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Judge Dismisses Whistleblower Suit Against Collectors Over Student Loan Contract

A District Court judge in the District of Columbia has granted motions to dismiss filed by the remaining defendants in a whistleblower’s False Claims Act lawsuit that alleges the a number of debt collectors defrauded the federal government of more than $100 million in relation to a contract to service student loans with the Department of Education.

A copy of the ruling in the case of PCA Integrity Associates v. NCO Financial Systems et al can be accessed by clicking here.

The contract with the Department of Education in this case stem back all the way to 2008. The plaintiffs accused the defendants of hiding the fact that subcontractors were affiliated with the co-conspirators, which would have affected the determination of whether the businesses qualified as “small businesses” under a federal definition in awarding the contract. The Department of Education indicated that it would award a certain percentage of the contracts to companies that met the definition of a “small business.”

The whistleblowers, who purportedly worked for some of the defendants, made claims that hinged “on the factual allegation of undisclosed affiliation and associated submission of false claims and / or misrepresentations concerning business size.” The whistleblowers attempted to lay out how some the personnel and connections between the companies overlapped, indicating a conspiracy.

But the plaintiffs fell short of providing the specifics necessary to convince the judge that the defendants engaged in fraud.

“Here, despite Relator’s contrary contentions, PCA Integrity’s pleading does not establish with the requisite particularity the time and place of the false misrepresentations, what constitutes the allegedly false claim for each discrete defendant, and what, precisely, ‘was retained or given up as a consequence of the fraud,’ ” wrote Judge Rudolph Contreras of the District Court for the District of Columbia.

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