Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-14-05210/USCOURTS-caDC-14-05210-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 17, 2015 Decided November 24, 2015

No. 14-5210

UNITED STATES OF AMERICA EX REL. ROBERT R. PURCELL,

APPELLANT/CROSS-APPELLEE

ROBERT R. PURCELL,

CROSS-APPELLEE

v.

MWI CORPORATION,

APPELLEE/CROSS-APPELLANT

Consolidated with 14-5218

Appeals from the United States District Court

for the District of Columbia

(No. 1:98-cv-02088)

Melissa N. Patterson, Attorney, U.S. Department of Justice,

argued the cause for appellant/cross-appellee United States of

America. With her on the briefs were Benjamin C. Mizer,

Principal DeputyAssistant AttorneyGeneral, Vincent H. Cohen,

Jr., Acting U.S. Attorney, and Michael S. Raab, Attorney. R.

Craig Lawrence, Assistant U.S. Attorney, entered an

appearance.

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Brian Tully McLaughlin and Robert T. Rhoad argued the

causes for appellee/cross-appellant MWI Corporation. With

them on the brief were Charlotte E. Gillingham and Jason C.

Lynch.

Joseph J. Aronica argued the cause and filed the brief for

cross-appellee Robert R. Purcell. 

Douglas W. Baruch and Jennifer M. Wollenberg were on the

brief for amicus curiae National Association of Manufacturers

in support of defendant-appellee/cross-appellant in support of

reversal of the decisions finding liability under the False Claims

Act.

Before: ROGERS, BROWN and KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS. 

ROGERS, Circuit Judge: The United States successfully

brought a civil action pursuant to the False Claims Act (“FCA”),

31 U.S.C. § 3729, based on certifications by MWI Corp. to the

Export-Import Bank (“the Bank”) to secure loans financing

MWI’s sale of water pumps to Nigeria. Although the total loan

of $74.3 million was to Nigeria, the Bank required MWI to

certify that it had paid only “regular commissions” to the sales

agent responsible for the sales contract. A jury found the

certifications were false and awarded the government $7.5

million in damages. The damages were trebled to $22.5 million

pursuant to the FCA. Because an FCA defendant is entitled to an

offset from the trebled damages by any amount paid to

compensate the government for the harm caused by the false

claims, see United States v. Bornstein, 423 U.S. 303 (1976), and

the district court considered Nigeria’s repayment of the loan to

be compensatory, MWI’s damages were reduced from $22.5

million to $0. MWI thus was subject only to civil penalties,

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which the district court imposed at the highest level permitted by

the statute, $10,000 for each of the 58 certifications.

The government, having recovered no damages, appeals. It

contends the district court should have applied only $7.5 million

of Nigeria’s loan repayment as an offset against MWI’s $22.5

million in trebled damages, because, according to the

government, the offset applies against the amount of damages

before trebling, not against the trebled damages, and so it is still

entitled to recover $15 million in damages. MWI cross appeals

on the principal ground that the government failed as a matter of

law to establish that it made a false claim or that it had done so

knowingly, both of which are required to establish FCA liability.

Because the government failed to establish that MWI

knowingly made a false claim, we reverse. At the time MWI

made the certifications, the government had yet to inform

exporters that, contrary to MWI’s understanding of “regular

commissions,” the term refers to what is normally paid in the

industry, and not what an exporter had historically paid to an

individual sales agent. Absent evidence that the Bank, or other

government entity, had officially warned MWI away from its

otherwise faciallyreasonable interpretation of that undefined and

ambiguous term, the FCA’s objective knowledge standard, as the

Supreme Court clarified while this litigation was pending in

Safeco Insurance Co. of America v. Burr, 551 U.S. 47, 69–70 &

n.20 (2007), did not permit a jury to find that MWI “knowingly”

made a false claim. 

I.

