water Pollution Control Act (33 U.S.C. 1319(c)) and is listed by the EPA, or the contract is not otherwise exempt.)^[50]

         On November 15, 1974, the City entered into a contract with the BOP to provide it sewage services, which is still in effect today. The VA and BOP's monthly bills are calculated as a percentage of the total actual operating expenses, derived from each entity's flow readings.

         Each month from 2008 to present, the Army, VA, and BOP have paid their monthly sewage bills in full. At no time from 2008 to present have any of these federal agencies declined to pay the full amount billed. At no point from 2010 to 2014 has the Army, VA, or BOP ever requested or performed an audit of the WTP to ensure the City was operating in conformity with its NPDES permit.

         III. DISCUSSION

         The City seeks summary judgment on all five counts: Count I, violations of the Federal False Claims Act (“FCA”); Count II, violations of the anti-retaliation provision of the FCA; Count III, Whistleblower Retaliation under Kansas common law; Count IV, Common Law Retaliatory Discharge; and Count V, Negligent Infliction of Emotional Distress.^[51] Plaintiff seeks summary judgment as to Count I only. The Court discusses each count separately.

         A. Count I - False Claims to Government Agencies

         The FCA “covers all fraudulent attempts to cause the government to pay out sums of money.”^[52] The FCA's qui tam provisions permit a private plaintiff to bring civil actions on behalf of the government.^[53] And while the government “may intervene and take over a private plaintiff's case, it often declines to do so.”^[54] If the government declines to intervene, a private plaintiff may proceed as a relator on behalf of the government.^[55] A relator is entitled to a portion of any civil penalty and damages awarded.^[56]

         The FCA, in pertinent part, makes any person liable who “knowingly presents, or causes to be presented, a false or fraudulent claim for approval, ”^[57] or who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”^[58] Knowledge or scienter is an essential element for all FCA violations. The FCA defines “knowing” and “knowingly” to mean “that a person, with respect to information-(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.”^[59] “For a statement to be knowingly false, it must be more than merely an innocent mistake or misinterpretation of a regulatory requirement.”^[60]

The FCA recognizes two types of actionable claims-factually false claims and legally false claims. In a run-of-the-mill “factually false” case, proving falsehood is relatively straightforward: A relator must generally show that the government payee has submitted “an incorrect description of goods or services provided or a request for reimbursement for goods or services never provided.” [Mikes v. Straus, 274 F.3d 687, 97 (2nd Cir. 2001)]. By contrast, in a claim based on an alleged legal falsehood, the relator must demonstrate that the defendant has “certifie[d] compliance with a statute or regulation as a condition to government payment, ” yet knowingly failed to comply with such statute or regulation. Id.^[61]

         Materiality is a requisite element for factually false claims under 31 U.S.C. § 3729(a)(1)(B) and false certification claims.^[62] The FCA defines materiality to include facts that have “a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”^[63] “The materiality standard is demanding.”^[64]

         Count I alleges the City submitted false claims for two types of payment: 1) a claim for flood damages to FEMA, and 2) monthly bills for wastewater services to the VA, Army, and BOP. The FEMA-claim falls under the factually false theory, while the monthly wastewater bills present a legal falsity.^[65]

         1. False Claim to FEMA

         Plaintiff asserts the City submitted two documents to FEMA that contained false statements: 1) an email dated December 12, 2011 (the “Email”), and 2) the Project Worksheet.

         a) The Email

         Plaintiff claims the Email violated 31 U.S.C. § 3729(a)(1)(B) because it contains a false explanation regarding the source of the damage to the Pipe.^[66] She argues that by providing the costs to repair the Pipe and stabilize the river bank, the Email supported the false statement that the Flood broke the Pipe. The Court disagrees.

         The Email, in pertinent part, states:

The 10” sewerline between Manholes 4284 and 4268 crossed Five Mile Creek in a concrete encased structure. The creek had eroded sufficiently that the structure had become a “waterfall[.]” City staff had explored a variety of repair strategies that would have been programmed into a future CIP [capital improvements project] program.

The 2011 Flood submerged this structure and subjected it to unusual forces. The structure became unstable and essentially “broke” at the outside of MH 4268. This allowed substantial inflow to enter the plant, and created other operational difficulties. Efforts to stop[] the flow from inside MH 4268 proved only marginally effective. Once the water receded[, ] a contract was issued to Linaweaver Construction to remove the broken sewer crossing and seal the two manholes. This work cost $7021 on PO 4478.

This solves the immediate concerns over inflow. There are a very small number of users upstream of MH 4284, and the City will use the vacuum truck periodically to remove any sewage generated until this is repaired.

Staff has had plans prepared for a replacement of the sewer and mitigation of the conditions that created the failure. The estimated cost for replacement of the sewer only is $358, 000. There is an additional cost of $121, 000 related to bank stabilization up and downstream of the crossing that prevents the severe erosion that has occurred.

