In a February 4, 2016, decision, United States ex rel. Wall v. Circle C. Construction, LLC, the Sixth Circuit summarily rejected the government’s assertion that the measure of damages in a False Claims Act (FCA) suit involving a violation of prevailing wage rate requirements was the total amount paid for the work.  The Sixth Circuit’s rejection of the “total contract value” theory of damages in the prevailing wage rate context is a welcome development for FCA defendants who are faced with increasingly creative damages theories asserted by the government and the relator’s bar.

Circle C’s Army Contract

For a case that involved a relatively minor non-compliance with the prevailing wage rate requirements applicable to federal construction contracts, the Circle C. Construction case has a long history.  Circle C entered into a contract to construct warehouses at the U.S. Army base at Fort Campbell, located in Kentucky and Tennessee.  Pursuant to the Davis-Bacon Act, Circle C was required to pay electrical workers at least $19.19 per hour, plus a fringe benefit rate of $3.94 per hour.  Circle C was also required to submit certified payroll for itself and its subcontractors.

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The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the FCA’s public disclosure bar and recent cases considering whether disclosures are sufficient to bar FCA claims.

Courts have continued to clarify the requirements for a relator to be considered an original source, and thus exempted from the public disclosure bar, under the FCA’s pre-PPACA and post-PPACA versions. In these cases, courts have typically focused on the requirements that a relator have “direct and independent knowledge of the information on which the allegations are based” (pre-PPACA) and “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions” (post-PPACA).

Continue Reading FCA Deeper Dive: Original Sources under the FCA’s Public Disclosure Bar

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the FCA’s public disclosure bar and recent cases considering whether disclosures are sufficient to bar FCA claims.

The FCA’s public disclosure bar prevents a relator from filing a qui tam complaint based on information previously disclosed to the public, thereby dissuading parasitic lawsuits based on publicly available information. In cases considering the scope of the public disclosure bar, courts have continued to examine the issue of how or to whom information must be disseminated in order to constitute a “public disclosure,” which often has resulted in a narrowing of the public disclosure bar’s scope in a given case. Such cases marked a shift away from decisions favorable to FCA defendants toward a more nuanced and specific application of the public disclosure bar.

Continue Reading FCA Deeper Dive: When Public Disclosures Bar FCA Claims

On April 6, 2015, the Sixth Circuit delivered a costly blow to the United States government to the tune of $657 million when it issued its opinion in United States v. United Technologies Corporation and remanded the case back to the district court to review the damages award, yet again.

This was the second time that the Sixth Circuit heard arguments deriving from the United States False Claims Act case against Pratt & Whitney (“Pratt”), now owned by United Technologies, for false statements the company made when competing against GE Aircraft for contracts to build F-15 and F-16 jet engines. In 1983, in an attempt to outbid GE Aircraft and make it hard for the government to issue a split-award contract, Pratt misstated its projected costs and certified that the company’s bid included its “best estimates and/or actual costs.” After uncovering Pratt’s overstated costs projections, the government filed both an administrative action against the company in the Armed Services Board of Contract Appeals (“ASBCA”) under the Truth in Negotiations Act and a lawsuit in district court alleging violations of the False Claims Act.

Continue Reading United Technologies is Saved from $657 million False Claims Act Verdict by the Sixth Circuit

On February 25, 2015, the Sixth Circuit reversed a district court’s decision to dismiss FCA allegations pursuant to the FCA’s public disclosure bar because the “publicity” aspect of the public disclosure bar was not satisfied.   The Sixth Circuit’s opinion became the most recent appellate decision to require disclosure beyond the government or the government’s agents or contractors to implicate the public disclosure bar.

In U.S. ex rel. Whipple v. Chattanooga-Hamilton County Hosp. Authority, OIG instituted an audit of the defendant’s billing practices in response to an anonymous complaint.  That audit led to a subsequent investigation by OIG, during which it consulted with the DOJ.  In 2009, the defendant resolved the matter through a refund to the government, and the government declined to pursue the matter further.

Continue Reading Sixth Circuit Addresses the “Public” Aspect of the Public Disclosure Bar