Debra Leveski v. ITT Educational Services, Inc , 719 F.3d 818 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
D EBRA L EVESKI,
Plaintiff-Appellant,
v.
ITT E DUCATIONAL S ERVICES, INCORPORATED ,
Defendant-Appellee,
and
A PPEALS OF:
M OTLEY R ICE LLP, P LEWS SHADLEY R ACHER &
B RAUN LLP, T HE L AW O FFICES OF
T IMOTHY J. M ATUSHESKI and
T IMOTHY J. M ATUSHESKI.
Appeals from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:07-cv-00867-TWP-MJD—Tanya Walton Pratt, Judge.
A RGUED JANUARY 17, 2013—D ECIDED JULY 8, 2013
2 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Before M ANION and T INDER, Circuit Judges, and L EE,
District Judge. Œ
T INDER, Circuit Judge. Debra Leveski brings this law-
suit against ITT Educational Services, Inc. on behalf of the
United States, pursuant to the qui tam provision of the
False Claims Act (FCA), 31 U.S.C. § 3730(b). ITT is a for-
profit institution with over 140 locations across the
United States that offers post-secondary educational
training, including associate’s, bachelor’s, and master’s
degrees. Leveski, who worked at the ITT campus in
Troy, Michigan, for more than a decade, alleges that ITT
knowingly submitted false claims to the Department of
Education in order to receive funding from federal
student financial assistance programs.
Four years after Leveski filed this lawsuit, the district
court dismissed it for want of jurisdiction, finding that
Leveski’s allegations had already been publicly disclosed
and that Leveski was not the original source of her al-
legations. In addition, the district court granted sanc-
tions in the amount of $394,998.33 against all three
law firms representing Leveski and against one of
Leveski’s attorneys individually. Accusing Leveski’s
attorneys of “pluck[ing] a plaintiff out of thin air and
tr[ying] to manufacture a lucrative case,” the district
court found Leveski’s allegations wholly “frivolous.”
Contrary to the district court, we believe that Leveski’s
allegations merit further development, and more impor-
Œ
The Honorable John Z. Lee of the Northern District of
Illinois, sitting by designation.
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 3
tantly, we believe they are sufficiently distinct from
prior public disclosures to give the federal district court
jurisdiction over Leveski’s lawsuit. Consequently, we
reverse both the dismissal and the sanctions, and
we remand the case back to the district court for further
proceedings.
I
Leveski’s FCA allegations turn on the restrictions
placed on schools that receive funding from federal
student financial assistance programs by the Higher
Education Act (HEA), 20 U.S.C. § 1001 et seq. Therefore,
before turning to the specifics of Leveski’s allegations,
we first review the specifics of the relevant HEA restric-
tions. The HEA was originally passed in 1965 “[t]o
strengthen the educational resources of our colleges
and universities and to provide financial assistance for
students in postsecondary and higher education.” Pub. L.
No. 89-329, 79 Stat. 1219. At issue in this case is Title IV
of the HEA, “Grants to Students in Attendance at In-
stitutions of Higher Education,” codified at 20 U.S.C.
§ 1070 et seq. In passing Title IV, Congress had the best
of intentions:
to provide, through institutions of higher educa-
tion, educational opportunity grants to assist in
making available the benefits of higher education
to qualified high school graduates of exceptional
financial need, who for lack of financial means
of their own or of their families would be unable
to obtain such benefits without such aid.
4 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Pub. L. No. 89-329, 79 Stat. 1219, § 401(a). Today, Title IV
governs the administration of over $150 billion in
annual federal financial assistance awards for higher
education. U.S. Dept. of Educ., Federal Student Aid: About
Us, http://studentaid.ed.gov/about (last visited July 1,
2013).
Notwithstanding Congress’s good intentions in passing
Title IV, the colossal sums of money now administered
under Title IV have led to abuses. Specifically, Congress
became concerned in 1992 that “recruiters [of students
for institutions of higher education] paid by the head
are tempted to sign up poorly qualified students
who will derive little benefit . . . and may be unable or
unwilling to repay federal guaranteed loans.” United
States ex rel. Main v. Oakland City Univ., 426 F.3d 914, 916
(7th Cir. 2005). As a result, Congress amended Title IV
to prohibit institutions receiving federal financial assis-
tance funding from “provid[ing] any commission, bonus,
or other incentive payment based directly or indirectly
on success in securing enrollments or financial aid to
any persons or entities engaged in any student
recruiting or admission activities or in making decisions
regarding the award of student financial assistance.”
20 U.S.C. § 1094(a)(20).
In 2002, the Department of Education issued regula-
tions that softened the blow of the 1992 amendments for
institutions of higher education by declaring certain
types of activities and compensation schemes compliant
with 20 U.S.C. § 1094(a)(20). Known as “safe harbors,”
these twelve provisions allowed, among other things,
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 5
institutions receiving federal financial assistance award
money to pay student recruiters and financial aid
officers “fixed compensation, . . . as long as that compensa-
tion is not adjusted up or down more than twice during
any twelve month period, and any adjustment is not
based solely on the number of students recruited, ad-
mitted, enrolled, or awarded financial aid.” 34 C.F.R.
§ 668.14(b)(22)(ii)(A) (2002). These safe harbors remained
in effect for almost a decade, until the Department of
Education became concerned that they had failed to
curtail abusive recruiting practices. See, e.g., Depart-
ment of Education, Program Integrity Issues: Incentive Com-
pensation, 46-52, http://www2.ed.gov/policy/highered/
reg/hearulemaking/2009/integrity-session3-issues.pdf (last
visited July 1, 2013) (detailing common abuses and rec-
ommending that “the elimination of all of the regula-
tory ‘safe harbors’ would best serve to effectuate con-
gressional intent”). Thus, the Department of Education
eliminated the safe harbor provisions from its regula-
tions in 2011, and its current regulations now flatly pro-
hibit institutions receiving federal award money from
adjusting the salaries of student recruiters and financial
aid officers “based in any part, directly or indirectly,
upon success in securing enrollments or the award of
financial aid.” 34 C.F.R. § 668.14(b)(22)(ii)(A) (2013).
Institutions of higher education must continually certify
their compliance with the current Department of Educa-
tion regulations through program participation agree-
ments (PPAs) in order to receive federal financial assis-
tance award money. 20 U.S.C. § 1094(a).
With this brief history of HEA regulations in mind,
we turn back to the allegations in the case at hand.
6 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Leveski’s decade-long employment with ITT began on
January 8, 1996, meaning that the 2002 safe harbor provi-
sions were in effect during the latter half of her employ-
ment. ITT initially hired Leveski as an Inside Recruit-
ment Representative (RR) for the Troy campus. (Dkt. 75, 2.)
As an Inside RR, Leveski was responsible for “contact[ing]
consumers via telephone through leads provided . . . by
ITT’s directors of recruitment at the Troy campus, . . .
persuad[ing] them to visit the Troy campus[, and] . . .
persuad[ing] them to enroll and start classes at ITT.”
(Dkt. 49-1, 1-2.) (Inside RRs did their recruiting inside
the ITT campus. Outside RRs, in contrast, visited high
schools to recruit students.) (Dkt. 141-6, 101.)
From the beginning of Leveski’s employment as an
Inside RR, ITT made the importance of her “numbers” very
clear. (Dkt. 75, 11.) According to Leveski, both Inside and
Outside RRs were directed to increase “applications,
enrollments, and starts” at every group meeting. (Dkt. 75,
10.) A prospective student who had filled out an ITT
application and paid a $100 fee (before ITT waived the fee
in 2001) was counted as an “application” for Leveski. A
prospective student who had additionally passed an
entrance exam and completed the financial aid pro-
cess—basically, anyone who had “done everything but
sat in class”—counted as an “enrollment” for Leveski.
A prospective student who actually attended a class
counted as a “start” for Leveski. (Dkt. 141-6, 53-54.) By all
appearances, these applications, enrollments, and starts
had real ramifications for Leveski and the other RRs;
RRs were constantly reminded by the Troy campus direc-
tor “that if they wanted an increase in pay, they must
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 7
increase applications, enrollments, and starts.” (Dkt. 75,
10.) To further incentivize them, ITT published each
RR’s sales goals in a quarterly memorandum distributed
throughout the corporate district (Dkt. 75, 10.)
Although ITT’s sole focus appeared to be on “numbers,”
it claimed to evaluate employees like Leveski on a multi-
tude of criteria, including professional development,
the attrition rate of enrolled students, “being a team
player,” appearance, and attitude. (Dkt. 141-6, 106-07.) But
according to Leveski, these other criteria—which were
specifically listed on the employee’s annual evaluation
form—did not matter to ITT. Over time, Leveski came
to realize that her success in attaining applications, en-
rollments, and starts directly correlated with her
alleged success in ITT’s other job evaluation criteria. In
other words, when Leveski had a good numbers year,
she also had a good team player, appearance, and
attitude year. When Leveski had a bad numbers year,
she had similarly bad scores all around.
