Decision Expands Reach of the False Claims Act and Helps Fight Government Fraud

We are honored to work alongside brave and honest individuals as a government contracts fraud law firm. Attorney Brod has a deep understanding of the laws that allows private whistleblowers to fight back against scammers who commit fraud against the government and partners with such individuals on cases nationwide. Many of these cases rely on a law that dates back to the Civil War and that was substantially amended in the mid-1980s, the False Claims Act (“FCA”). Despite over 150 year of history, the law continues to be examined and interpreted including on the crucial question of whether a contract violation in itself can support an FCA action, a theory referred to as “implied certification.”

Background of the Badr Case – Contractor Accused of Providing Security Forces Who Did Not Meet Marksmanship Requirements
gavel3.jpgLast month, the Fourth Circuit Court of Appeals (a critical jurisdiction since, although it doesn’t include Washington D.C. itself, it includes areas around D.C. where many federal contractors operate), released an opinion endorsing the implied certification theory in FCA actions. The issue arose as the court evaluated the dismissal of certain portions of the Complaint filed in United States ex rel. Badr v. Triple Canopy Inc., ultimately affirming part of the lower court’s ruling and dismissing other portions of that decision. In doing so, the circuit joined several other jurisdictions (including state courts interpreting California’s version of the FCA) in embracing the implied certification concept.

In June 2009, Triple Canopy entered into an agreement to provide security services at the second-largest airbase in Iraq, Al Asad Airbase. Pursuant to the Task Orders that spelled out the company’s responsibilities, Triple Canopy was to provide personnel who had received certain weapons training and passed a marksmanship skills test. Among the personnel hired by Triple Canopy were 332 Uguandan guards (plus replacements). According to the Complaint, some or all of these guards did not meet the marksmanship requirements. Omar Badr, a medic with Triple Canopy, initiated the FCA action alleging, among other things, that he was asked for prepare false scorecards for guards who did not actually pass the marksmanship test.

Court Endorses Implied Certification Theory, Finds Conduct Violated FCA By Falsely Suggesting Contractual Compliance
Among the reasons listed in support of its Motion to Dismiss, Triple Canopy suggested that the FCA Complaint failed to point to a demand for payment that included a statement that was objectively false. Importantly, payment was not expressly contingent on compliance with this requirement and the invoices submitted by Triple Canopy did not specifically mention marksmanship matters. The issue became, in essence, whether violating the contract constituted a violation of the FCA. While the court expressed concerns about making all contract violations into FCA violations, they noted the FCA is intended to protect the treasury and determined that a claim for payment that rests on a false suggestion of contractual compliance, whether express or implied (including silent implications), is in fact an FCA violation. The Court wrote:

… Accordingly, we hold that the Government pleads a false claim when it alleges that the contractor, with the requisite [knowledge], made a request for payment under a contract and withheld information about its noncompliance with material contractual requirements…The pertinent inquiry is whether, through the act of submitting a claim, a payee knowingly and falsely implied that it was entitled to payment. (internal citations removed)

It is worth noting that this is not a ruling on the merits of the case but rather a finding that the facts alleged by the plaintiffs could, if proven, legally support a claim (see discussion of a motion for failure to state a claim on the Legal Information Institute website: “A defense asserting that even if all the factual allegations in a complaint are true, they are insufficient to establish a cause of action. In a federal civil action, this defense is raised via Federal Rule of Civil Procedure 12(b)(6).”)

Using the False Claims Act to Fight Fraud
The Badr ruling (notably not a ruling on the merits but rather one that reverses a ruling dismissing certain claims based on the law) is a critical decision in that it helps expand the power of the FCA to reach those who are looking to cheat the government and, thus, all Americans. Our firm welcomes calls from honest individuals across the country who you believe they have witnessed a scheme to defraud the government. When you call, we will schedule a no-cost/no-obligation consultation to discuss the Act, whether what you’ve witnessed is a likely violation, and how we can partner together to fight back. Our government fraud whistleblowers’ attorney and the entire government contract fraud team are committed to protecting whistleblowers from retaliation and also ensuring you are fairly compensated if your information leads to a recovery on behalf of the government
See Related Blog Posts:

The False Claims Act: From Shoddy Civil War Uniforms to Costly Defense Contracts in 2014
Public Safety and Other Aims of False Claims Act Litigation
Fighting Fraud: Government Contract Fraud Attorney Examines Procurement Fraud

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