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Complaint Sufficiently Pled FCA Violation


A False Claims Act qui tam action was not dismissed by the District Court for the District of Columbia, because the complaint pled fraud allegations with sufficient particularity to meet the standards articulated by Federal Rule of Civil Procedure 9(b). The relator, a former employee of a contractor that supplied bulletproof vests to the government, brought the action against the contractor and a subcontractor that provided the synthetic fiber for the vests. The government subsequently intervened and filed an amended complaint, which alleged the defendants violated the FCA by presenting fraudulent claims, making false statements and conspiring to defraud. The elements of an FCA violation under 31 USC 3729(a)(1) require a plaintiff to show the defendant submitted a false claim to the government, the claim was false, and the defendant knew the claim was false. The subcontractor moved to dismiss, arguing the government failed to plead fraud with particularity and did not allege the subcontractor presented a false claim for payment or the existence of a conspiracy. FRCP 9(b), which applies to FCA actions, requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Rule 9(b) does not require plaintiffs to allege every fact pertaining to fraud when a scheme spans several years, but defendants must be able "to defend against the charge and not just deny that they have done anything wrong."

Inducing Claims


Here, the government factually alleged a fraudulent scheme in which the subcontractor played a part, and the subcontractor's conduct, in concert with the prime contractor, induced the presentment of false claims. Specifically, the government alleged the contractor predicated each sale and consequent invoice submission on a fraudulently represented five-year warranty despite the fact the contractor and subcontractor knew the vest fibers lost strength when exposed to sunlight, high temperatures and humidity --thus inducing the government to pay claims. The government also set out in detail the "time, place, and content" of the fraud by alleging the subcontractor retracted negative data in exchange for the contractor's continued purchase of the fiber. The government further alleged the time span when the alleged fraudulent activities occurred, and though the government did not name any of the subcontractor's executives who participated in the fraudulent scheme, the absence of those names did not frustrate the subcontractor's ability to plead responsively or defend itself. Finally, the government clearly alleged the subcontractor knowingly misrepresented and concealed facts, creating a false record that in part caused the contractor to submit a false claim to the government. (U.S. ex rel. Westrick v. Second Chance Body Armor, Inc., et al., DC DofC, 54 CCF 79,264)



















 






 

 

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

     
  
 

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