Of course, correlation does not prove causation, and it
is certainly plausible that Leveski had good years and
bad years all around. But Leveski offers evidence sug-
gesting that the direct correlation between her “numbers”
evaluation and her other job criteria evaluations was
no coincidence. Rather, Leveski suggests that the other
job criteria listed on the employee evaluations were
simply a sham to cover up the only thing that truly mat-
tered to ITT: the number of applications, enrollments,
and starts. In an affidavit, Leveski described the many
incidents that led her to believe that the other job
criteria were a sham:
8 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
ITT corporate employees and Troy campus direc-
tors continually reminded sales representatives to
meet sales targets to obtain raises and stay em-
ployed, but never discussed tactics to meet other
non-sales targets that were included in our
yearly review as sales representatives such as
assisting the school in meeting its attrition budget,
being a team player, appearance and attitude.
(Dkt. 49-1, 12.)
During the review process as a sales representa-
tive, I questioned Steve Sorensen, Patricia Hyman
and Bob Martin regarding how my success in
helping ITT Troy Campus to obtain the attrition
rate set by ITT corporate was evaluated during
the review. I also asked them how ITT defined
attrition rate and calculated it. I was never given
a clear explanation of what attrition rate meant
or how it was calculated, nor how my rating for
appearance, attitude, and team player was evalu-
ated. In fact, to my knowledge, ITT did not keep
track of any non-recruitment criteria during each
academic quarter.
(Dkt. 49-1, 12-13.)
[D]uring my reviews . . . when I did not signifi-
cantly exceed my sales targets—the non-recruit-
ment criteria on my reviews dropped from the
top performance level of “Very Exceptional Re-
sults” to “Results at Standard.” I asked my super-
visor who conducted the review why my non-
sales criteria decreased in unison with my sales
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 9
criteria. I was reassured that the score I received
in my review—the results of which determine
the percentage of my pay raise—were solely
based upon my sales targets.
(Dkt. 49-1, 13.) Similarly, when asked at her deposition
how she came to believe that ITT only considered
the number of applications, enrollments, and starts in
evaluating RRs, Leveski provided the following examples:
My first year there, 1996, I received a 1 [overall
evaluation score, which was the highest possible
score]. I did an exceptional job; I got a 1 in my
appearance. I wore the same suits the first day
I started to work at ITT and the last day I left
ITT. I didn’t get a 1 again in appearance. It doesn’t
make any sense. And when I questioned managers
about this, [they answered,] because, Debbie, they
don’t care. All they want you to do is make your
numbers. They want you to start students. It is
a number game.
(Dkt. 141-6, 88.)
You received your raises based on the students
that started. It didn’t matter how you dressed, it
didn’t matter what college courses you took. You
didn’t end up getting a raise because you got a
master’s degree in education. You didn’t get a 1
for doing that. I didn’t know what the criteria
was [sic]. . . . Look at [my professional develop-
ment evaluation.] What more did I have to do to
get a 1 in that category? Go for a Ph.D.? I mean,
we . . . had representatives at that time taking
10 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
religious classes, because ITT didn’t define what
professional development was. So Joie Bowman
[another ITT employee] went and took something
at her church.
(Dkt. 141-6, 87.)
Q. Who told you you get paid based on your
starts?
A. [ITT managers] Patricia Hyman, Dave
McDaniel, Steve Sorensen, Bob Martin, [and]
representatives. If you want me to name them,
I will name them.
Q. Yes, what representatives also told you that?
A. Joie Bowman, Dave McKinnon . . . I can’t think
of any others.
Q. What specifically did Ms. Hyman tell you?
A. You know it’s a numbers game; you’re going to
get paid on the number of students you start.
(Dkt. 141-6, 73-74.)
Despite her concerns over how she was being evaluated,
for the most part, the evaluations turned out well for
Leveski. For four out of the six years that she was em-
ployed as an RR, Leveski met or exceeded her starts goal
number, and for five out the six years she received at
least the median rating for overall performance.
Moreover, Leveski received a salary increase after every
evaluation (although this increase was much higher in
years that she exceeded her numbers goal). (Dkt. 49-1, 14-
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 11
15.) Consequently, Leveski continued to work for ITT as
an Inside RR until a better opportunity arose.
That opportunity came in 2002, when ITT offered Leveski
the chance to move from the hourly position of Inside
RR to the salaried position of Financial Aid Administrator
(FAA). (Dkt. 141-6, 50.) Leveski began her new FAA job
on April 15, 2002, and quickly discovered it was a
new sort of “numbers game.” (Dkt. 49-1, 15.) Instead of
worrying about the numbers of applications, enrollments,
and starts, Leveski now had to worry about the numbers
of students she successfully “packaged.” Once a student
had completed ITT’s application process and had
passed the entrance exam, the student came to an FAA.
There, the FAA “packaged” the student—collecting
personal and demographic information on the student,
inquiring about personal and family income, and helping
the student complete the necessary forms to receive
financial aid. (Dkt. 141-6, 39-40.)
According to Leveski, the number of students success-
fully “packaged” directly impacted an FAA’s pay. Despite
the fact that FAAs were paid a salary, instead of being
paid by the hour, Leveski alleges that an FAA’s pack-
aging numbers determined whether the FAA received
a raise in her salary. (Dkt. 49-1, 17.) Specifically, Leveski
came to believe over time that ITT only cared about
how much federal financial assistance award money
she could secure for the school, and how quickly she
could do it. As with her claims about ITT’s compensation
of RRs, Leveski did not arrive at this conclusion
through complete guesswork. Rather, she details specific
12 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
conversations that led her to reach this conclusion in
both her affidavit and her deposition testimony, including:
Liz Franck, Kim Zwierzchowski, Stephen
Goddard, Richard Zeeman, and Matt Diemling
[Leveski’s supervisors as an FAA] . . . stressed to
all financial aid administrators at frequent meet-
ings that goals of securing financial aid for ITT
students must be met to get a raise.
(Dkt. 49, 1, 18-19.)
Q. What did Mr. Diemling [the director of finan-
cial aid at the Troy campus] tell you?
A. That I would receive an increase in wages by
securing federal funding for students by getting
them repacked or packaged.
(Dkt. 141-6, 346.) Leveski also notes in her affidavit that
her yearly goals were always defined in terms of her
ability to secure the most federal award money “by the
first available date permitted by Federal law.” (Dkt. 49-1,
17.) Leveski’s success in meeting these yearly goals
directly determined how much of a raise she would
receive the following year. (Dkt. 49-1, 17-18.) In sum, it
did not take Leveski long in her new position as an FAA
to realize that ITT was “looking for the money, and [it]
want[ed] the money to come in on the first day it’s avail-
able.” (Dkt. 141-6, 192-93.) With the constant emphasis
on numbers throughout the FAA office, Leveski realized,
once again, that the only things that mattered to ITT were
the numbers. (Dkt. 141-6, 193.)
Although the numbers were important for both RRs
and FAAs, according to Leveski, the pressure to meet
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 13
number goals led to some particularly unsavory
behavior among the FAAs. The pressure to secure as
much federal award money for ITT as quickly as possible
led many managers and FAAs to underreport students’
incomes, to overlook discrepancies in the students’ ap-
plications, and even to falsify financial aid documents.
Again, Leveski provided specific examples of this
behavior in her deposition:
Q. Ms. Leveski, were you ever instructed by a
manager at ITT to falsify financial aid forms?
A. Yes.
Q. Who instructed you to falsify financial aid
forms?
A. Richard Zeeman.
...
Q. What did Mr. Zeeman instruct you to do in
2005 that you thought was improper?
A. He asked the financial aid advisors and myself
to falsify documents so that we could get the
students packaged.
...
Q. . . . Why do you contend Mr. Zeeman instructed
you to falsify financial aid documents?
A. Because he called three of us in his office behind
closed doors and asked us to falsify documents
so that we could get our students packaged.
(Dkt. 141-6, 393-94.)
14 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Q. Okay. You just testified that you’re aware of
other FAAs falsifying documents at ITT; is
that right? . . . Why do you contend that they
falsified documents, they being the unnamed
FAAs?
A. When you would meet with an individual, and
there were many individuals out there that work
under the table. They don’t put down the income
on the FAFSA [Free Application for Federal Stu-
dent Aid]. And . . . I would say to them, How
much money did you make? Oh, I made $10,000,
but it was all under the table. I made them write
it on the FAFSA. Other FAAs just looked the
other way. They didn’t have it recorded. . . . At
that point I would say, Okay, . . . you were re-
quired by law to file federal income tax. Well,
the person would get very upset sometimes. I’d
end up calling my manager in, and . . . in some
instances the manager would either come back
and say to me, and possibly the Director of Fi-
nance, that the person made a mistake. He didn’t
mean he had made $10,000.
(Dkt. 141-6, 151-52.) Despite the less-than-honest atmo-
sphere that prevailed throughout the financial aid office,
Leveski continued to work there for four more years. In
2005, she filed a sexual harassment lawsuit against
ITT, which settled on November 3, 2006. (Dkt. 49-1, 1;
Dkt. 141-6, 247.) As part of the settlement agreement,
Leveski agreed to end her employment with ITT, and
the parties appeared to part company forever.