The following facts are undisputed. In 1992, MWI agreed

to sell $82.2 million in irrigation pumps and related equipment

to seven states in Nigeria. To facilitate the sales, the parties

sought financing from the Bank, which finances and facilitates

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export of U.S. goods and services by providing loans to foreign

purchasers, thereby “contribut[ing] to the employment of United

States workers.” 12 U.S.C. § 635(a)(1). The Bank agreed to

lend Nigeria $74.3 million in eight separate loans. Prior to

approving the loans, the Bank had required MWI to submit a

“Letter of Credit Supplier’s Certificate” in which MWI certified

that it had not paid “any discount, allowance, rebate,

commission, fee or other payment in connection with the sale”

except “[r]egular commissions or fees paid or to be paid in the

ordinary course of business to [its] regular sales agents.” 

(Emphasis added). Similarly, before it would disburse funds, the

Bank required MWI to make an identical certification. 

Altogether, MWI certified in fifty-eight documents that it had

paid only “regular commissions” in connection with the water

pump sales.

In 1998, a former MWI employee, Robert Purcell, filed on

behalf of the government the FCA complaint on which this

lawsuit is based. Purcell, relator here, alleged that non-regular

commissions had been paid, pointing to $28 million in

commissions — over 30% of the loan amount — that MWI had

paid to its long-term (over twelve years) Nigerian sales agent,

Alhaji Indimi. He alleged those commissions were so great that

MWIshould have disclosed them to the Bank as payments other

than “regular commissions.”

In 2002, the United States intervened and filed an amended

complaint stating two FCA claims and two common law claims. 

See 31 U.S.C. § 3730(b)(2). (The common law claims were

subsequently dropped.) Focusing on the unreported

commissions, the government alleged that MWI both knowingly

submitted false claims for payment or approval in violation of 31

U.S.C. § 3729(a)(1), and knowingly made false statements to

obtain a false or fraudulent claim in violation of 31 U.S.C.

§ 3729(a)(2). The parties filed cross motions for summary

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judgment.

The district court denied MWI’s motion and granted the

government’s motion in part. United States ex rel. Purcell v.

MWI Corp. (MWI I), 520 F. Supp. 2d 158, 181 (D.D.C. 2007). 

MWI argued that the unsettled meaning of the ambiguous term

“regular commissions” precluded, as a matter of law, the

government from establishing the elements of falsity and

knowledge. The district court acknowledged that the Bank had

not issued written guidance on the meaning of the term and that

“the contours of [the Bank’s] interpretation remained unclear

until the parties deposed [Bank] officials and related their

findings to the court in the instant motions.” Id. at 175–76.

Further, it agreed that the undefined, ambiguous term could

support MWI’s understanding that a commission is “regular” if

it is consistent with what had historically been paid to an

individual agent. Id. at 175–77. Nonetheless, the district court

accepted the meaning the government proposed in its summary

judgment briefing: a commission is “regular” only if it is

consistent with industry-wide benchmarks. Id. at 175–78. This

definition was based on the implicit understanding Bank

employees had about the meaning of the term. In view of the

amount of the commissions at issue, the district court concluded

that the term “regular commissions” was not so ambiguous that

MWI had not been on notice that, in the government’s view, the

term “might imply an industry-wide rather than an intra-firm or

(as the defendants quite implausibly propose) an individual-agent

standard.” Id. at 176. To the extent that there was a “nimbus of

uncertainty” that “may linger around commissions that lie at the

fringes of industry-wide benchmarks,” the district court

suggested that MWI ought to have “assumed the featherweight

onus of disclosing any questionable commissions.” Id. at 177.

Having accepted the government’s definition for “regular

commissions,” the district court left to the jury the question

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whether MWI knowingly made a false claim. See id. at 177–78,

181. In a later round of summary judgment, the district court

determined that the government had proffered sufficient

evidence to create triable issues as to whether MWI’s claims

were false as measured against this industry-wide definition of

“regular commissions,” whether such claims were material, and

whether the government had suffered any actual damages as a

result of the false claims. United States ex rel. Purcell v. MWI

Corp. (MWI II), 824 F. Supp. 2d 12, 26–30 (D.D.C. 2011). 

