City of Los Angeles Agrees to Pay $38.2 Million to Resolve False Claims Act Suit for Alleged Misuse of HUD Grant Funds

LOS ANGELES - The City of Los Angeles has agreed to pay $38.2 million to resolve allegations that it knowingly failed to meet federal accessibility requirements when it sought and used U.S. Department of Housing and Urban Development (HUD) grant funds for multifamily affordable housing, the Justice Department announced today.

"Municipalities that receive federal grant money for affordable and accessible housing must comply with federal law and honor the rights of people with disabilities," said First Assistant United States Attorney Joseph T. McNally. "The nearly $40 million settlement here demonstrates our commitment to ensuring municipalities receiving federal funds comply with federal law. We will continue to work with the City of Los Angeles to ensure equal access for individuals with disabilities."

HUD provides grant funds to Los Angeles and other cities to support housing and community development, including building and rehabilitating affordable multifamily housing units. Recipients of federal housing development funds must comply with federal accessibility laws, including Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act. These laws prohibit discrimination against people with disabilities in activities receiving federal financial assistance.

For example, the laws require five percent of all units in certain federally-assisted multifamily housing be accessible for people with mobility impairments and an additional two percent be accessible for people with visual and auditory impairments.

Recipients of federal funds must also implement other housing-related accessibility requirements, including maintaining a publicly available list of accessible units with a description of their accessibility features, adopting policies and procedures to ensure that people who need the accessibility features of particular units occupy them, and designating at least one city employee to coordinate accessibility efforts.

In 2017, the United States intervened and filed a complaint in a whistleblower action filed under the False Claims Act alleging that, for over a decade, the City of Los Angeles failed to follow federal accessibility laws when building and rehabilitating affordable multifamily properties and failed to make its affordable multifamily housing program accessible to people with disabilities. The United States alleged that the housing was not structurally accessible because of failures like slopes that were too steep, counters that were too high, and thresholds that did not permit wheelchair access. The United States further alleged that the city failed to maintain a publicly available list of accessible units and their accessibility features. The United States alleged that the city, on an annual basis, knowingly and falsely certified to HUD that it complied with these grant requirements despite its failure to do so. Today's settlement resolves the pending lawsuit.

"This settlement shows that we will hold accountable jurisdictions receiving federal grant money to ensure they satisfy their obligations to make affordable housing accessible to people with disabilities," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "Our years spent litigating this case demonstrate the department's steadfast commitment to this effort."

"By failing to make certain that HUD-funded multifamily housing was appropriately built or rehabilitated to meet federal accessibility requirements, the city discriminated against people with disabilities," said HUD Inspector General Rae Oliver Davis. "HUD's Office of the Inspector General will continue to work with our law enforcement partners to hold accountable those who fail to meet their legal obligations for the housing needs of people with disabilities."

"The settlement announced today sends a clear message that HUD and its partners at the Department of Justice will work tirelessly to protect the integrity of HUD's programs and demonstrates the importance of providing accessible housing," said General Counsel Damon Smith of HUD. "In this instance, HUD determined that the City of Los Angeles fell far short of its responsibilities to provide HUD-funded accessible housing, but the settlement agreement provides a fresh start for HUD and the City to work collaboratively to address the City's pressing housing needs."

The settlement resolves a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. The Act permits the United States to intervene and take over responsibility for litigating these cases, as the United States did in 2017 here. The qui tam case is captioned United States ex rel. Ling, et al. v. City of Los Angeles, et al., No. CV11‐00974 (C.D. Cal.), and was brought by a Los Angeles resident who uses a wheelchair and the Fair Housing Council of San Fernando Valley, a nonprofit disability rights advocacy group. A relator share has not yet been determined.

In 2020, the United States settled for $3.1 million allegations against another defendant in the lawsuit, CRA/LA, the successor of the Community Redevelopment Agency of the City of Los Angeles, a local redevelopment agency that financed and assisted in the development of multifamily affordable housing using local tax monies and federal grants.

The resolution obtained in this litigation was the result of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section and the United States Attorney's Office for the Central District of California, with assistance from HUD's Office of General Counsel and Office of Inspector General.

The matter was handled by Assistant United States Attorneys Karen Y. Paik and Paul B. La Scala of the Civil Division's Civil Fraud Section and Justice Department Fraud Section attorneys William C. Edgar, Jennifer Chorpening, Daniel W. Kastner, and Wesley J. Heath of the Civil Division.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

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