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 15
But an express mail letter brought the parties back
into conflict only six months later. On May 17, 2007,
Leveski received a letter from private investigator
Davy Keith, informing Leveski that he worked for a
Mississippi attorney who would like to speak to her. (Dkt.
141-6, 239.) Leveski was not sure why a Mississippi
attorney would want to speak to someone in Michigan;
nonetheless, Leveski called Keith’s phone number and
left a message on his answering machine. Later that
day, Leveski received a phone call directly from the
Mississippi attorney, who turned out to be Timothy J.
Matusheski (one of the original attorneys who filed
the present lawsuit). Matusheski, it seems, had hired
Keith to find former ITT employees who had previously
filed lawsuits against the company. Apparently
assuming that they would be predisposed to think ill of
their former employer, Matusheski contacted these
former employees, with the hope of finding one who
had enough damaging information against the school
to bring an FCA lawsuit. (Dkt. 141-6, 240-43.)
Before talking to Matusheski, Leveski admittedly had
never considered filing an FCA suit against ITT. (Dkt. 141-
6, 244.) However, after learning about a potential FCA
claim from Matusheski, Leveski began conducting
some independent research, which included “t[aking] a
closer look at my own reviews . . . [and] doing searches on
the Internet in reference to Title IV funding and the rules
and regulations.” (Dkt. 141-6, 294.) During her research,
she also reviewed previous qui tam actions against ITT,
including United States ex rel. Graves v. ITT Educ. Servs.,
Inc., 284 F. Supp. 2d 487 (S.D. Tex. 2003) and U.S. ex rel.
16 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Olson v. ITT Educ. Servs., Inc., No. 1:04-CV-0647-JDT-WTL,
2006 WL 64597 (S.D. Ind. Oct. 20, 2005). Leveski did not
limit her research to ITT; in fact, Leveski also
researched Matusheski—who had been completely un-
known to her before the private investigator’s let-
ter—looking up information about him on the internet
as well as contacting her previous attorney from the
sexual harassment suit. (Dkt. 141-6, 247.) After all this
research, Leveski decided that she wanted to bring a
qui tam action against ITT, and Matusheski was the at-
torney to file it.
Thus, Matusheski (along with another attorney who
has subsequently withdrawn) filed this case under seal
in the Southern District of Indiana (the location of ITT’s
corporate headquarters) on July 3, 2007, and the long
procedural history of this case began. The Department
of Justice declined to intervene in Leveski’s case on No-
vember 13, 2008, and the court unsealed Leveski’s case
shortly thereafter. (Dkt. 23, 1.) On January 30, 2009, ITT
filed its first motion to dismiss Leveski’s case pursuant
to Fed. R. Civ. P. 9(b), 12(b)(1), and 12(b)(6), claiming
that (1) the “ ‘fraudulent scheme’ alleged by Leveski in
this matter is identical” to the one alleged in Graves, 284
F. Supp. 2d at 490-93, so 31 U.S.C. § 3730(b)(5) barred
subject-matter jurisdiction over Leveski’s case in federal
court, (2) Leveski’s case was barred by a release she
signed after settling her sexual harassment suit with ITT,
(3) Leveski had failed to plead her allegations of fraud
with sufficient particularity, as required by Fed. R. Civ.
P. 9(b), and (4) Leveski had made her allegations in a
conclusory manner, in violation of Fed. R. Civ. P. 12(b)(6).
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 17
(Dkt. 40.) On September 23, 2009, Judge William T. Law-
rence, the original district court judge assigned to
Leveski’s case, dismissed it under Fed. R. Civ. P. 9(b),
finding that Leveski had “all but admit[ted] that she
has not plead her allegations with sufficient particular-
ity,” but gave Leveski the option to file an amended
complaint within fifteen days. In issuing this order, the
judge explicitly rejected both ITT’s jurisdictional argu-
ment and its release argument. The judge rejected the
release argument because Leveski had only released
ITT from claims “based upon” and “relate[d] to her
employment,” but Leveski’s claims in the present FCA
suit were “derivative in nature, based on an obligation
owed to the Government.” (Dkt. 74, 4.) With respect to
the jurisdictional argument, the judge noted that 31
U.S.C. § 3730(b)(5) only barred subject-matter jurisdic-
tion if Leveski’s case could be fairly characterized as a
“related action based on the facts underlying” Graves.
Since Leveski alleged many facts in her complaint that
occurred after the Graves litigation had been resolved,
the judge did not see how Leveski’s case could be
“based on” Graves. Thus, the judge concluded, nothing
stood in the way of federal subject-matter jurisdiction
over Leveski’s case were she to re-file an amended com-
plaint alleged with sufficient particularity. (Dkt. 74, 3-4.)
Leveski took up the district judge’s offer to amend
her complaint, and she filed this amended complaint on
October 8, 2009. (Dkt. 75.) ITT immediately filed a
second motion to dismiss pursuant to Fed. R. Civ. P.
12(b)(6) and 9(b), this time alleging that (1) Leveski
had again failed to plead her fraud allegations with
sufficient particularity, (2) Leveski had again failed to
18 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
state a claim, (3) Leveski’s suit was barred by a settle-
ment agreement between ITT and the Department of
Education, and (4) at least some of Leveski’s claims
were barred by the FCA’s six-year statute of limita-
tions. (Dkt. 77.) Leveski’s case fared much better on the
disposition of ITT’s second motion to dismiss than it
had on the first, with one exception. On May 12, 2010,
Judge Lawrence agreed with ITT that the FCA’s six-
year statute of limitations applied to Leveski’s case, thus
barring all of Leveski’s claims occurring before July 3,
2001 (since Leveski originally filed this action on
July 3, 2007). The statute of limitations issue was ITT’s
only victory, however, as Judge Lawrence rejected the
rest of ITT’s arguments. After the disposition of ITT’s
second motion to dismiss, Leveski’s case proceeded in
the district court covering only the time period from
July 3, 2001 to November 3, 2006 instead of the original
January 8, 1996 to November 3, 2007 period, and it contin-
ues covering this abbreviated time period today since
Leveski did not appeal Judge Lawrence’s order. Yet
practically speaking, this abbreviation does not matter
much to Leveski’s case since the new time period—July 3,
2001 to November 3, 2006—still covers Leveski’s em-
ployment both as an RR and as an FAA. (Dkt. 92.)
By the time that Judge Lawrence issued an order on
ITT’s second motion to dismiss, he had already been
dealing with Leveski’s case for close to three years. None-
theless, it appears that because of new judicial appoint-
ments to the district court, case assignments were
shuffled, and Leveski’s case was reassigned from Judge
Lawrence’s docket to Judge Tanya Walton Pratt’s
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 19
docket on June 25, 2010. (Dkt. 110.) Perhaps believing
that it would have better luck with a new judge, ITT
filed a third motion to dismiss Leveski’s case on March 16,
2011. (Dkt. 141.) In this third motion, filed pursuant to
Fed. R. Civ. P. 12(b)(1), ITT hearkened back to an argu-
ment from its first motion to dismiss, claiming once
again that the federal court lacked subject-matter juris-
diction over Leveski’s case. Instead of basing its jurisdic-
tional argument on 31 U.S.C. § 3730(b)(5), however,
ITT now based its jurisdictional argument on the ap-
plicable version of 31 U.S.C. § 3730(e)(4):
(A) No court shall have jurisdiction over an
action under this section based upon the
public disclosure of allegations or transactions in
a criminal, civil, or administrative hearing, in a
congressional, administrative, or Government
Accounting Office report, hearing, audit, or investi-
gation, or from the news media, unless the
action is brought by the Attorney General or the
person bringing the action is an original source
of the information.
(B) For purposes of this paragraph, “original
source” means an individual who has direct
and independent knowledge of the information
on which the allegations are based and has volun-
tarily provided the information to the Govern-
ment before filing an action under this section
which is based on the information.
Based on this statute, ITT argued that Leveski’s case
was “based upon publicly disclosed allegations,” and
20 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Leveski was “not the original source of these allegations.”
(Dkt. 141, 1.) Although based on a different subsection
of § 3730, ITT’s new jurisdictional argument before
Judge Pratt was similar to its earlier jurisdictional argu-
ment before Judge Lawrence. Still, ITT now claimed
to have stronger evidence that the federal court lacked
subject-matter jurisdiction over Leveski’s case. (Dkt. 141-
1, 6-7.) This stronger evidence came in the form of
Leveski’s deposition testimony from only two weeks
prior, which—according to ITT—“firmly establish[ed
that] Leveski lacks direct knowledge of the fundamental
premise of her suit . . . and what minimal knowledge
she does have was not acquired independently, but
through Internet research of prior cases brought against
ITT and conversations with the lawyer who recruited
her, Matusheski.” (Dkt. 141-1, 15.)
