Week Twenty

Week of May 15, 2017 through May 19, 2017

United States of America and United States ex rel. Omar Badr v. Triple Canopy, Inc. (Shedd 5/16/2017): The Fourth Circuit held that the government properly alleged that Triple Canopy violated the False Claims Act (“FCA”), 31 U.S.C. § 3729(a), by knowingly misrepresenting its noncompliance with a material requirement in its contract with the government to protect an air base in Iraq where Triple Canopy requested payment on the contract despite failing to hire guards that met marksmanship requirements included in the contract. The court reasoned that the government properly stated a claim under the FCA against Triple Canopy, Inc., using an implied certification theory of liability because the government’s complaint sufficiently alleged both falsity and materiality. The Fourth Circuit, hearing the case on remand from the United States Supreme Court to reconsider its earlier decision in light of Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), reaffirmed its reversal of the district court’s dismissal of the Government’s complaint, and remanded the case for further proceedings. Full Opinion

Gary Waag v. Sotera Defense Solutions, Inc. (Traxler 5/16/2017): The Fourth Circuit held that an employee who takes leave under the Family and Medical Leave Act (“FMLA”) has the right to be restored either to his original position or to an equivalent position. The court concluded that no reasonable factfinder could find that Sotera failed to place Waag in an “equivalent position”  or that the differences between the two jobs were more than merely de minimis. In dismissing both of Waag’s claims based on his termination from Sotera, the court explained that the job created for him upon his return was not a sham job and that Sotera’s firing of Waag did not constitute a retaliation under the FMLA. The court therefore affirmed the district court’s grant of summary judgment in favor of Sotera as to each of Waag’s claims under the FMLA. Full Opinion

United States of America v. Steve Hale (Niemeyer 5/15/2017): The Fourth Circuit upheld the defendant’s conviction for transporting stolen property in interstate commerce, conspiring to do the same, making false statements in his tax returns, failing to collect and pay employee taxes, and obstructing justice. The court reasoned that the district court properly provided the jury with a willful blindness instruction because of ample evidence the defendant knew the goods were stolen and that he took deliberate actions to avoid confirming the goods were stolen; that admission of other jury instructions and multiple categories of evidence was simply plain error because they were not objected to at trial; and that ample evidence was presented to show that a person of interest was the defendant’s employee. Finding no reversible error, the court affirmed the district court’s decision to sentence the defendant to ninety-seven months’ imprisonment following his conviction. Full Opinion

 

Highlight Case

United States of America and United States ex rel. Omar Badr, No. 13-2190

Decided: May 16, 2017

The Fourth Circuit held that the government properly stated a claim under the False Claims Act (“FCA”), 31 U.S.C. § 3729(a), against Triple Canopy, Inc., using an implied certification theory of liability because the government’s complaint sufficiently alleged both falsity and materiality.

The United States government awarded Triple Canopy a one-year contract to provide security services at an air base in Iraq. Part of Triple Canopy’s contractual responsibilities was ensuring that all of its employees became qualified on a U.S. Army qualification course. The relator, Omar Badr, stated that Triple Canopy employed guards who were unable to meet this marksmanship requirement. Triple Canopy took steps to conceal this fact from the government and continued to submit invoices for the guards on a monthly basis. Badr sued Triple Canopy and the government intervened, alleging, inter alia, that Triple Canopy knowingly presented false claims in violation of the FCA because it charged the government full price for the unqualified guards.

The district court granted Triple Canopy’s motion to dismiss and, in doing so, declined to recognize an “implied certification” theory of liability. On appeal, the Fourth Circuit reversed on the issue of the implied certification theory and held that the theory was valid in certain circumstances. The Fourth Circuit concluded that the government successfully stated a claim because it alleged that Triple Canopy made a material falsehood. Following this decision, the United States Supreme Court decided Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), where the Court held that the implied certification theory is valid under the FCA and can, in certain circumstances, be a basis for liability. After clarifying the proper standard for this theory in Universal Health, the Supreme Court granted certiorari and vacated the Fourth Circuit’s opinion and remanded for further consideration in light of this clarified standard.

Applying Universal Health, the Fourth Circuit reaffirmed its reversal of the district court’s decision to dismiss the Government’s complaint for failure to state a claim and remanded the case for further proceedings. The Fourth Circuit applied the implied certification theory of liability and rejected Triple Canopy’s argument that the government’s complaint fell short of alleging both falsity and materiality. The court reasoned that the government properly alleged that Triple Canopy violated the FCA by knowingly misrepresenting its noncompliance with a material requirement in its contract with the government to protect an air base in Iraq where Triple Canopy requested payment on the contract despite failing to hire guards that met marksmanship requirements included in the contract.

In regard to falsity, the court applied Universal Health’s requirement that the complainant show that a contractor made specific representations about the services provided, but knowingly failed to disclose its noncompliance with a contractual requirement. The court concluded that the government had sufficiently alleged falsity because Triple Canopy knew its guards failed to meet the marksmanship requirement yet still submitted invoices requesting payment despite this contractual violation. In regard to materiality, the Fourth Circuit noted that nothing in Universal Health changed the “rigorous” standard it had previously used in its earlier opinion that examined whether the falsehood was one that was capable of influencing the government’s decision to pay. The court then reiterated its conclusion from its earlier opinion that Triple Canopy’s omissions were material because the government’s decision to pay a contractor for providing security services in an active combat zone would clearly be influenced by knowledge that the guards the contractor was employing failed to meet contractual-based marksmanship requirements. As evidence of this fact, the court noted that the government did not renew its contract for base security with Triple Canopy and immediately intervened after Omar Badr filed suit against Triple Canopy.

Accordingly, the Fourth Circuit concluded that nothing in Universal Health contradicted its prior holding that the government properly stated a claim under the FCA. The court therefore reinstated the portions of its opinion not impacted by Universal Health and reversed the district court’s decision to grant Triple Canopy’s motion to dismiss, remanding for further consideration.

Full Opinion

Raymond J. Prince