During this round, the government expanded on its interpretation

of the industry benchmark relevant to determining regularity,

arguing that the commissions paid to Indimi were so high that

they would be considered irregular in any industry. Even so, the

government offered evidence that the commissions paid to

Indimi would be considered irregular in MWI’s industry, which

the government defined as the “business of manufacturing and

selling pumps and related equipment.” Id. at 26–27 & n.6. The

government resisted MWI’s argument that in determining

whether commissions were regular it was appropriate to take into

account the country in which the work giving rise to the

commissions was to be completed. 

Because the parties disputed whether MWI’s commissions

complied with this industry-wide standard, the district court

denied both motions for summary judgment on the falsity issue,

stating that “a jury is more than capable of resolving any

borderline definitional issues” presented by the need to apply an

industry-wide standard. Id. at 27 & n.6. The district court also

rejected MWI’s argument that Purcell must be dismissed from

the lawsuit, finding his allegations of fraud had not been based

on information solely found in the public domain — either from

news articles speaking generally about potential fraud associated

with the MWI-Nigeria deal or any related Freedom of

Information Act requests. Id. at 22–24; see 31 U.S.C.

§ 3730(e)(4).

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A jury found each of MWI’s fifty-eight certifications

violated the FCA under §§ 3729(a)(1) & (2), and that the

government suffered $7.5 million in actual damages. The district

court trebled this amount to $22.5 million pursuant to the FCA,

31 U.S.C. § 3729(a), but accepted MWI’s argument that the

entirety should be offset because Nigeria’s repayments of $108

million (the full loan with interest and fees) constituted

compensatory payments. United States ex rel. Purcell v. MWI

Corp. (MWI III), 15 F. Supp. 3d 18, 23, 30 (D.D.C. 2014). The

district court relied on Bornstein, 423 U.S. at 314–17, in which

the Supreme Court held that an FCA defendant is entitled to an

offset from the trebled damages by any amount paid to

compensate the government for harm caused by the false claims. 

MWI was not completely off the hook, however, because the

district court imposed the maximum ($10,000) in civil penalties

for each of the fifty-eight false claims. MWI III, 15 F. Supp. 3d

at 32; see 31 U.S.C. § 3729(a). The district court denied MWI’s

motion for judgment as a matter of law pursuant to Federal Rule

of Civil Procedure 50(b), finding there was sufficient evidence

for a jury to find the Indimi commissions were not regular and to

infer knowledge of falsity. United States ex rel. Purcell v. MWI

Corp. (MWI IV), 50 F. Supp. 3d 33, 39–46 (D.D.C. 2014). 

Concluding that it lacked authority to consider whether MWI’s

good faith or reasonable understanding of “regular commissions”

precluded a knowledge finding, because MWI had an

opportunity to argue that theory to the jury, see id. at 44–46, the

district court found no basis to overturn the jury’s determination

that MWI did not have a reasonable or good faith interpretation

of “regular commissions,” id. at 46.

Both the government and MWI appeal. The government

contends that the district court erred in not confining the offset

to the non-trebled portion of the damages award — $7.5 million

— and that it is entitled to recover $15 million in damages. 

MWI, on cross appeal, contends that the district court erred in

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denying its motions for summary judgment and judgment as a

matter of law. MWI maintains it could not have been found

liable under the FCA because it was entitled to rely on its own

reasonable interpretation of “regular commissions” absent timely

notice from the government of the meaning of that undefined and

ambiguous term. MWI also challenges the district court’s ruling

that Purcell’s claims were not jurisdictionally barred under 31

U.S.C. § 3730(e)(4)(A). In view of our disposition of MWI’s

cross appeal, the court need not address the government’s offset

contention. The court also need not address MWI’s contention

that Purcell’s claim is jurisdictionally barred; the court would

have jurisdiction even if Purcell is dismissed as relator in this

lawsuit, see Rockwell Int’l Corp. v. United States, 549 U.S. 457,

476–78 (2007), and the presence of Purcell in the lawsuit makes

no material difference to our consideration of the merits of these

appeals, see Military Toxics Project v. Envtl. Prot. Agency, 146

F.3d 948, 954 (D.C. Cir. 1998); Aamer v. Obama, 742 F.3d 1023,

1042–43 (D.C. Cir. 2014).