A spreadsheet with the estimates is attached. The estimates are based on a concept developed in early 2011 as part of the CIP planning.^[67]

         Plaintiff's construction of the Email is untenable because she ignores the first paragraph and construes the second paragraph in a vacuum. The first paragraph explained that erosion caused the Pipe to become a waterfall; in other words, erosion had damaged the Pipe. The second paragraph explained the effects of the Flood to the already damaged Pipe-it broke at the outside of MH 4268, which allowed substantial water to enter the plant. These paragraphs thus reported two sources of damage to the Pipe, creek erosion and the Flood.

         Although the Email did not expressly state the Pipe was damaged prior to the Flood, the fifth paragraph explained that the estimates to repair the erosion damage were obtained in early 2011, many months before the Flood triggered FEMA funding. This explanation, combined with the first two paragraphs, show a lack of intent to hide the fact that the Pipe had pre-Flood damage.

         Plaintiff points to McDonald's testimony that he could not recall when or who from the City had informed FEMA about pre-Flood damage to the Pipe to suggest a genuine issue of fact exists regarding whether the City had informed FEMA of the pre-existing damage to the Pipe. The Email, however, establishes that the City informed FEMA of the erosion damage prior to submitting its claim.

         The Court rejects Plaintiff's argument that providing estimates to repair the Pipe and stabilize the river bank was effectively engaging in a false communication to influence FEMA's decision to pay. Plaintiff conveniently ignores that the City did not submit a claim for these repairs. Additionally, Plaintiff offers no evidence that the Pipe repair estimates contained any false information. Nor does she provide evidence suggesting that the Pipe repair estimates were material to payment for damages from floodwater inflow.^[68] The Court fails to see how the Pipe repair estimates would influence FEMA's decision to reimburse the City for the costs of removing debris in the bar screen building, removing excessive grit in the clarification chamber building, and unclogging approximately 20 sewer lines.^[69] These facts make this argument a non sequitur. The Court concludes no reasonable jury could find falsity, materiality, or the requisite scienter with respect to the Email and its attachment.

         b) The Project Worksheet

         On December 13, 2011, the City submitted a claim to FEMA in Project Worksheet #90 (“PW90”), requesting $22, 966.73 for damages due to flood water entering the WTP.^[70] Plaintiff claims PW90 constitutes a false claim in two ways: 1) it sought reimbursement for damages caused, at least in part, by a known pre-existing condition; and 2) it concealed the failure to undertake proper mitigation measures in anticipation of the Flood.^[71] The Court finds these arguments unpersuasive.

         First, Plaintiff offers no evidence to suggest that FEMA requires the Flood be the sole cause for the damage. As discussed above, the Email establishes that the City informed FEMA of the pre-Flood damage to the Pipe. FEMA representative Tom Montgomery even suggested that the broken sewer line near the treatment be included in the PW.^[72] The uncontroverted evidence is that floodwater entered the WTP from numerous sources, not just the broken Pipe. Plaintiff adduces no evidence that FEMA was unaware of this fact. Nor is there evidence that FEMA required the City to analyze and determine the sources of water that damaged the Plant. These facts suggest that FEMA did not consider it material that floodwaters had entered the Plant from a pipe that had pre-Flood damage.

         Second, the Court fails to see how PW90 concealed the City's failure to undertake proper mitigation measures in anticipation of the Flood. The worksheet does not ask for information regarding mitigation efforts. There is also no evidence that FEMA requested this information from the City. These facts suggest that FEMA did not consider it material that floodwaters had entered the Plant from a pipe that had pre-Flood damage.

         Third, it is undisputed that the broken Pipe caused no damage to the Bar Screen Building, the Clarification Building, and the sewer lines that required unclogging before the Flood. This fact suggests that the temporary measure of sandbags had done its job until it had to face the Flood's overwhelming force. Additionally, there is no evidence that FEMA asked the City to analyze the extent of damage to the WTP had the Pipe been capped with concrete prior to the Flood. These facts suggest that FEMA did not consider the efforts to repair the broken Pipe prior to the Flood material to its decision to pay PW90.

         Fourth, Plaintiff cites 44 C.F.R. § 206.48 for the proposition that FEMA considers the City's mitigation measures material in deciding whether to approve payment of PW90. But that regulation sets forth the factors to consider when evaluating a Governor's request for a major disaster declaration. It does not set out FEMA's standards for approving claims for disaster relief. Plaintiffs reliance upon this regulation is thus misplaced.

         In sum, the summary judgment evidence, even when viewed in the light most favorable to Plaintiff, fails to demonstrate that the City submitted a false claim to FEMA. Accordingly, the Court grants summary judgment to the City on the false-FEMA claim.

         2. Implied False Certifications in Sewage Bills to the Army, the VA, and the BOP

         In Universal Health Services, Inc. v. United States ex rel. Escobar,^[73] the Supreme Court held that “[w]hen . . . a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant's representations misleading with respect to the goods or services provided.”^[74] The Supreme Court made clear that courts should continue to police expansive implied certification theories “through strict enforcement of the Act's materiality and scienter requirements.”^[75] In particular, “a misrepresentation about ...