United States of America and Eric Romero v. New York Institute of Technology

Background

Eric Romero brought a qui tam action under the federal False Claims Act and the New York False Claims Act against New York Institute of Technology (NYIT). The government declined to intervene. Romero alleged that NYIT falsified records and submitted false statements and certifications to keep students eligible for federal and state financial aid and to retain those funds.

Romero was employed as a visiting professor from September 2016 through August 2017. He alleged that a department chair asked him to change grades and pass students, partly to keep enrollment and revenue up. Romero refused, told the chair and a dean that the grade changes constituted fraud, and alleged that NYIT then removed him from courses, changed grades he had assigned, and did not renew his contract. The complaint also alleged fraud involving attendance requirements and foreign-student visas. The court stated that those claims were dismissed as unopposed because Romero did not defend them in opposition to the motion.

Legal standard

NYIT moved to dismiss under Rule 12(b)(6), which asks whether the complaint states a legally sufficient claim. The court accepted well-pleaded factual allegations as true and drew reasonable inferences in Romero’s favor. Because the False Claims Act allegations involved fraud, the complaint also had to satisfy Rule 9(b), which requires fraud to be described with particularity, including the allegedly false statements, who made them, where and when they were made, and why they were fraudulent.

Federal False Claims Act claims

The court held that Romero did not adequately allege that NYIT submitted false claims to the government. Although a relator need not have personal knowledge of the actual claims submitted, allegations based on information and belief must plausibly show that the claims were within the defendant’s knowledge and control and must provide specific facts supporting a strong inference of fraud.

Romero identified eleven students whose grades were allegedly changed, but he did not allege facts showing that NYIT submitted government claims for those students or that the students received financial aid. The court found no alleged connection between the changed grades and a scheme to obtain government funding. The department chair’s reference to keeping enrollment up and revenue coming in did not mention financial aid, government money, or grading requirements for financial aid. The court therefore dismissed the federal False Claims Act claims.

Retaliation claims

The court separately considered Romero’s claim that NYIT retaliated against him for refusing to participate in the alleged scheme and reporting it. The court concluded that Romero adequately alleged protected activity because he refused to change grades and told NYIT administrators that the changes constituted fraud. He also adequately alleged that NYIT knew about that activity.

The court nevertheless dismissed the retaliation claim because Romero did not allege an actionable adverse employment action. Removing him from courses was not enough because he did not allege a resulting loss of wages or other material benefits. The court also stated that nonrenewal of his visiting-professor contract could qualify as an adverse action only in circumstances not alleged here, including where an employee sought renewal. Romero did not allege that he actively sought renewal.

New York False Claims Act claims and disposition

After dismissing all claims over which it had original federal jurisdiction, the court declined to exercise supplemental jurisdiction over the New York False Claims Act claims. It dismissed those state-law claims without prejudice.

The court granted NYIT’s motion to dismiss, dismissed the case, directed the Clerk to terminate the pending motion, and closed the case. The opinion does not state that the federal claims were dismissed with or without prejudice.