II.

The False Claims Act prohibits false or fraudulent claims for

payment from the United States. 31 U.S.C. § 3729(a); see

United States ex rel. Davis v. District of Columbia, 679 F.3d 832,

835 (D.C. Cir. 2012). The government alleged that MWI

violated that prohibition in two separate but related ways: (1) it

knowingly presented false claims, 31 U.S.C. § 3729(a)(1), and

(2) it used false statements to get false claims paid, id.

§ 3729(a)(2). Under either theory, the government had to prove 1

Congress modified and renumbered 31 U.S.C. § 3729(a)

1

upon enactment of The Fraud Enforcement and Recovery Act of 2009,

Pub. L. No. 111-21, 123 Stat. 1617. The government advisesthat only

the amendment to § 3729(a)(2) was made retroactive, but states the

amendments are not relevant to this appeal and cites only the pre-2009

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“that the defendant presented . . . a claim to the government, that

the claim was false, and that the defendant knew that the claim

was false.” United States ex rel. Davis v. District of Columbia,

793 F.3d 120, 124 (D.C. Cir. 2015) (quoting United States ex rel.

Hampton v. Columbia/HCA HealthcareCorp., 318F.3d 214, 218

(D.C. Cir. 2003)). The jury found that the government had

established liability and damages under both FCA theories.

Focusing on the ambiguity resulting from the government’s

failure to provide guidance to exporters about the meaning of the

term “regular commissions,” MWI contends that these FCA

claims should have never gone to the jury. First, MWI maintains

its reasonable interpretation of the undefined, ambiguous term

prevented a jury from finding either the elements of falsity or

knowledge under the FCA. Second, MWI maintains this

ambiguity means that the district court erred as a matter of law

in concluding that MWI had fair notice of its legal obligations

when the term could, as the district court found, plausibly have

implied MWI’s interpretation. 

Of course, the government as plaintiff has the burden of

proving each element of the FCA, and to prevail, MWI need only

show that the government’s proof was lacking as to any one

element. Contentions like these — that a defendant cannot be

held liable for failing to comply with an ambiguous term — go

to whetherthe government proved knowledge. See United States

ex rel. K & R Ltd. P’ship v. Mass. Hous. Fin. Agency, 530 F.3d

980, 983 (D.C. Cir. 2008); United States ex rel. Oliver v. Parsons

Co., 195 F.3d 457, 463–64 (9th Cir. 1999). And in this context,

resolving the knowledge issue makes resolving the notice

question unnecessary. Strict enforcement of the FCA’s

version of the statute in its brief. Appellant’s Br. 2 n.1. This opinion

refers only to the FCA’s pre-2009 text. See United States v. Sci.

Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 2010).

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knowledge requirement helps to ensure that innocent mistakes

made in the absence of binding interpretive guidance are not

converted into FCA liability, thereby avoiding the potential due

process problems posed by “penalizing a private party for

violating a rule without first providing adequate notice of the

substance of the rule.” Satellite Broad. Co. v. Fed. Commc’ns

Comm’n, 824 F.2d 1, 3 (D.C. Cir. 1987). There is no doubt that

MWI has been penalized; in addition to damages, the FCA

imposes statutory penalties on those defendants who fail to

comply with its terms. See 31 U.S.C. § 3729(a). And it is

undisputed that the first actual notice of the meaning of “regular

commissions” did not come until long after the conduct giving

rise to this litigation took place. Faced with concerns like these,

a knowledge requirement can play an essential role as it “may

mitigate a law’s vagueness, especially with respect to the

adequacy of notice to the complainant that his conduct is

proscribed.” See Village of Hoffman Estates v. Flipside,

Hoffman Estates, Inc., 455 U.S. 489, 499 (1982).