Judge Pratt found ITT’s jurisdictional arguments more
convincing than her predecessor had found them. On
August 8, 2011, Judge Pratt dismissed Leveski’s case
for lack of jurisdiction under 31 U.S.C. § 3730(e)(4), finding
that Leveski’s allegations had already been publicly
disclosed in Graves and that Leveski was not the original
source of these allegations. Judge Pratt noted that, like
Leveski, the Graves relators had also been employed by
ITT as RRs, and they had also “alleged that ITT violated
the HEA by compensating its admissions and recruit-
ment representatives based directly on the number of
their enrolled students.” (Dkt. 241, 5-6.) Although
Leveski had attempted to distinguish her case from
Graves, the judge did not find her attempts persuasive.
The judge acknowledged that Leveski’s allegations
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 21
against ITT spanned a later time period than the
Graves allegations. The judge also recognized that Leveski
made additional allegations not present in the Graves
complaint—most notably, the allegation that ITT compen-
sated both FAAs and RRs in a manner that violated
the HEA. (In contrast, the Graves relators had alleged
that ITT only compensated RRs in a manner that violated
the HEA.) But citing Glaser v. Wound Care Consultants, Inc.,
570 F.3d 907, 920-21 (7th Cir. 2011), for the proposition
that “though a complaint may add a few allegations
not covered by the previous disclosure, it is not enough
to take this case outside the jurisdictional bar,” the
judge ultimately concluded that Leveski’s additional
allegations were “insufficient to withstand the ‘based
upon public disclosure’ analysis.” (Dkt. 241, 6.) Thus,
Judge Pratt concluded that 31 U.S.C. § 3730(e)(4)(A)
required her to dismiss Leveski’s suit for lack of subject-
matter jurisdiction. (Dkt. 241.)
Following this dismissal for lack of subject-matter
jurisdiction, things went from bad to worse for Leveski.
Leveski filed a motion to alter or amend the judgment
under Fed. R. Civ. P. 59(e) on September 2, 2011, arguing
that the dismissal order had “not take[n] into considera-
tion the material factual differences between this case
and . . . Graves” and had also ignored binding Seventh
Circuit precedent. (Dkt. 255, 2.) A sharp denial ruling
referred to Levesi’s 59(e) motion as a “second bite at the
apple.” (Dkt. 297, 15.) The denial did note that “the me-
chanics of this scheme [alleged by Leveski] are perhaps
not identical to the mechanics of the scheme alleged in
Graves,” but emphasized that “the two cases need not be
22 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
identical” in order to be barred by 31 U.S.C. § 3730(e)(4)(A).
(Dkt. 297, 20.) In response to Leveski’s allegation
that binding Seventh Circuit precedent had not been
followed, the denial ruling noted that “the Court’s
decision to grant ITT’s motion to dismiss was not an
anomaly. To the contrary other courts have dismissed
nearly identical qui tam suits where the plaintiff’s
attorney [Matusheski] clearly recruited the relators to
serve as makeshift and manufactured whistleblowers
wielding generic and cookie-cutter complaints.” (Dkt 297,
20.) Along those lines, the order concluded with a stern
criticism of the way in which attorney Matusheski
had recruited Leveski to bring her case. Noting that
Matusheski had recently apologized to another federal
district court for his behavior in a separate FCA case
involving a different for-profit educational institution,
the district judge characterized Matusheski’s continual
pursuit of Leveski’s case as “brazen.” (Dkt 297, 20.)
Leveski, according to the district judge, was “worlds
apart from the type of genuine whistleblower contem-
plated by the FCA,” leading the judge to conclude
that both “the existence of nearly on-point cases
reaching identical results [and] the attorney-driven
nature of this lawsuit” demanded the dismissal of
Leveski’s suit for lack of subject-matter jurisdiction
under 31 U.S.C. § 3730(e)(4)(A). (Dkt. 297, 21.)
The final blow to Leveski’s lawsuit came in the form
of sanctions. ITT had sought sanctions in the district
court against both Leveski and her counsel, principally
contending that the qui tam suit was frivolous. Upon
the dismissal of Leveski’s case for lack of subject-
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 23
matter jurisdiction, the district judge awarded
sanctions against counsel only. (Note that in addition to
Matusheski, Leveski had secured additional counsel by
the time that the district court dismissed her case
and granted sanctions. The law firm of Plews
Shadley Racher & Braun had joined Matusheski in the
representation of Leveski on April 30, 2009, and the law
firm of Motley Rice LLP had joined both Matusheski
and Plews Shadley in the representation of Leveski on
June 2, 2011. Despite their differing lengths of involve-
ment with Leveski’s case, all counsel were included in
the sanctions order.) Nevertheless, because we now
reverse the dismissal, this sanctions order will require
little discussion.
Leveski and her counsel filed a timely appeal of both
the dismissal and the sanctions order with our court. We
review Leveski’s appeal concerning the district court’s
dismissal of her case for lack of subject-matter jurisdic-
tion de novo. Apex Digital, Inc. v. Sears, Roebuck & Co., 572
F.3d 440, 443 (7th Cir. 2009). Furthermore, because ITT
raised a factual (instead of a facial) challenge to jurisdic-
tion, we are “not bound to accept as true the allegations
of the complaint which tend to establish jurisdiction.”
Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir.
1979). Instead, we may “properly look beyond the jurisdic-
tional allegations of the complaint and view whatever
evidence has been submitted on the issue”—such as
Leveski’s deposition testimony. Id.; see also Hay v. Ind.
State Bd. of Tax Comm’rs, 312 F.3d 876, 879 (7th Cir. 2002).
24 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
II
Both Leveski and ITT agree that federal subject-matter
jurisdiction over this case turns on our interpretation
of 31 U.S.C. § 3730(e)(4). The version of § 3730(e)(4) appli-
cable to Leveski’s lawsuit is the version that was “in
force when the events underlying this suit took place.”
United States ex rel. Goldberg v. Rush Univ. Med. Ctr., 680
F.3d 933, 934 (7th Cir. 2012) (noting that the language of
§ 3730(e)(4) was “altered in 2010, but that change is not
retroactive”). This version of § 3730(e)(4), which re-
mained effective from October 27, 1986 until March 22,
2010—a time period that encompasses both Leveski’s
employment at ITT and her subsequent filing of this
lawsuit—bars federal court “jurisdiction over an [FCA]
action . . . based upon the public disclosure of allega-
tions . . . unless . . . the person bringing the action is an
original source of the information.” Pub. L. No. 99-562, § 3,
100 Stat. 3153 (1986). Congress added this provision to
the FCA in order to avoid the “risk that unnecessary
‘me too’ private litigation would divert funds from
the Treasury.” Goldberg, 680 F.3d at 934. With this con-
gressional purpose in mind, we have previously inter-
preted the phrase “based upon [a] public disclosure”
to mean “substantially similar to publicly disclosed
allegations,” in accordance with virtually every other
circuit that has interpreted this phrase.1 Glaser, 570
1
The current version of 31 U.S.C. § 3730(e)(4), which went into
effect on March 23, 2010, expressly incorporates the “substan-
(continued...)
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 25
F.3d at 920. Moreover, the applicable version of
§ 3730(e)(4)(B) defines the term “original source” to
mean “an individual who has direct and independent
knowledge of the information on which the allegations
are based and has voluntarily provided the information
to the Government before filing an [FCA] action.”
Applying the definitions of these terms to the instant
case, we must first determine whether Leveski’s allega-
tions are “substantially similar to publicly disclosed
allegations.” 570 F.3d at 920. If we decide that Leveski’s
allegations are not substantially similar, then our juris-
dictional inquiry ends, and Leveski can proceed to
litigate her case on the merits in the federal district
court. On the other hand, if we decide that Leveski’s
allegations are substantially similar, then our jurisdic-
tional inquiry has a second step. In this second step,
we must assess whether Leveski has “direct and indep-
endent knowledge of the information on which [her]
allegations are based.” 31 U.S.C. § 3730(e)(4)(B). (Both
sides agree that Leveski contacted the government
before bringing this action, so we need not inquire
whether Leveski “voluntarily provided [her] information
to the Government before filing.”) (Dkt. 334-3, 4.) If
1
(...continued)
tially similar” standard previously used by our circuit and
most other circuits under the prior version of the statute. See 31
U.S.C. § 3730(e)(4)(A) (2013) (commanding courts to “dismiss
an action or claim under this section, unless opposed by the
Government, if substantially the same allegations or transac-
tions as alleged in the action or claim were publicly disclosed.”
26 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
we decide that Leveski has direct and independent knowl-
edge of her allegations, then once again, Leveski can
proceed to litigate her case on the merits in the federal
district court. If we decide that Leveski does not have
direct and independent knowledge, however, then 31
U.S.C. § 3730(e)(4)(A) bars subject-matter jurisdiction,
and Leveski cannot litigate her case in federal court.
A
The first step of our jurisdictional inquiry requires us
to determine whether Leveski’s allegations are substan-
tially similar to the relators’ allegations in Graves, 284
F. Supp. 2d at 490-93, which was filed more than five
years before Leveski’s case on April 22, 2002. (Dkt. 241.)
