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Media Alerts - United States ex rel. Badr v. Triple Canopy Inc. -- Fourth Circuit
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February 13, 2015
  United States ex rel. Badr v. Triple Canopy Inc. -- Fourth Circuit
Headline: Missing the Mark: The Fourth Circuit Embraces the False Claims Act Theory of Implied Certification

Area of Law: False Claims Act, Contract

Issue Presented: Whether a contractor knowingly and falsely implied that it was entitled to payment by submitting a claim, thus facing False Claims Act liability?

Brief Summary: In 2009, the U.S. government awarded a military contract, TO-11, to Triple Canopy to provide security services to Al Asad Airbase in Iraq. The contract specified that Triple Canopy was to ensure all personnel had achieved a qualifying score on the U.S. Army Marksmanship skills tests, though the contract did not condition payment on compliance with this responsibility. Triple Canopy hired 332 Ugandan guards to serve for the contract, most of whom were unable to score the required score on the marksmanship test. Accordingly, Triple Canopy asked one of their staff, Omar Badr, to falsify personnel records to indicate the guards received the required training and score. Although the invoice Triple Canopy submitted to the government for payment did not falsely represent the guards' capabilities, the government argued that the claim was a false misrepresentation because it implied compliance with a material obligation of the agreement that it knowingly did not comply with. The government alleged that Triple Canopy knowingly presented false claims in violation of 31 U.S.C. § 3729(a)(1)(A) (Count I); and that Triple Canopy caused the creation of false records material to a false claim in violation of 31 U.S.C. § 3729(a)(1)(B) (Count II). The district court dismissed both Counts I and II for failure to plead that Triple Canopy submitted a demand for payment that contained a false statement.

The United States Court of Appeals for the Fourth Circuit rejected the district court's reasoning holding that the government adequately pled a false claim where Triple Canopy withheld information about its noncompliance with material contract requirements when requesting payment from the government. In order to distinguish this case from routine contractual disputes where the FCA has been found inapplicable, the court focused its opinion on the materiality of the misrepresentation and the high degree of Triple Canopy's alleged knowledge. In discussing the materiality of the marksmanship clause, the court focused on the commonsensical notion that the government would not pay for guards in a combat zone who did not know how to use their weapons, as well as Triple Canopy's efforts to conceal the guards' failings. Although it acknowledged the potential risks of an implied certification theory, the court concluded that it could not support an application of the FCA that would allow the defendant to "avoid liability because nothing on the 'face' of the invoice was objectively false." In addition, the court found that Triple Canopy could not avoid FCA liability simply because a government employee failed to discover the false statement. The falsified marksmanship score cards were material to the invoices, supporting a falsified records claim under Count II.

To read the full opinion, please click here.

Panel: Judge SHEDD, AGEE, and WYNN.

Argument Date: 10/30/2014

Date of Issued Opinion: 01/08/2015

Docket Number: Case No. 13-2191

Decided: Affirmed in part; reversed in part; and remanded by published opinion.

Case Alert Author: Michele Hayes, Univ. of Maryland Carey School of Law

Counsel: ARGUED: Charles W. Scarborough, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C.; Earl N. Mayfield, III, DAY & JOHNS,
PLLC, Fairfax, Virginia, for Appellants. Tara Melissa Lee, DLA
PIPER LLP (US), Reston, Virginia, for Appellee. ON BRIEF:
Stuart F. Delery, Assistant Attorney General, Joyce Branda,
Acting Assistant Attorney General, Michael S. Raab, Civil
Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.;
Dana J. Boente, Acting United States Attorney, Richard W.
Sponseller, Assistant United States Attorney, Peter S. Hyun,
Assistant United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Alexandria, Virginia, for Appellant United States of
America. Paul A. Prados, Milt C. Johns, Christopher M. Day, DAY
& JOHNS, PLLC, Fairfax, Virginia, for Appellant Omar Badr.
Joseph C. Davis, Reston, Virginia, Paul D. Schmitt, DLA PIPER
LLP (US), Washington, D.C., for Appellee.

Author of Opinion: Judge Shedd

Case Alert Circuit Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 02/13/2015 03:24 PM     4th Circuit  

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