To be liable under the FCA, a defendant must have made the

false claims knowingly. United States ex rel. Folliard v. Gov’t

Acquisitions, Inc., 764 F.3d 19, 29 (D.C. Cir. 2014); K & R Ltd.,

530 F.3d at 983. An entity acts knowingly under the FCA by

“(1) having actual knowledge, (2) acting in deliberate ignorance,

or (3) acting in reckless disregard.” Folliard, 764 F.3d at 29. 

Consistent with the need for a knowing violation, the FCA does

not reach an innocent, good-faith mistake about the meaning of

an applicable rule or regulation. See Oliver, 195 F.3d at 463–64. 

Nor does it reach those claims made based on reasonable but

erroneous interpretations of a defendant’s legal obligations. See

K & R Ltd., 530 F.3d at 983–84; United States ex rel. Hixson v.

Health Mgmt. Sys., Inc., 613 F.3d 1186, 1190–91 (8th Cir. 2010);

Commercial Contractors, Inc. v. United States, 154 F.3d 1357,

1366 (Fed. Cir. 1998); cf. Safeco Ins., 551 U.S. at 69–70 & n.20. 

As this court has recognized, establishing “even the loosest

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standard of knowledge, i.e., acting ‘in reckless disregard of the

truth or falsity of the information’” is difficult when falsity turns

on a disputed interpretive question. See United States ex rel.

Siewick v. Jamieson Sci. & Eng’g, Inc., 214 F.3d 1372, 1378

(D.C. Cir. 2000) (quoting 31 U.S.C. § 3729(b)(3)).

MWI reads these precedents to mean that the knowledge

element presents a pure question of law such that a defendant

cannot be held liable under the FCA so long as it has an

objectively reasonable interpretation of an ambiguous provision. 

If this understanding is correct, then the court could reverse in

MWI’s favor without considering the evidence presented to the

jury on the question of knowledge. Cf. Feld v. Feld, 688 F.3d

779, 782 (D.C. Cir. 2012). The interpretive questions whether

the term “regular commissions” is ambiguous and whether

MWI’s interpretation is objectively reasonable are legal

questions. See Oliver, 195 F.3d at 463; K & R Ltd., 530 F.3d at

983; Ortiz v. Jordan, 562 U.S. 180, 190 (2011); Feld, 688 F.3d

at 783. But this court, looking to Supreme Court guidance, has

held that a jury might still find knowledge if there is interpretive

guidance “that might have warned [the defendant] away from the

view it took.” K & R Ltd., 530 F.3d at 983 (quoting Safeco Ins.,

551 U.S. at 70). In other words, even if the meaning of “regular

commissions” is ambiguous and MWI’s interpretation is

reasonable, there remains the question whether MWI had been

warned away from that interpretation. That question cannot

readily be labeled as a “purely legal” question. See Ortiz, 562

U.S. at 190–91. Consequently, MWI cannot prevail on the basis

that the issue of knowledge should never have gone to the jury

because it was entitled to summary judgment on a pure question

of law. Proving knowledge is in part an evidentiary question,

and “once evidence is presented at a trial, any challenge to

evidentiary sufficiency at summary judgment becomes moot.” 

Feld, 688 F.3d at 782; Ortiz, 562 U.S. at 183–84; Chemetall

GMBH v. ZR Energy, Inc., 320 F.3d 714, 718–19 (7th Cir. 2003). 

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MWI must instead show that the evidence before the jury was

not sufficient for it to find that MWI acted knowingly.