Although we have already reviewed Leveski’s allega-
tions in Section I, we must also review the Graves allega-
tions before making this determination. We turn to
this review now. Much like the present case, the Graves
case was brought by relators who were former
employees of ITT. The two relators, Susan Newman
and Dan Graves, had worked for ITT as Inside RRs—the
same job that Leveski had once held at ITT. Moreover,
the two Graves relators alleged in their complaint that
ITT had violated the HEA by illegally paying incentive
compensation to its RRs. (Dkt. 241, 6.)
Certainly, the allegations in Graves seem very similar
to Leveski’s allegations on first impression. But first
impressions can be deceiving. A closer examination
reveals four critical differences between the two cases.
First, we note that the relators in Graves had much
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 27
shorter tenures at ITT than did Leveski. Relator Susan
Newman was employed by ITT for approximately
nineteen months (from June 2, 1998 to February 7, 2000),
while relator Dan Graves was employed for less than
one year (from July 1999 to February 2000). (Dkt. 141-9, 3.)
Leveski, in contrast, worked for ITT for over a decade
(January 8, 1996—November 3, 2006). (Dkt. 75.) The
relatively long span of Leveski’s employment, of course,
does not directly impact her FCA claim. Nevertheless,
because Leveski worked at ITT for so much longer than
the Graves relators, she has greater potential than the
Graves relators to possess relevant evidence about ITT’s
compensation scheme that could directly impact her
FCA claim.
Second, and relatedly, the long span of Leveski’s employ-
ment allows her to make allegations against ITT that cover
a different time period than the Graves allegations. Al-
though the Graves relators worked for ITT for less than
two years, they allege that “ITT paid illegal incentive
compensation to its admissions representatives” from
“1993 to 1999”—i.e. during the five years prior to their
being hired by ITT as well as during their brief employ-
ment. (Dkt. 141-9, 24-25.) Leveski, on the other hand,
alleges that ITT paid illegal incentive compensation
throughout her decade-long employment at ITT from
1996 to 2006. After excluding the earlier years of
Leveski’s employment (since Judge Lawrence found
allegations from these years barred by the six-year
statute of limitations), Leveski’s allegations cover the
period from July 3, 2001 to November 3, 2006. (Dkt. 92.)
Thus, there is no temporal overlap between the Graves
allegations and Leveski’s allegations.
28 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Third, because the Graves relators were employed by
ITT for a relatively short period of time, they were only
able to make allegations about the one department to
which they were briefly exposed: the recruitment office.
Leveski, on the other hand, is able to present evidence
about ITT practices in a second department, the financial
aid office, since her long employment afforded her the
opportunity to hold two different positions (RR and
FAA). Indeed, Leveski’s experience as an FAA during
the latter half of her employment at ITT allows her to
make allegations both about the way that ITT com-
pensated its employees in the financial aid office and
about the way that ITT applied to the federal government
for financial aid. Specifically, Leveski alleges that the
FAAs’ salaries “were directly tied” to how much finan-
cial aid they could secure for ITT “by the first available
date permitted by Federal law.” (Dkt. 75, 13-14.) With
regard to ITT’s applications for federal financial
aid, Leveski testified in her deposition that other ITT
employees, and even her manager, condoned students
underreporting their income on the FAFSA (which
would, of course, increase the amount of financial aid
for which they were eligible). (Dkt. 141-6, 151-53). If true,
both of Leveski’s allegations would constitute clear
violations of the HEA—and yet, these allegations are
wholly absent from the Graves case.
Fourth, even putting aside Leveski’s additional allega-
tions about the ITT financial aid office, we see significant
differences in her allegations about the recruitment
office. The scheme alleged by the Graves relators
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 29
involved a flagrant violation of Department of Educa-
tion requirements. According to them,
ITT’s salary administration program for admis-
sions and recruitment personnel provided in
part for the payment of “5% of earned revenues
for Inside Representatives and 10% of earned
revenues for Outside Representatives.” The level
of “earned revenue” was a direct function of the
new and continuing students and graduates
who are enrolled by the admissions and recruit-
ment representative.
(Dkt. 141-9, 24.) In addition to this allegation that ITT
paid direct commissions to its RRs, the Graves relators
alleged that ITT “had minimum enrollment quotas for
recruiters. Recruiters failing to meet their enrollment
quotas were fired. Each campus had a minimum enroll-
ment quota that was determined by ITT’s officers and
directors as part of the annual budgeting process.” Brief
of Petitioner-Appellant at 6, United States ex rel. Graves
v. ITT Educ. Servs., No. 03-20460 (5th Cir. Nov. 4, 2003).
The scheme alleged by Leveski, in contrast, involves a
much more sophisticated—and more difficult to de-
tect—violation of Department of Education require-
ments. Leveski does not allege that either her compensa-
tion or her continuation as an ITT employee depended
on explicit percentages or quotas. In fact, she acknowl-
edges that ITT claimed to compensate her based on a wide
range of factors (including appearance, attitude, and
participation in continuing education classes). But Leveski
alleges that how ITT claimed to compensate her and
30 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
how ITT actually compensated her were very different.
Despite ITT’s claims, Leveski believes that her compensa-
tion was based on only one thing: the number of students
Leveski brought into ITT (and as a result, the amount
of money Leveski brought into ITT).
Moreover, through her affidavit and deposition testi-
mony, Leveski provides evidence to support her allega-
tions that ITT’s claimed practices in its recruitment and
financial aid offices did not match ITT’s actual practices.
As the excerpts from Leveski’s testimony in Section I
demonstrated, Leveski was able to name specific indi-
viduals in positions of authority at ITT who told her
that her recruitment and financial aid “numbers” were
all that mattered. Leveski also provided evidence that
ITT never considered any other factors besides her num-
bers. For example, Leveski indicated that ITT did not
police what types of continuing education classes that
its employees took, even though the employees were
allegedly evaluated on these classes. As a result,
ITT employees who “got a master’s degree in educa-
tion” appeared to get the same amount of “professional
development” credit as employees who “took something
at [their] church.” (Dkt. 141-6, 87.) Furthermore, although
ITT employees were allegedly evaluated on their ap-
pearance, ITT’s evaluation of appearance did not cor-
relate with how the employee actually appeared. Leveski
testified that she “wore the same suits the first day
[she] started to work at ITT and the last day [she] left
ITT.” (Dkt. 141-6, 88.) Yet she only received an excellent
appearance evaluation during her first year at ITT—
coincidentally, the same year that her recruitment “num-
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 31
bers” were also “exceptional.” (Dkt. 141-6, 88.) Leveski’s
testimony suggests that ITT’s supposed multi-factor
evaluation system was little more than a sham.
Undoubtedly, the sham compensation scheme and the
financial aid violations alleged by Leveski are different
than the outright quota system alleged by the Graves
relators. But the question we must face is whether
Leveski’s allegations are different enough from the
Graves allegations to bring her suit outside the public
disclosure bar of 31 U.S.C. § 3730(e)(4). A review of our
recent case law leads us to the conclusion that they are
different enough. Indeed, Leveski’s allegations against
ITT are only similar to the Graves allegations when
viewed at the highest level of generality. But in the last
few years, we have indicated on more than one
occasion that viewing FCA claims “at the highest level of
generality . . . in order to wipe out qui tam suits that rest
on genuinely new and material information is not
sound.” Goldberg, 680 F.3d at 936.
For instance, in United States ex rel. Baltazar v. Warden,
635 F.3d 866, 869-70 (7th Cir. 2011), we reversed a
dismissal under the § 3730(e)(4) jurisdictional bar after
we found that the district court had viewed the relator’s
claims too generally. There, chiropractor Kelly Baltazar
brought an FCA claim against the chiropractic group
for which she had previously worked, alleging that the
group had “added to her billing slips services that had
not been rendered and [upcoded] for services that had
been performed.” Id. at 866. Prior to Baltazar’s suit,
the General Accounting Office (GAO) had issued
32 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
several reports detailing widespread, abusive Medicare
billing practices by chiropractic groups—without
naming specific groups that were guilty of these abusive
practices. Nevertheless, the district judge believed that
these reports were enough to preclude federal court
jurisdiction over Baltazar’s claim. On appeal, we
pointed out that Baltazar’s suit was “ ‘based on’ her own
knowledge rather than the published reports” and had
“supplied vital facts that were not in the public domain.”
Id. at 869. Because the GAO reports did “not disclose
the allegations or transactions on which Baltzar’s [suit
was] . . . based,” we found that § 3730(e)(4) did not
stand in the way of Baltazar’s suit. Id. at 868. Like
Baltazar’s allegations, Leveski’s allegations are clearly
based on her own knowledge; in her affidavit and dep-
osition, she provides the court with relevant names,
meetings, and other details specific to her employment
with ITT. And like Baltazar, Leveski has supplied
the court with vital facts that were not alleged in
Graves. Leveski has suggested that ITT developed a
sophisticated, yet illegal employee evaluation and com-
pensation scheme designed to avoid detection by the
Department of Education.
