Category Archives: Government Contract-Related Investigations and the False Claims Act

DOJ Crackdown on False Certification for Small Business Set-aside Award

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As discussed in prior blog posts, the DOJ over the last few years has continued to crack down on small-business contracting fraud, including “pass through” and “sham” contracting schemes. This trend has continued, and the DOJ recently cracked down on a subcontractor’s false certification for a government small-business set-aside program. On May 3, 2018, the DOJ announced that MassTech Inc. (MTI) and its CEO and CFO agreed to pay the United States $1.9 million to resolve allegations that MTI falsely certified it was a small business concern in order to obtain a Small Business Innovation [...]Read more

Jeff Belkin Quoted by Law360 on Leaked DOJ FCA Memo

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On January 25, 2018, Jeff Belkin was quoted by Law360 in the article “FCA Memo No Proof of New DOJ Direction on Dismissals,” which covers a recently leaked memo from the U.S. Department of Justice (DOJ) detailing when DOJ attorneys should ask to dismiss “meritless” qui tam False Claims Act cases. The article covers varying viewpoints about what the impact of the memo will be on future FCA cases. Many FCA defense attorneys have reacted positively, some saying that the memo does suggest a change in policy. Others have reservations and remain unconvinced of actual policy changes. In the article, [...]Read more

Chris Roux and John Hanover Published in The Construction Lawyer on Implied False Certification Liability

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Alston & Bird partners Chris Roux and John Hanover had their article, “Implied False Certification Liability Under the False Claims Act: How the Materiality Standard Offers Protection after Escobar,” published in the Winter 2018 edition of The Construction Lawyer. The article takes an in-depth look at the viability of implied false certification claims under the False Claims Act by examining their use before and after the U.S. Supreme Court’s Escobar decision, the key elements of the decision, and how varying interpretations of the decision apply to the construction industry. Readers [...]Read more

Fifth Circuit Ruling Shows Government’s Actions Are Key Under Escobar

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Government contractors continue to closely follow the impact of the U.S. Supreme Court’s landmark False Claims Act decision in Universal Health v. U.S. ex rel Escobar. Most recently, in U.S. ex rel Harman v. Trinity Industries, the Fifth Circuit considered the heightened standard whistleblowers must meet under Escobar to prove materiality if the government continued to pay claims despite its knowledge of misconduct allegations. In Trinity Industries, Trinity, a manufacturing company and government contractor, appealed the denial of its motion for judgment as a matter of law. The underlying [...]Read more

DOJ Continues to Crack Down on SBA Fraud

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On April 25, 2017, the DOJ announced that Michelle Cho, an officer of Far East Construction Corporation and other companies, received both prison time and civil penalties for her involvement as the mastermind of a fraudulent scheme to defraud the Small Business Administration’s (SBA) 8(a) program. Under this scheme, Cho would bid for set-aside contracts for small, disadvantaged businesses under the SBA 8(a) program. However, Cho’s companies would not perform this work. Instead, other large companies would perform this work and pay 3 percent of the proceeds to Cho’s companies. This is another [...]Read more

Circuit Court Signals Potential Impacts of Escobar

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Lower courts have begun grappling with the implications of the U.S. Supreme Court’s decision in Universal Health Services, Inc. v. United States ex rel. Escobar. In U.S. ex rel. Sheet Metal Workers International Association v. Horning Investments, LLC, a union filed a qui tam lawsuit against Horning Investments, LLC. Horning, a roofing company, was acting as a subcontractor for a construction project for the U.S. Department of Veterans Affairs. The union claimed that Horning violated the False Claims Act by failing to pay union workers in accordance with the Davis-Bacon Act. Under the Davis-Bacon [...]Read more

The Supreme Court Weighs In on the Implied Certification Theory of False Claims Act Liability

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The Supreme Court has handed the Department of Justice and qui tam relators a bigger hammer to wield against government contractors with its opinion in Universal Health Services, Inc. v. United States ex rel. Escobar, confirming the viability of the implied certification theory of False Claims Act (FCA) liability. In this case, the relators filed a qui tam action alleging that a provider of mental-health services in Massachusetts violated the FCA when it submitted Medicaid reimbursement claims that included representations about the services provided, but failed to disclose that the service [...]Read more

Supreme Court Hears Oral Arguments in Significant False Claims Act Case

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Our colleagues Jackie Baratian and Jason Popp summarize here the oral argument for Universal Health Services v. United Sates ex rel. Escobar heard by the U.S. Supreme Court on Tuesday, April 19th, laying out the various arguments presented by counsel and addressed by the Justices.  As they note, much of the argument focused on the Restatement of Contracts, as a source of “fraud” in contracting common law, to help draw a distinction between an implied promise and an immaterial unspoken performance detail.  The Justices also took note of the decision in Halper, in which the Supreme Court in [...]Read more

Is the False Claims Act Becoming a Catch-All Penalty for Any and Every Contractual Breach?

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A recent Department of Justice (DOJ) settlement announcement suggests that the government intends to continue to use the False Claims Act (FCA), rather than more traditional breach of contract or tort claims or regulatory authority, to administer its contracts. On March 7, 2016, the DOJ announced its $3 million settlement with ArmorSource LLC to resolve FCA allegations against the company. ArmorSource contracted with the U.S. Army in 2006 to provide ballistic helmets for combat. In 2010, the Army recalled the helmets after rounds of failed ballistic safety tests. The government alleged that from [...]Read more

Supreme Court to Rule on the Implied Certification Theory

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The U.S. Supreme Court has scheduled oral arguments in a case that will have significant implications for cases brought under the False Claims Act (FCA). In Universal Health Services v. United States ex rel. Escobar, No. 15-7, the Court will hear argument on two important questions. First, whether the “implied certification” theory of legal falsity is viable under the FCA, a question on which the circuit courts of appeal are divided. If the Court concludes the implied certification theory is viable, then the second issue it will consider is whether government contractors’ reimbursement claims [...]Read more