On the legal questions, we agree with MWIthat the meaning

of the term “regular commissions” is ambiguous and that MWI’s

interpretation is reasonable. No party contests that the meaning

of “regular commissions” is ambiguous. As the district court

found, the term could imply at least three different standards:

industry-wide, intra-firm, or individual-agent. MWI I, 520

F. Supp. 2d at 176–77. So understood, MWI’s individual-agent

interpretation of “regular commissions” is objectively

reasonable. Furthermore, the definition of “regular” makes clear

that something can be “regular” either because it is not unusual

in relation to societal norms or because it is not unusual for that

individual. See, e.g., The American Heritage Dictionary of the

English Language (5th ed. online 2015). Consequently, MWI

could reasonably have concluded that Indimi’s commissions

were regular because they were consistent with what MWI had

been paying him for over twelve years and were calculated using

the same formula MWI used to determine commissions for all of

its agents. Moreover, even if “regular commissions” is best

understood as referring to an industry-wide standard in light of

the Bank’s mission, which includes “ridding taxpayer-financed

loans of tainted commissions,” MWI I, 520 F. Supp. 2d at 177,

that does not mean MWI’s interpretation is objectively

unreasonable. This knowledge inquiry is necessary only because

MWI’s understanding of the term proved to be “erroneous” once

the government announced the term’s meaning in this litigation. 

See Safeco Ins., 551 U.S. at 69. Had the government interpreted

the term as MWI does, there can be little doubt that the court

would owe deference to that interpretation as reasonable. See

Satellite Broad., 824 F.2d at 3.

Accepting the reasonableness of MWI’s interpretation, the

factual question remains whether there was sufficient evidence

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that MWI was warned away from its interpretation. The court

will not overturn a jury verdict “unless the evidence and all

reasonable inferences that can be drawn therefrom are so onesided that reasonable men and women could not disagree.” 

Williams v. Johnson, 776 F.3d 865, 870 (D.C. Cir. 2015)

(quoting Scott v. District of Columbia, 101 F.3d 748, 753 (D.C.

Cir. 1996)). MWI has met this demanding standard, for the

government has not pointed to sufficient record evidence that

there was “guidance from the courts of appeals” or relevant

agency “that might have warned [MWI] away from the view it

took.” Safeco Ins., 551 U.S. at 70; K & R Ltd., 530 F.3d at 983. 

It is undisputed that the government has never published any

written guidance on what the term meant. MWI I, 520 F.

Supp. 2d at 175–76. The Bank first revealed its understanding

of “regular commissions” only after this litigation began. 

Indeed, Bank officials acknowledged at trial that the Bank had

preferred to keep the standard flexible in order to make the loan

approval process more efficient, having moved away from an

overly cumbersome system where exporters listed all expenses

and commissions. See Tr. at 17–26 (testimony of Warren Glick)

(Nov. 20, 2013, PM Session). And even though the Bank was

concerned about bribery escaping its detection, it was wary of

adopting a rigid standard for “regular commissions” in view of

the wide variety of transactions the Bank financed. Tr. at 69–78

(testimony of Dr. Rita Rodriguez) (Nov. 14, 2013, AM Session). 

In keeping the standard flexible, however, the Bank (and the

government) afforded exporters such as MWI the right to rely on

its reasonable interpretation of that flexible standard until the

Bank (or a court, Congress, or an appropriate agency) indicates

otherwise.

Unable to establish that the Bank had made known its

implicit understanding of “regular commissions,” the

government attempts to salvage the jury’s knowledge finding by

emphasizing other record evidence. First, the government

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highlights that even though the Bank’s standard was not formally

published, there was, in the government’s view, evidence that

MWI had been warned away from its individual-agent

understanding of “regular commissions.” The government’s best

evidence on this point is testimony by a former MWI employee

that the Bank, through its Nigeria country officer, had told MWI

that even though there were no definitive guidelines for

commissions, they should be somewhere near five percent. Tr.

at 20–22 (testimony of Juan Ponce) (Nov. 13, 2013, AM

Session). But this suggestion hardly amounts to the necessary

“authoritative guidance” from the Bank. In Safeco Insurance,

the Supreme Court explained that informal guidance like the

kind described here — in that case an informal letter from staff

of the Federal Trade Commission — is not enough to warn a

regulated defendant away from an otherwise reasonable

interpretation it adopted. See id. at 70 n.19.