As helpful as the Baltazar decision is to Leveski, even
more helpful to her is our decision last year in Goldberg,
680 F.3d at 936. There again, we reversed a district court
that had dismissed an FCA suit for lack of jurisdiction
under § 3730(e)(4) after viewing the relator’s claims too
generally. Id. The relators in Goldberg were an orthopedic
surgeon and a director of real estate at Rush University
Medical Center in Chicago. Together, they alleged
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 33
that Rush was improperly billing Medicare for services
performed by teaching physicians that were, in reality,
performed by inadequately supervised residents. Id. at
934-35. During the 1990s, both the Department of
Health and Human Services and the GAO had issued
research studies concluding that improper billing for
services performed by unsupervised residents was a
widespread problem in teaching hospitals nationwide.
Id. at 934. Much like Leveski, however, the relators in
Goldberg alleged a more sophisticated, harder to detect
scheme than the kind described in the governmental
reports. The reports had accused teaching hospitals of
billing for services performed by residents who were
wholly unsupervised. The Goldberg relators, on the other
hand, alleged that Rush billed for services performed
by residents who were not adequately supervised. Ac-
cording to them, Rush scheduled teaching physicians
for multiple surgeries at once, such that “even if the
teaching physician were present for the ‘critical’ portion
of one [surgery], . . . the surgeon could not have been
‘immediately available for the rest of each procedure,” as
required by Medicare. Id. at 935. After reviewing the
relators’ allegations, we found that they had “allege[d]
a kind of deceit that the GAO report does not attribute
to any teaching hospital. Unless we understand the ‘unsu-
pervised services’ conclusion of the [governmental
reports] at the highest level of generality—as covering
all ways that supervision could be missing or inade-
quate—the allegations of these relators are not ‘substan-
tially similar.’ ” Id. at 936. Thus, we found that § 3730(e)(4)
did not destroy federal court jurisdiction over the
relators’ claims. Id.
34 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
Like Goldberg and Baltazar, we believe that Leveski’s
case is yet another instance of a district court dismissing
an FCA suit after viewing the allegations at too high a
level of generality. To be sure, Leveski’s case looks
similar to the Graves case at first blush. The relators in
both cases are former employees of ITT—and even held
the same job title. The relators in both cases also allege
that ITT violated the incentive compensation provision
of the HEA. But this is where the similarities between
the two cases end. The details of how ITT allegedly vio-
lated the HEA are quite different in Leveski’s case
than they were in Graves. Unlike the Graves relators, who
alleged a more rudimentary scheme by ITT to violate
the HEA incentive compensation provision, Leveski
alleges a more sophisticated, second-generation method
of violating the HEA.
Furthermore, although we know from Leveski’s deposi-
tion testimony that she reviewed the Graves case before
filing her lawsuit, we are convinced that Leveski has done
more than just “add[] a few allegations” to the Graves
complaint. Glaser, 570 F.3d at 920. In Glaser, we upheld
a district court’s dismissal for lack of jurisdiction under
§ 3730(e)(4) after finding that a relator had done just
that—characterizing the Glaser relator’s allegations as
“wrongdoing [that was] virtually identical” to prior,
publicly disclosed allegations. Id. The relator, Carol A.
Glaser, brought an FCA suit accusing a medical clinic
of fraudulent billing practices; but this time, the relator
was a patient, not an employee, of the medical clinic.
Unlike Leveski, Glaser had no inside information from
her own personal experience at the clinic; instead, she
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 35
appeared to have learned all of the relevant information
in her FCA complaint from her attorney. Id. at 921. More-
over, Glaser’s allegations covered the same time
period covered by an ongoing Centers for Medicare
and Medicaid Services (CMS) investigation of the clinic.
Id. at 909. The CMS investigation centered on whether
the defendant medical clinic had billed patients for
seeing a doctor when they had actually seen a
physician’s assistant. Glaser alleged exactly the same
fraudulent billing practices in her complaint. Indeed,
Glaser’s only unique contribution was pointing out a
couple of instances in which the clinic billed patients
for seeing a doctor (instead of the physician’s assistant
whom they had actually seen) that were not mentioned
in the CMS report. It was under these circumstances
we held that “add[ing] a few allegations . . . is not
enough to take [a] case outside the jurisdictional bar,
properly understood; ‘based upon’ does not mean
‘solely based upon.’ ” Id. at 920.
In contrast to Glaser, Leveski has used inside informa-
tion that she obtained during her decade-long employ-
ment to make allegations that are noticeably different
from any prior allegations against ITT. Leveski’s case
would be more analogous to Glaser if Leveski had
merely added a few examples from her own personal
experience at ITT to the Graves complaint, re-alleging
that ITT maintained minimum enrollment quotas for its
recruiters and paid its recruiters direct commissions. But
Leveski has done much more than re-package the
Graves complaint. She has alleged new tactics by ITT to
avoid the mandates of the HEA—tactics that extend
36 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
beyond the recruiting office (the focus of Graves) to
the financial aid office.
The extent to which Leveski’s complaint goes beyond
a mere re-packaging is perhaps most apparent when
viewed in light of two other recent FCA cases that
were unsuccessfully litigated by her attorney, Timothy
Matusheski. Matusheski, who bills himself as the “Missis-
sippi Whistle Blower,” has apparently recruited many
other FCA relators besides Leveski to pursue HEA-
related cases against for-profit educational institutions.
The Law Offices of Timothy J. Matusheski, available at
http://mississippiwhistleblower.com (last visited July 1,
2013). For at least two of these cases, Matusheski appears
to have recruited relators who possessed little to
no knowledge beyond what was already in the public
domain.
In United States ex rel. Lopez v. Strayer Educ., Inc., 698
F. Supp. 2d 633 (E.D. Va. 2010), the relator recruited
by Matusheski, Magdalis Lopez, was a former recruiter
for Strayer University who alleged that Strayer paid
its recruiters incentive compensation in violation of the
HEA. Like the Graves relators, Lopez only alleged viola-
tions in the recruiting office (not the financial aid of-
fice), and Lopez appeared to allege a more straight-
forward scheme of outright recruitment commissions and
bonuses. Nevertheless, the exact details of Lopez’s
alleged scheme were never clear due to her total inability
to produce any evidence of specific people, statements,
and incidents to support her allegations. For instance,
when asked at her deposition to explain certain allega-
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 37
tions in her complaint, Lopez could not provide
any details:
Q. Do you have any factual knowledge of any
of the statements in your complaints from para-
graphs 43 through 72?
A. I have knowledge.
Q. What knowledge? Point to—me to one factual
statement that you knew before talking to
[Matusheski].
A. (after objection by counsel) I’m not an attor-
ney. You know, I cannot give you, you know, like,
details.
Lopez, 698 F. Supp. 2d at 639. Lopez’s inability to
provide relevant details in her deposition testimony
stands in sharp contrast Leveski’s ability to name
specific people and describe specific incidents in her
deposition testimony, as recounted in Section I.
Similarly, in United States ex rel. Schultz v. DeVry Inc.,
No. 07 C 5425, 2009 WL 562286 (N.D. Ill. Mar. 4, 2009), the
relator recruited by Matusheski, Jennifer S. Schultz, was
also a former recruiter—but this time, for DeVry Univer-
sity—who alleged that DeVry paid its recruiters incen-
tive compensation in violation of the HEA. Like Lopez,
Schultz only alleged violations in the recruiting office,
and Schultz alleged a straightforward bonus incentive
compensation system for recruiters that violated the
HEA. And just like Lopez, Schultz was completely incapa-
ble of providing any relevant details in her deposition
testimony. During Schultz’s deposition, she refused
38 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
to answer any questions about what information
Matusheski had provided her, and what information she
had provided Matusheski, citing the attorney-client
privilege. Id. at *1, *4. Leveski, in contrast, was much
more candid about the information that Matusheski
had provided her, and the information she had pro-
vided him. (Dkt. 141-6, 239-44.) More importantly, the
specific names and incidents that Leveski provided
though her deposition testimony and her affidavit are
details specific to Leveski’s employment—details that
Matusheski was incapable of supplying to Leveski.
It is true that serious questions have been publicly
raised about whether some for-profit educational institu-
tions have violated the incentive compensation provi-
sions of the HEA. See, e.g., Editorial, An Industry in Need
of Accountability, N.Y. Times, Aug. 15, 2011, at A20. The
fact that Matusheski alone has litigated multiple
FCA lawsuits against for-profit educational institutions
demonstrates that this general knowledge is well within
the public domain. But Leveski has added new facts
and new details to this general knowledge that were not
previously in the public domain. Even though prior
relators represented by Matusheski, such as Lopez and
Schultz, were not able to add new facts and new details,
Leveski is different. Through her deposition testimony
and her affidavit, Leveski has informed the public about
a new method of violating the HEA prohibition against
incentive compensation—a method much more difficult
to detect than outright commission and bonus schemes.
