Source: https://www.mooreandlee.com/news/page/2/
Timestamp: 2019-04-21 18:06:37+00:00

Document:
The U.S. Supreme Court in Universal Health Servs., Inc. v. United States, held that liability can exist under the civil False Claims Act (FCA) based on the implied certification theory, resolving a split among the Federal Court of Appeals about the theory’s viability. Since that decision, Federal Circuits have begun to explore the ramifications of the holding. The Seventh Circuit Court of Appeals, in United States v. Sanford–Brown, Ltd., examined the new standard and held that the conditions for liability under an implied certification theory were not met. 840 F.3d 445, 447 (7th Cir.). The Court of Appeals found that “bare speculation” regarding misleading representations is insufficient to support a claim at the summary judgment stage. Id. Second, the granting of summary judgment was affirmed because the plaintiff failed to establish the independent element of materiality. Id. The Court of Appeals strongly enforced this element of the implied certification theory, and focused on the fact that there was no evidence to support the argument that the government’s decision to pay would likely or actually have been different if it had known of the alleged misrepresentations. Id. Further, the Court of Appeals stressed that even if it was shown that the government’s knowledge of misrepresentations would have caused it to decline payment, this alone would still not be enough to meet the high standard required for the materiality element. Id. at 448. In summary, the Seventh Circuit Court of Appeals did not try to find ways to work around the Supreme Court’s decision; rather, it whole-heartedly enforced the elements outlined by the Supreme Court and showed that it will hold plaintiffs to a rigorous standard on alleged liability under the FCA based on the implied certification theory.
The Ninth Circuit Court of Appeals recently addressed the materiality element of the implied certification theory as well. United States ex rel. Kelly v. Serco, Inc., 846 F.3d 325 (9th Cir.). Again, the Court of Appeals held that the claims failed because of the failure to meet the rigorous materiality standard. Id. at 333. As the Seventh Circuit Court of Appeals did, the Ninth Circuit Court of Appeals held that it is not enough to show that the government would not have paid if it knew of the alleged misrepresentation. Id. Rather, what was important here was the fact that the government did not find the reports which contained the alleged misrepresentations useful—the government found the reports to be neither necessary nor cost‑justified for their related project. Id. at 334. This indicates that the Ninth Circuit will examine the government’s use of the substance that contains the alleged misrepresentations, and that materiality will be judged partly on the utility of that use. The takeaway from this case is that the Ninth Circuit, like the Seventh Circuit, will apply a rigorous standard to meet the materiality element. Moving forward, it will be worth watching the Federal Circuits as they continue to develop and explore their treatment of the materiality element.
Moore & Lee is pleased to welcome John Bertino and Rachel Bauer as summer associates. John has just finished his second year at George Washington University Law School and Rachel has just finished her first year at American University Washington College of Law.
Congratulations to Robert M. Moore on again being recognized as a Virginia Super Lawyer for Construction Litigation.
The U.S. Court of Federal Claims recently set aside GSA’s award of a lease for the Transportation Security Administration’s (“TSA”) consolidated Northern Virginia Office. The TSA’s new office would have provided more than 600,000 square feet of rentable space for the administration. The Court of Federal Claims in Springfield Parcel C, LLC v. United States, held that a permanent injunction preventing GSA from proceeding with lease contract originally awarded to successful offeror was warranted. The court further held that GSA’s acceptance of an offer for space larger than the permitted maximum contained in the request for proposal contravened a material term in the proposal, and therefore, violated 40 U.S.C. § 3307(a). The failure to acquire appropriations for this lease, also violated the Anti-Deficiency Act, and therefore, the lease was void ab initio.
The Court, with this ruling, has carved out a right for would-be lessors to seek permanent injunctive remedies if an agency lease contract does not comply with the terms approved by Congress and articulated in the Request for Lease Proposal (“RLP”). Prior to this ruling, post award bid protests pertaining to a fully executed GSA lease did not pose a real threat to the government or the awardee. After this ruling government contractors should be very careful to follow any, and all, specifications found in the RLP when submitting their bid.
Moore & Lee is pleased to announce that Michael Dockins has joined the firm as an Associate. Michael earned his law degree from the University of Texas at Austin in May 2016. Michael had previously worked at Moore & Lee as a Paralegal prior to law school and as a Summer Associate during law school.
Moore & Lee is pleased to announce that Spencer Kiggins has joined the firm as an Associate. Spencer is barred in Virginia and the District of Columbia and has been practicing complex commercial, securities, antitrust and construction litigation since 2009.
In a recent matter in the U.S. District Court for the District of Maryland, a subcontractor initiated a suit against a general contractor and its payment bond surety to recover for claims of changed work and increased costs on a construction project. MBR Constr. Servs., Inc. v. Liberty Mut. Ins. Co., No. GJH-15-14, 2016 WL 727107. The general contractor and payment bond surety filed a motion to dismiss, or in the alternative stay, the subcontractor’s action pending the completion of mandatory dispute resolution procedures between the general contractor and the owner of the project. The Court found that the subcontractor’s failure to satisfy a contractually binding “condition precedent to the initiation of . . . the instant litigation” was cause to stay the action pending resolution “of the contractual dispute resolution procedures” between the general contractor and the owner of the project. The Court held that the parties were bound to contractual procedures they agreed to in the subcontract, which required the subcontractor to allow the general contractor to exhaust the contractual remedies under the Prime Contract before the subcontractor could proceed directly against the general contractor.
A Virginia-based IT contractor recently agreed to pay the government $400,000 to settle claims that its employees improperly accessed restricted information at a U.S. military installation. The allegations arose out of the contractor’s work at a U.S. Army Medical Information Technology Center. The contractor held a contract for IT services, under which its employees had access to the network, computers, and other resources solely for the purpose of performing work on the government’s information technology systems.
The Government contended that, while performing work under the contract, the contractor’s employees accessed information that they deemed useful for the contractor’s future efforts to obtain government contracts. The contractor’s employees allegedly searched for and downloaded documents from the network, including documents that were restricted or required security clearance. The documents were allegedly used to prepare proposals for three subsequent government contracts. The contractor did not secure any of those contracts and, additionally, withdrew itself from consideration for one contract before a source selection decision was made. Nevertheless, the government initiated an action against the contractor for improperly using restricted information.
Government contractors should be aware that the use of restricted government information for purposes beyond the scope of the contract, including for use in attempting to secure future contracts, can lead to government prosecution for false claims.

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