Second, the government focuses on testimony by that same

MWI employee that he and his fellow employees knew they

were applying the wrong definition of “regular commissions”

and had concerns about not disclosing Indimi’s commissions in

the certifications to the Bank. Tr. at 33–36 (testimony of Juan

Ponce) (Nov. 13, 2013, AM Session). In the face of an

undefined and ambiguous regulatory requirement, it is no

wonder that employees of the regulated entity were concerned. 

More fundamentally, all this evidence might imply is that MWI

did not hew to its reasonable interpretation in good faith. Since

this litigation began, the Supreme Court clarified that subjective

intent — including bad faith — is irrelevant when a defendant

seeks to defeat a finding of knowledge based on its reasonable

interpretation of a regulatory term. See Safeco Ins., 551 U.S. at

70 n.20. Under the FCA’s knowledge element, then, the court’s

focus is on the objective reasonableness of the defendant’s

interpretation of an ambiguous term and whether there is any

evidence that the agency warned the defendant away from that

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interpretation. See id. at 70 & nn.19–20; K & R Ltd., 530 F.3d

at 983.

These generalized concerns about the regularity of Indimi’s

commissions also fail to support a finding that MWI acted

recklessly by failing to seek a legal opinion from the Bank

resolving MWI’s concerns. In K & R Ltd., 530 F.3d at 983–84,

the court rejected a similar argument, explaining that the

defendant’s “failure to obtain a legal opinion or prior [agency]

approval cannot support a finding of recklessness without

evidence of anything that might have given it reasons to do so.” 

Although MWI may have been concerned generally, there is no

evidence that the Bank gave it particular reason to formally

inquire about these commissions.

The government’s final evidentiary theory fares no better. 

It maintains that because the sheer amount of these commissions

— both in absolute dollar amount and percentage terms — was

so much greater than those paid elsewhere, MWI must have

known that they were irregular. As an initial matter, the record

does not support that these commissions were so far out of sync

with what is seen elsewhere in the world. At oral argument,

government counsel emphasized that the basis for this argument

was testimony by a former Bank board member, Dr. Rita

Rodriguez, that she had never seen commissions in any industry

at the rate given to Indimi. Tr. at 27–39, 79–86 (Nov. 14, 2013,

AM Session). On cross examination, however, Dr. Rodriguez

acknowledged that the Bank pays its own insurance brokers

commissions of up to forty percent. Id. at 80–87. Although Dr.

Rodriguez suggested that the percentages paid by the Bank were

likely this high only because the absolute dollar amounts were

small, id. at 90, the state of the record is far from clear that the

government established that Indimi’s commissions were so

innately irregular that MWI must have known the commissions

should have been disclosed.

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Even assuming the jury was convinced that these

commissions were beyond the pale, the government’s position

that this establishes knowledge amounts to a backdoor challenge

to whether MWI’s interpretation was reasonable. The

government’s desire to avoid results like these — where the

Bank may not have assessed whether a high commission

represents the financing of non-U.S. employment or a bribe —

might confirm that MWI’s interpretation of “regular

commissions” is incompatible with the Bank’s basic purposes

and the government’s interpretation the better one. That MWI’s

interpretation may not be the best interpretation does not

demonstrate that MWI’s interpretation was necessarily

unreasonable. Absent evidence that the negative consequences

of an interpretation render it unreasonable, such consequences

can play no role in evaluating whether an FCA defendant acted

knowingly. Cf. Safeco Ins., 551 U.S. at 70 n.20. Had the

government wanted to avoid such consequences, it could have

defined its regulatory term to preclude them. Of course, the

government may instead determine that its goals are better

served by not doing so, much as the Bank officials’ testimony

implied. This may be the government’s choice, but then the

FCA may cease to be an available remedy if the government

concludes after the fact that a particular commission is not

“regular” because it is too high.

Accordingly, we reverse and remand the case with

instructions to enter judgment for MWI, and we do not address

the damages question presented by the government’s appeal or

MWI’s challenge to the denial of dismissal of relator Purcell.

USCA Case #14-5210 Document #1585115 Filed: 11/24/2015 Page 16 of 16