Leveski has also informed the public that HEA viola-
tions in for-profit educational institutions may extend
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 39
beyond recruiting departments and bleed into financial
aid departments. And Leveski’s allegations do not
appear to be baseless; as the excerpts from Leveski’s
deposition and affidavit in Section I demonstrate, she
has recounted specific conversations with specific indi-
viduals that support her allegations.
In closing our discussion of why Leveski’s allegations
are not “based upon” Graves for the purposes of 31
U.S.C. § 3730(e)(4)(A), we pause to emphasize two im-
portant points. First, we have not ignored ITT’s
argument that Leveski has altered her allegations on
appeal in order to distinguish them from the Graves
allegations. But we have saved our discussion of this
argument to the end because we think it lacks merit.
Accusing Leveski of “brief[ing] a different case from
the one Leveski actually filed,” ITT asserts that Leveski
did not emphasize the allegations that most con-
vincingly distinguish her case from Graves in the district
court. ITT argues that Leveski did not emphasize that
ITT “created a matrix to feign compliance” with the
HEA even though it “was still illegally compensating
student recruiters” in her second amended complaint
(the controlling complaint in this case). Yet we had no
trouble finding this allegation in paragraph thirty-two
of the second amended complaint:
While continually reminding sales representatives
to meet sales targets to obtain raises and stay
employed, ITT corporate employees and Troy
campus directors never discussed tactics to
meet non-sales targets that were included in sales
40 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
representatives’ yearly review such as assisting
the school in meeting its attrition budget, being a
team player, appearance, and attitude.
(Dkt. 75, 12.) Similarly, ITT accuses Leveski of not previ-
ously emphasizing her allegations that ITT’s illegal com-
pensation scheme extended beyond the recruiting office
to the financial aid office. But again, we had no trouble
finding this allegation in paragraph thirty-eight of
Leveski’s second amended complaint: “Relator’s and
other financial aid administrators’ salary increases were
directly tied to financial aid: rising and falling based
on whether the representative exceeded or failed to
meet financial aid goals.” (Dkt. 75, 14.) Perhaps ITT’s
most puzzling argument, however, is that Leveski has
somehow waived the right to distinguish her case from
Graves because she failed to mention Graves in her
second amended complaint. But Leveski had no reason
to mention Graves in her second amended complaint.
Her allegations had nothing to do with the Graves case.
Her allegations were based upon her own personal ex-
perience at ITT, not the allegations of the Graves relators.
Graves only became an issue in Leveski’s case once ITT
brought it to the district court’s attention in its final
motion to dismiss for lack of subject-matter jurisdic-
tion. (Dkt. 143.) As soon as ITT raised Graves, Leveski im-
mediately responded. In her brief opposing ITT’s final
motion to dismiss for lack of subject-matter jurisdiction,
Leveski pointed out to the district court that her “com-
plaint allege[d] different misconduct during a different
time period than Graves” and that “Graves d[id] not
address financial aid advisors.” (Dkt. 154, 12.) In sum,
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 41
ITT has failed to produce any convincing evidence
that Leveski has altered her allegations on appeal.
Second, although we believe that Leveski has evidence
to support her allegations, we do not necessarily imply
that Leveski has a winning case. As we have noted before,
“[r]elators’ allegations may be incorrect . . . [b]ut these
are questions on the merits.” Goldberg, 680 F.3d at 936.
In other words, we believe that Leveski could have a
winning case, but ultimately, it is up to her to convince
a trier of fact that her allegations are true. For now,
we only evaluate whether the federal district court has
subject-matter jurisdiction under 31 U.S.C. § 3730(e)(4)(A)
to let Leveski’s case proceed. All we care about at this
stage is whether Leveski’s allegations “rest on genuinely
new and material information.” Id. We find that
Leveski’s case does rest on genuinely new and material
information, and as a result, Leveski’s allegations are
not “substantially similar to publicly disclosed allega-
tions.” Glaser, 570 F.3d at 920. Leveski’s case is not “based
upon” the prior Graves allegations, and so the federal
district court has subject-matter jurisdiction over her
case under § 3730(e)(4)(A).
B
Because we find that Leveski’s allegations are not
“based upon the public disclosure of allegations” under
31 U.S.C. § 3730(e)(4)(A), our jurisdictional inquiry need
not go any further. Nevertheless, we pause here to
note that even if we had found that Leveski’s allega-
tions were based on a prior public disclosure, Leveski
42 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
would still be allowed to proceed as an “original source” of
her information. 31 U.S.C. § 3730(e)(4)(A). Recall that
Leveski may litigate her case on the merits—even if her
allegations are based upon a prior public disclo-
sure—as long as she has “direct and independent knowl-
edge of the information on which [her] allegations are
based.” 31 U.S.C. § 3730(e)(4)(B).
In evaluating whether Leveski is an “original source”
of her claims, we find our language in Baltazar, 635 F.3d
at 869, particularly enlightening: “The question is
whether the relator is an original source of the allega-
tions in the complaint and not, as the district court sup-
posed, whether the relator is the source of the informa-
tion in the published reports.” Thus, it is not appropriate
to ask whether Leveski was the original source of the
allegations in Graves. Nor is it appropriate to ask whether
Leveski was the first person to bring HEA violations
by for-profit educational institutions to the public’s
attention. Rather, it is appropriate to ask whether Leveski
is the original source of the specific allegations in her
complaint.
For the same reasons that we found that Leveski’s
allegations are not “based upon” a prior public disclosure
under § 3730(e)(4)(A), we also find that she has direct
and independent knowledge of her allegations, and
thus, is the original source of them. In Glaser, 570 F.3d at
921, we indicated that a relator’s knowledge was not
“direct” if the relator “had no knowledge whatsoever of the
fraudulent conduct before hearing from an attorney.” We
further indicated that a relator’s knowledge was not
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 43
“independent” if the relator would not “ ‘have learned
of the allegation or transactions independently of the
public disclosure.’ ” Id. (quoting United States v. Bank of
Farmington, 166 F.3d 853, 865 (7th Cir. 1999)).
Along these lines, ITT argues that Leveski’s knowledge
of the RR and FAA compensation schemes was neither
direct nor independent since Leveski admitted at her
deposition that she had not considered filing an FCA
suit until attorney Matusheski contacted her. Dkt. 141-6,
244. Yet just because Leveski had never considered
filing suit until an attorney contacted her does not neces-
sarily mean that she lacked sufficient knowledge to
bring suit. It could simply mean that Leveski did not
know her rights under the law. And that appears to be
the case here—although we know that Leveski reviewed
prior FCA complaints against ITT after speaking with
Matusheski, including Graves, 284 F. Supp. 2d 487, and
Olson, 2006 WL 64597, Leveski has provided the court
with many pieces of evidence that could have only
come from her. As detailed in Section I, Leveski has
recalled specific conversations with her personal super-
visors that indicate ITT was in violation of the HEA
throughout the course of Leveski’s decade-long employ-
ment. Matusheski could not have fed this evidence to
Leveski. Matusheski never worked for the Troy,
Michigan campus of ITT—he lives at the other end of
the country in Mississippi—so he would have no way
of knowing what occurred on that specific campus. Nor
could the Graves complaint have fed this evidence to
Leveski. The Graves complaint is extremely general,
providing absolutely no details about how either relator
44 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
surmised through their employment that ITT might be
in violation of the HEA. Ironically, the allegations con-
tained within the Graves complaint read like something
that came from an attorney, and not the relators them-
selves. (Dkt. 141-9.)
In contrast, virtually all of Leveski’s evidence in sup-
port of her allegations against ITT comes from conversa-
tions to which she was a party. For instance, in her dep-
osition, Leveski makes some references to information
she learned from other ITT employees, but for the most
part, Leveski discusses statements that were made directly
to her by her supervisors at ITT. Leveski’s main evidence
is personal and specific to her; it is not second- or third-
hand evidence learned from another source like an at-
torney, a co-worker, or a prior lawsuit. Therefore, we
find that Leveski’s evidence is based on her own direct
and independent knowledge. Because the most com-
pelling evidence against ITT could have only come
from Leveski herself, we are not troubled by Leveski’s
admission that she had not contemplated filing suit
until Matusheski contacted her. Attorneys are allowed
to advise potential future clients of both the contents of
the law and their rights under the law; it is upon that
basis that attorneys are permitted to advertise their
services. See Bates v. State Bar of Ariz., 433 U.S. 350, 376
(1977) (noting that advertising allows a “supplier [attor-
ney] to inform a potential purchaser [client] of the avail-
ability and terms of exchange”). After all, “potential clients
rarely know in advance what services they do in fact
need,” and in some cases, potential clients do not know
that they need any services from an attorney. Id. at 386
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 45
(Burger, C.J., concurring in part and dissenting in part).
Here, Leveski had no idea that she was sitting on infor-
mation that was potentially valuable to the govern-
ment until Matusheski contacted her. The fact that
Leveski first learned the potential value of her informa-
tion from Matusheski does not bar her claim.2
Moreover, just because a party first learns that she
may have a valuable legal claim from an attorney
seeking her business does not mean that the party’s case
is bogus. Leveski’s counsel drew an analogy at oral argu-
ment between the events underlying Leveski’s decision
to file her FCA suit and the events underlying the de-
fendants’ decision in the famous case, Lawrence v.
