In order for colleges and other schools to receive federal subsidies under Title IV of the Higher Education Act (“HEA”), the school must complete a Program Participation Agreement with the United States Department of Education. Under 20 U.S.C. § 1049(a), each Program Participation Agreement (“PPA”) “shall condition the initial and continuing eligibility of an institution to participate in a program [for Title IV subsidies] upon compliance with [certain] requirements.” Section 1049(a)’s PPA provisions require schools comply with various statutes and regulations, commonly referred to as “Title IV Restrictions.” See U.S. v. Sanford-Brown, Ltd., 788 F.3d 696 (7th Cir. 2015).

The “False Record Theory” is one of several theories of liability under the False Claims Act. Under 31 U.S.C. § 3729(a)(1)(B), a party is liable under the FCA who “knowingly makes, uses, or causes to be made or use, or a false record or statement material to a false or fraudulent claim.” A whistleblower seeking to prove a defendant liable under the False Record Theory must show: (1) the defendant made a statement or record in order to receive money from the government; (2) the statement or record was false; and, (3) the defendant knew it was false. U.S. v. Sanford-Brown, Ltd., 788 F.3d at 708, citing U.S. ex rel. Yannacopoulos v. General Dynamics, 652 F.3d 818, 822 (7th Cir. 2011).

The plaintiff and government in U.S. v. Sanford-Brown alleged that the defendant, Sanford-Brown College, agreed to comply with all Title IV regulations when it entered into the PPA. According to the plaintiff, Sanford-Brown fraudulently used the PPA to obtain funding when the school led students to apply for federal funds with the knowledge that the students were not in compliance with Title IV’s restrictions. Id. The school, on the other hand, argued that in order for the plaintiff to satisfy the statute’s “knowingly” requirement, the plaintiff had to offer proof that the school entered into the PPA with the intent to defraud the government out of subsidies. Id. at 708.

In deciding whether the Sanford-Brown plaintiff met the “knowingly” requirement, the Seventh Circuit considered its opinions in United States ex rel. Main v. Oakland City Univ., 426 F.3d 914 (7th Cir. 2005). Like Sanford-Brown, the court in Main considered whether a school entering into a PPA qualified as a false record under the False Claims Act. Sanford-Brown 788 F.3d at 708. The Main court found that the school had entered into PPA based on a false promise of future compliance.Id. The court noted that to “establish that defendants knowingly used a false record under Main, the relator must establish the defendant’s mindset at the time it signed the PPA. Id.

According to the Sanford-Brown court, the plaintiff did not prove that the school entered into the PPA in bad faith. The court noted that proof of fraud “requires more than breach of promise; fraud entails making a false representation such as a statement that the speaker will do something it plans not to do.” Id. at 709 quoting Main at 917. The plaintiff in Sanford-Brown did not prove its claim, the court noted, because through discovery it elicited no evidence of the defendant’s fraudulent mindset. Id.


Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at