Zotos v. Town of Hingham: False Claims Case Over Speed Signs Dismissed

In United States ex rel. Zotos v. Town of Hingham, the U.S. District Court for the District of Massachusetts dismissed a qui tam suit alleging violations of the federal and state False Claims Acts. The court concluded that the relator’s claims, centered on alleged misrepresentations tied to speed limit signage compliance, failed to meet the materiality standard necessary to proceed.

Background on Reimbursement Requests and Regulatory Claims

Frederic Zotos, a licensed attorney, brought the suit on behalf of the United States and the Commonwealth of Massachusetts. He alleged that the Town of Hingham and several officials improperly certified compliance with state and federal regulations when submitting reimbursement forms under Massachusetts Chapter 90 and the Federal-Aid Highway Program.

Zotos claimed the town posted speed limit signs without proper approvals under the Manual on Uniform Traffic Control Devices (MUTCD) and related Massachusetts laws. He argued these violations rendered the town’s certifications false, and that reimbursement requests totaling more than $7 million were obtained through misrepresentation.

Court Applies Escobar Materiality Standard

Applying the standard from Universal Health Services v. United States ex rel. Escobar, the court determined that the alleged misstatements were not material to government payment decisions. Materiality requires that a misrepresentation be sufficiently significant to influence payment decisions, not merely that a regulation was violated.

The court found that even if the certifications broadly affirmed compliance with "all applicable laws and regulations," they did not specifically reference traffic signage rules. The court also noted that the town continued receiving reimbursement despite Zotos’ direct requests to the state to withhold funds, suggesting the alleged noncompliance was not important to funding decisions.

Regarding the federal claims, the court found the allegations speculative. Zotos did not allege facts showing that the Town of Hingham directly submitted false claims to the federal government, or that the MassDOT’s reimbursement requests included certifications material to signage rules.

Claim and Issue Preclusion Not Applied

The court rejected arguments that Zotos’ prior lawsuits on related topics barred the current action through claim or issue preclusion. It distinguished the current qui tam suit as representing the interests of the United States and the Commonwealth, not just Zotos as an individual.

Conclusion and Dismissal

Because the complaint failed to allege a material misrepresentation that could support liability under the False Claims Act or the Massachusetts False Claims Act, the court granted the motion to dismiss. It held that the essence of the funding agreements focused on whether the reimbursed work was completed, not whether every regulatory requirement was followed.

Regulatory Compliance Representation

Government funding recipients are expected to understand and fulfill the terms of reimbursement programs. Our attorneys at Whitcomb, Selinsky, PC assist clients in reviewing funding certifications, navigating regulatory obligations, and addressing questions related to federal and state program compliance.