Texas, 539 U.S. 558 (2003), to pursue their appeal all
the way to the Supreme Court. According to a recent
book by University of Minnesota law professor Dale
Carpenter, the Lawrence defendants would never have
appealed the constitutionality of their sodomy convic-
tions on their own. See Flagrant Conduct: The Story of
Lawrence v. Texas 132 (W. W. Norton & Co. 2012) (noting
that neither of the Lawrence defendants had the “ ‘fire in
the belly’ reaction [to their arrest] of activists ready to
take on the legal system”). Instead, the “legal trajectory” of
Lawrence was the result of gay activists learning of the
2
Because ITT makes much of Matusheski’s “track record of
improper behavior” in its brief, we specifically asked ITT at
oral argument what rule of professional conduct that
Matusheski’s “recruitment” of Leveski violated. ITT could not
supply us with a single rule.
46 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
defendants’ arrest and subsequently putting the defen-
dants in touch with a lesbian, gay, bisexual, and trans-
gender legal defense organization. Id. at 118. With-
out the encouragement of attorneys from this organiza-
tion, the defendants never would have known their
rights. They would have never known that they had a
strong constitutional challenge to the Texas sodomy
law, and thus, would never have pursued an appeal.
Id. at 117-32. Leveski contends that she is in the
same position: without the encouragement of attorney
Matusheski, she would have never known her rights.
This analogy is interesting, but unnecessary. The annals
of legal history are full of examples of lawyers playing
a vital role in encouraging parties to litigate. If done
in a proper manner—that is, within the confines of the
applicable rules of professional conduct—there is
nothing about such attorney involvement that negates
the validity of a suit. As applied to the case at hand, ITT
has not shown that Matusheski’s conduct invalidates
Leveski’s claim.
Although we find ITT’s argument regarding
Matusheski’s role in this suit unpersuasive, ITT raises
a second argument challenging the directness and inde-
pendence of Leveski’s knowledge. Leveski, ITT points
out, was never in a position of authority during her
employment; she was never responsible for setting em-
ployee compensation or filing PPAs. As a result, ITT
argues that Leveski lacks “sufficient knowledge of ITT’s
allegedly illegal compensation practices.” In response to
this argument, we note that we have never required
a relator to have previously occupied a position of author-
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 47
ity, and in fact, we have previously found relators
who were even greater outsiders than Leveski to possess
direct and independent knowledge of their FCA claims.
For instance, in United States ex rel. Lamers v. City of
Green Bay, 168 F.3d 1013 (7th Cir. 1999), the relator,
Allen Lamers, owned a private bus company that had
once contracted with the city of Green Bay to bus
school children. After it lost the contract, the owner
filed an FCA suit alleging that the city of Green Bay
had fraudulently represented to the Federal Transit
Administration (FTA) that it was in compliance with
FTA regulations in exchange for FTA funding. Lamers
had never even worked for the city of Green Bay—let
alone witnessed or participated in the city’s filing
of compliance forms. Yet still we found that Lamers’s
FCA suit had adequate subject-matter jurisdiction
because he had direct and independent knowledge
derived from “walk[ing] the streets of Green Bay
observing the buses in action.” Id. at 1017. Lamers had
spent time observing the Green Bay buses, and his ob-
servations called into question whether Green Bay was
in compliance with FTA regulations. It was unnecessary
for Lamers to prove personal knowledge that Green
Bay had fraudulently certified its compliance with FTA
regulations at the outset of his suit. Clearly, Green Bay
was certifying that it was in compliance since it was still
receiving FTA funding—which meant that if Lamers’s
allegations were true, Green Bay was falsely certifying
it was in compliance.
A decade after Lamers, we reaffirmed that a relator
need not produce a copy of the actual document
48 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
making the false claim at the outset of the lawsuit in
United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d
849, 854 (7th Cir. 2009). There, Curtis J. Lusby, a former
Rolls-Royce engineer, brought an FCA suit claiming
that the company was falsely certifying that the engines
it built for the Air Force conformed to military specifica-
tions. Id. at 850. In response, Rolls-Royce argued that as an
engineer, Lusby had not seen “any of the invoices and
representations that Rolls-Royce submitted to its cus-
tomers. He kn[ew] about shipments and payments, but
he d[id] not have access to the paperwork.” Id. at 854.
Although Lusby admitted that he had not had access to
the paperwork, he countered that “Rolls-Royce must
have submitted at least one such certificate [of compli-
ance], or the military services would not have paid for
the goods.” Id. We agreed with Lusby, holding:
We don’t think it essential for the relator to pro-
duce the invoices (and accompanying representa-
tions) at the outset of the suit. True, it is essential
to show a false statement. But much knowledge
is inferential—people are convicted beyond a
reasonable doubt of conspiracy without a written
contract to commit a future crime—and the infer-
ence that Lusby proposes is a plausible one.
Id. Moreover, we noted that “[s]ince a relator is unlikely
to have those documents unless he works in the defen-
dant’s accounting department,” holding otherwise
would have “take[n] a big bite out of qui tam litigation.” Id.Both Lamers and Lusby stand for the proposition that
Leveski need not produce copies of the PPAs in which
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 49
ITT certified compliance with the HEA at the outset of
her lawsuit. For now, an inference is enough. Leveski
observed ITT receive federal funding throughout her
employment, and ITT could only have received federal
funding by certifying compliance with the HEA. Conse-
quently, if Leveski’s allegations about incentive com-
pensation are true, then ITT must have been falsely cer-
tifying compliance with the HEA. Furthermore, our
holding in Lamers completely refutes ITT’s contention
that Leveski needed to be in a position of authority or
responsible for setting the compensation of other em-
ployees at ITT in order to have direct and independent
knowledge of her FCA claim. Recall that relator
Lamers never worked for the city of Green Bay before
filing an FCA suit against it, and yet we found that he
had sufficiently direct and independent knowledge
based on his personal observations as a total outsider.
168 F.3d at 1017. If Lamers’s observations as a total out-
sider from the defendant were sufficient to constitute
“direct and independent knowledge of the information
on which the allegations were based,” then certainly
Leveski’s observations as a ten-year employee of the
defendant company are sufficient. 31 U.S.C. § 3730(e)(4)(B).
III
Given our finding that Leveski’s allegations are suffi-
ciently distinguishable from Graves—not to mention our
finding that she has direct and independent knowledge
of her allegations—our sanctions analysis becomes quite
easy. The district judge sanctioned Matusheski personally
50 Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891
under 28 U.S.C. § 1927 and sanctioned the Law Offices
of Timothy J. Matusheski, Plews Shadley, and Motley
Rice under Fed. R. Civ. P. 11. Although these sanctions
were granted under two different rules, they were all
granted for the same reason: the district judge con-
cluded that Leveski’s counsel had continued to pursue
a “frivolous” case despite “unmistakably clear warnings
that [they were] playing with fire by pushing the case
forward.” (Dkt. 318, 23.)
As indicated above, we disagree with this conclusion.
Our lengthy discussion of Leveski’s case has shown
that Leveski’s case appears to be substantial, not frivo-
lous. Even disregarding the fact that Leveski’s allegations
cover a later time period than the Graves allegations,
Leveski has still provided the district court with
at least two ways in which her allegations substantially
differ from the Graves allegations: (1) Graves alleged
an outright scheme to violate the HEA incentive com-
pensation ban, in which ITT did not even attempt to
feign compliance, and (2) Graves was solely concerned
with the ITT recruitment office and had nothing to say
about the ITT financial aid office. Moreover, through
her affidavit and deposition testimony, Leveski has
provided the district court with numerous pieces of
evidence both supporting her allegations and demon-
strating that her knowledge is direct and independent.
At this stage of the litigation, we think that Leveski
has produced more than enough to overcome the 31
U.S.C. § 3730(e)(4) jurisdictional bar. We do not know
whether Leveski will ultimately prevail, nor do we
Nos. 12-1369, 12-1967, 12-1979, 12-2008 & 12-2891 51
state any opinion as to whether Leveski should
ultimately prevail. But we do believe that Leveski
should be allowed to litigate her case on the merits,
and thus, sanctions for bringing a frivolous lawsuit are
inappropriate.
Of course, if it becomes clear later in the course of
litigation that Leveski has made up all of her allegations
and all of her supporting evidence, then sanctions may
be warranted. But for now, the truth of Leveski’s allega-
tions is not appropriately resolved on a motion to
dismiss for lack of subject-matter jurisdiction. Leveski
has presented enough to move forward with this litiga-
tion. Consequently, we R EVERSE both the district court’s
dismissal of Leveski’s case for lack of subject-matter
jurisdiction and the district court’s award of sanctions
in the amount of $394,998.33 against Leveski’s counsel,
and we R EMAND the case back to the district court for
further proceedings consistent with this opinion. Circuit
Rule 36 will apply on remand.
7-8-13