On July 15, the U.S. Court of Appeals for the 9th Circuit reversed a district court’s dismissal of a qui tam action alleging that a mortgage lender and its founder and chief executive made false statements in a PPP loan application in violation of the False Claims Act (FCA), holding that the relator’s claim was not barred by the FCA’s public disclosure bar and that the district court abused its discretion in denying the relator leave to amend its complaint.
The lender had received and had forgiven a PPP loan of nearly $5 million, and the relator alleged that the lender misrepresented its eligibility for those funds because it was a mortgage lender categorically excluded from the program, that its use of loan proceeds, given that ineligibility, necessarily violated the program’s purpose, that it falsely certified the loan was necessary because its revenue and profits had not declined during the pandemic, and that it falsified its employee headcount to inflate the size of the loan it received. The district court had dismissed the suit after concluding that the FCA’s public disclosure bar applied because a public-facing government website that provides information on PPP loans had already disclosed the lender’s use of a North American Industry Classification System (NAICS) code indicating it was a lending company, which the district court found revealed the lender’s categorical ineligibility for PPP funds.
The 9th Circuit disagreed, holding that the district court had...
On July 15, the U.S. Court of Appeals for the 9th Circuit reversed a district court’s dismissal of a qui tam action alleging that a mortgage lender and its founder and chief executive made false s...