Opinion ID: 159646
Heading Depth: 3
Heading Rank: 2

Heading: The Monthly Invoices

Text: 43 Defendants argue that an invoice, submitted after the violation of a contractual provision, 12 cannot constitute the knowing presentation of a false or fraudulent claim for payment or approval under the FCA. 13 Id. 3729(a)(1). Specifically, Defendants assert that the monthly invoices which they submitted could not be false or fraudulent because the invoices only billed the amount called for by the fixed price contract and did not contain any factual misrepresentations regarding either monthly billings or AAA's equitable adjustment request. The United States, appearing as Amicus Curiae, 14 responds that when AAA submitted its monthly invoices, it impliedly certified that it had complied with the silver recovery provisions in the contract; because AAA was being paid not only for photography services but also for environmental compliance, its false implied certification of compliance with the contract's silver recovery requirement gives rise to liability under the FCA. 44 Permitting FCA liability based on a false certification of compliance with a government contract, whether the certification is express or implied, 15 is consistent with the legislative history of the 1986 Amendments to the FCA. See S. Rep. No. 99-345 (1986), reprinted in 1986 U.S.C.C.A.N. 5266. The Senate Committee on the Judiciary noted a false claim under the FCA may take many forms, the most common being a claim for goods or services not provided, or provided in violation of contract terms, specification, statute, or regulation. S.Rep. No. 99-345 at 9, reprinted in 1986 U.S.C.C.A.N. at 5274 (emphasis added). 45 Additionally, the language and structure of the FCA itself supports the conclusion that, under 31 U.S.C. 3729(a)(1), a false implied certification may constitute a false or fraudulent claim. This interpretive conclusion flows from a distinction between the language of 3729(a)(1) and that of 3729(a)(2). Under 3729(a)(2), liability is premised on the presentation of a false record or statement to get a false or fraudulent claim paid or approved. Section 3729(a)(1), however, requires only the presentation of a false or fraudulent claim for payment or approval without the additional element of a false record or statement. See United States ex rel. Fallon v. Accudyne, 921 F. Supp. 611, 627 (W.D. Wis. 1995) (Fallon II) (noting this distinction between 3729(a)(1) and 3729(a)(2)); cf. United States ex rel. Aakhus v. Dyncorp, Inc. 136 F.3d 676, 682-83 (10th Cir. 1998) (concluding that there needs to be a specific statement by a contractor in order to support a cause of action under 3729(a)(2)). Thus, FCA liability under 3729(a)(1) may arise even absent an affirmative or express false statement by the government contractor. 46 The validity of an FCA claim based on a false implied certification of contractual compliance has been expressly recognized by the Court of Federal Claims and at least one district court. In Ab-Tech Constr., Inc. v. United States, Ab-Tech was a minority-owned small business which was awarded a service contract by the Small Business Administration. See 31 Fed. Cl. 429, 430 (1994), aff'd without written opinion 57 F.3d 1084 (Fed. Cir. 1995). Ab-Tech then entered into a prohibited co-management agreement with one of its principal subcontractors, a non-minority owned enterprise, but nevertheless continued to submit claims for payment to the government and to receive payment under the contract. See id. at 431-33. Stating that the FCA extends 'to all fraudulent attempts to cause the Government to pay out sums of money,' the Ab-Tech court concluded the claims for payment were false claims within the meaning of the FCA. Id. at 433 (quoting United States v. Neifert-White, 390 U.S. 228, 233 (1968)). The Ab-Tech court reasoned the payment vouchers represented an implied certification by Ab-Tech of its continuing adherence to the requirements for participation in the [minority-owned business] program. Id. at 434 (emphasis added); see also United States ex rel. Pogue v. American Healthcorp, Inc., 914 F. Supp. 1507, 1508-10, 1513 (M.D. Tenn. 1996) (vacating a prior dismissal decision in an FCA suit based on the theory that by submitting Medicare claims defendants implicitly certified compliance with the statutes, rules, and regulations governing the Medicare program); BMY-Combat Sys. Div. of Harsco Corp. v. United States, 38 Fed. Cl. 109, 124-25 (1997) (holding that invoices provided by a government contractor for the supply of goods impliedly but falsely represented contractual compliance which was critical to defendant's decision to pay, and thus invoices constituted false claims under the FCA). The Ab-Tech court also reasoned that each submission seeking payment from the government constituted a claim under the FCA, even when the submissions were made pursuant to one contract. See 31 Fed. Cl. at 435. 47 Without explicitly stating that the decisions were based on an implied certification theory, other cases have also recognized that FCA liability may arise even when there has been no express false declaration. The D.C. Circuit, for example, determined that a contractor may be liable under the FCA when it knowingly omitted from progress reports material information concerning non-compliance with the program it had contracted to implement. See United States v. TDC Management Corp., 24 F.3d 292, 296, 298 (D.C. Cir. 1994); see also United States ex rel. Oliver v. Parsons Co., 195 F.3d 457, 464-65 (9th Cir. 1999), petition for cert. filed, 68 U.S.L.W. 3491 (U.S. Jan. 20, 2000) (No. 99-1225) (concluding that a contractor's failure to disclose information specifically requested by the government can form the basis for FCA liability); Fallon II, 921 F. Supp. at 621 (holding that a contractor may be liable under the FCA for knowingly failing to perform a material requirement of the contract yet seeking full payment without disclosing its nonperformance). 48 Not all courts have embraced the theory that an FCA suit may be based on an implied certification. Those cases, however, are distinguishable. For instance, while not expressly addressing an implied certification claim, the Ninth Circuit concluded that a teacher who accused her school district of failing to comply with federal and state laws could not maintain an action under the FCA. See United States ex rel. Hopper v. Anton, 91 F.3d 1261 (9th Cir. 1996). The Hopper court reasoned that [v]iolations of laws, rules, or regulations alone do not create a cause of action under the FCA, and held there must be a false certification of compliance with those laws. Id. at 1266-67. The forms on which the Hopper plaintiff premised her FCA claims, however, differed significantly from AAA's monthly invoices. The Hopper forms did not request payment for statutory or contractual compliance and thus did not impliedly certify such compliance. Additionally, the court in Hopper reasoned the relator had not produced sufficient evidence that the defendant knowingly maintained a policy not to be in compliance with federal laws. See id. at 1268. In contrast, Shaw presented ample evidence that AAA knowingly failed to practice silver recovery but nevertheless invoiced for and accepted full payment under the contract. 49 One district court has also held that a contractor's violation of state law may not support an FCA action without some express certification that Defendant complied with those laws. See United States ex rel. Joslin v. Community Home Health of Md., Inc., 984 F. Supp. 374, 383-84 (D. Md. 1997). The Joslin court expressed concern with the decision in Ab-Tech, because it feared the doctrine of implied certification would permit FCA liability potentially to attach every time a document or request for payment is submitted to the Government, regardless of whether the submitting party is aware of its non-compliance. Id. at 384. While the Joslin court surmises the Ab-Tech court ignored the FCA's knowing requirement, this court reads the Ab-Tech decision differently. See id. at 384-85. Regardless of Ab-Tech, however, this court holds that when FCA liability is premised on an implied certification of compliance with a contract, the FCA nonetheless requires that the contractor knew, or recklessly disregarded a risk, that its implied certification of compliance was false. See 31 U.S.C.A. 3729(b); see also infra Section III.B.2. 50 In sum, because Shaw presented sufficient evidence demonstrating AAA submitted invoices for full payment on the contract knowing it had failed to comply with the silver recovery contract requirements, the district court properly denied AAA's Rule 50(a) motions.