Twin Visa FCA Cases Reach Different Results With Same Judge
With immigration becoming an ever-more present issue in American politics, False Claims Act practitioners and companies subject to potential FCA allegations may be wondering: Can violation of US immigration laws lead to FCA liability? The Northern District of California recently addressed this question in United States ex rel. Lesnik v. Eisenmann, No. 16-CV-01120-LHK, 2018 WL 4700342 (N.D. Cal. Oct. 1, 2018), and answered it with an emphatic yes.
Lesnik concerned an alleged scheme where Defendants staffed a paint-equipment company with foreign workers on improperly obtained visas. Defendants allegedly obtained skilled-worker visas for foreign workers and then employed them as unskilled labor at far below the minimum wage. Specifically, Defendants allegedly did this to avoid the higher fees associated with unskilled-worker visas.
The legal question addressed in Lesnik is whether lying on a visa application to avoid paying higher visa fees can result in FCA liability. Relators argued that this constitutes a reverse FCA violation, saying that because Defendants falsely obtained cheaper visas, they avoided an obligation to pay the government the higher fees associated with the more expensive unskilled-worker visa. This is a classic formulation of reverse false claims liability, albeit in a somewhat out of the ordinary circumstance.
The Northern District of California sided with Relators, holding that such an FCA claim is "permissible to the extent that it relies on the non-payment or under-payment of visa fees." However, the court ultimately dismissed the visa-related allegations under Rule 9(b), observing that the Relators had failed to allege which Defendant (if any) actually paid the fees associated with the visas at issue. This lack of particularity was sufficient to defeat the allegation in this instance, but the legal validity of the scheme alleged remains.
Curiously, the same court decided another visa-related FCA case just a few weeks later. On October 16, 2018, the very same judge (the Honorable Lucy Koh) addressed allegations that Defendants had conspired to have two Indian nationals enter the United States on a business visitor B-1 visa to provide training services when they should have been admitted under the more expensive (and numerically limited) H1-B visas instead. United States ex rel. Krawitt v. Infosys Techs. Ltd., Inc., et. al, No. 16-cv-04141, 2018 WL 5023366 (Oct. 16, 2018). In that case, the court held that the Relator had not properly alleged an FCA violation because the work performed by the Indian gentlemen actually did fit within the (admittedly "ambiguous") ambit of a B-1 visa.
These two decisions placed side by side reflect a court invested in immigration laws and prepared to explore their application to individual scenarios, rather than create blanket rules regarding liability. Those employing foreign nationals anywhere in the United States—but particularly within the Northern District of California—would do well to examine their compliance with immigration laws at least as carefully as this court has done, or run the risk of incurring FCA liability.
© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.