Plaintiff qui tam claimants appealed a summary judgment from the Superior Court of the City and County of San Francisco (California), which ruled that defendant bus company had no liability in an action under California’s False Claims Act (Gov. Code, § 12650 et seq.).

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Overview

The complaint alleged that the bus company had submitted claims for payment to a school district while knowingly failing to comply with contractual maintenance obligations. The bus company contended that the alleged false implied certification was not material because the district had declined to intervene, had declined to bring an action of its own for breach of contract, and had extended the bus company’s contract after receiving its written assurance that it would correct violations. The court held that conflicting evidence and inferences precluded summary judgment because common sense, contractual language reflecting concerns about safety, and the district’s insistence on prompt correction of violations could support a reasonable inference that the maintenance requirements were material. The district’s reaction upon learning of the alleged false claims was not dispositive of the issue of materiality. A triable issue of fact also existed as to whether the bus company acted knowingly under Gov. Code, §§ 12650, subd. (b)(3), 12651, subd. (a)(1), because frequent maintenance failures and lack of regular audits could support a reasonable inference of reckless disregard of the truth.

Outcome

The court reversed the judgment.