The Ninth Circuit, in U.S. ex rel. Fawn Cain et al. v. Salish Kootenai College Inc. et al., recently reversed a lower court's dismissal of a False Claims Act lawsuit by former Salish Kootenai College employees. The False Claims Act permits suits against any "person" who defrauds the government by knowingly presenting a false or fraudulent claim.
The former employees alleged that the College and other defendants gave the federal government fake student progress reports in order to keep grant monies coming from the Department of Health and Human Services and Indian Health Service. The lower court initially dismissed the claims, finding that the College was an arm of the Confederated Salish Kootenai Tribes that shared the Tribe's sovereign immunity, and that neither the Tribe nor congress waived the College's immunity.
On appeal, while the Ninth Circuit found that tribes are not a "person" under the False Claims Act, the Ninth Circuit reversed the lower court's finding that the College was a tribal arm that enjoyed the Tribe's sovereign immunity. The Ninth Circuit remanded the case for the parties to conduct discovery to determine whether the College satisfied the White v. University of California factors to demonstrate that it is entitled to sovereign immunity as an arm of the tribe. These factors include: (1) the method of creation of the entity, (2) its purpose, (3) its structure, ownership, and management, including the amount of control the tribe has over the entity, (4) a tribe's intent with respect to the sharing of its sovereign immunity, and (5) the financial relationship between the tribe and the entity.
In sum, when a tribal arm defends an action based on sovereign immunity, the tribal arm should be sure the record squarely addresses the five White v. University of California factors.