Court Opinion

ID: 8414102
Source: CourtListenerOpinion
Date Created: 2022-11-02 20:48:05.385705+00
Date Added: 2024-06-11T16:48:07.184387
License: Public Domain

POSNER, Circuit Judge,
dissenting.
For Horning, the employer defendant, to be found to have violated the False Claims Act, the union had to prove that the company had “knowingly presented], or eause[d] to be presented [to the government], a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1)(A). The employer does not have to have intended to defraud (i.e., cheat) the government. § (b)(1)(B). It just has to have known that the claim it’s submitting is false, or act in reckless disregard of its truth or falsity. § (b)(1)(A). It might think the falsehood harmless — it might for example be sure the claim would be turned down — or it might think it had underclaimed in the past, and the false claim if accepted would merely place it in the position it would be in, rightfully, had it not made such mistakes. But as long as the claimant knows that its representations are both false and “material” (i.e., relevant in the sense of “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property” by the government, § (b)(4)), it has violated the False Claims Act. Universal Health Services, Inc. v. United States ex rel. Escobar, — U.S. -, 136 S.Ct. 1989, 1996, 195 L.Ed.2d 348 (2016).
By way of background it needs to be understood that a separate statute, the Davis-Bacon Act, establishes a minimum wage for workers on certain federal construction projects, 40 U.S.C. § 3142, among them a project in Dayton, Ohio, for which Horning was a contractor. That minimum (which is based on the prevailing wage for similar work in the location in which the work will be performed, § 3142(b)) includes fringe benefits. § 3141(2). For example, Horning was required to pay roofers a wage of $22.36 an hour plus $11.58 an hour in fringe benefits, for a total of $33.94 an hour. The fringe benefits included insurance: $5 of the $11.58 was not paid to the employees but instead was to be used to fund an insurance program for them (“the trust”).
The false-claims evidence begins with the false statement, in the Certified Payroll Reports that Horning submitted to the Department of Veterans Affairs, that “all persons employed on [the] project have been paid the full weekly wages earned ... and no deductions have been made either directly or indirectly from the full wages earned by any person, other than permissible deductions.” An employee named Federico Gonzalez had $5 per hour deducted from his pay and placed into the fringe-benefits trust even though he was *596ineligible to receive benefits from the trust. The Davis-Bacon Act permits an employer to count contributions to an insurance plan for employees not yet eligible for coverage only if the plan requires the employer to make those contributions during the employee’s waiting period — that is, after the employee has been hired but before he is eligible for benefits. See Dep’t of Labor, Field Operations Handbook § 15fl3, www.dol.gov/whd/foh/foh_chl5.pdf (visited July 7, 2016). Horning had contributed $5 per hour to the insurance trust ostensibly for Gonzalez’s benefit for over two months longer than his waiting period, which was 90 days. Because he wasn’t receiving the $5 an hour either in cash or in insurance during that two-month period, he was receiving less than the Davis-Bacon Act entitled him to.
There is uncontradicted evidence that four other Horning workers had $5 per hour of work credited to the trust as well even though like Gonzalez they didn’t participate in the benefits program and so never benefited from the $5 that was an ostensible part of their compensation — a part, I repeat, to which Davis-Bacon entitled them.
Horning’s manager of human resources acknowledged that the $5 per hour subtracted from the workers’ compensation was not based on an estimate of the benefits the worker would or might receive. She said that “Horning would put that money how they — you know, how they [the management] saw fit on that money. It wasn’t just cash money in [the worker’s] hand” — or, in the case of the five workers we’ve mentioned, money in their insurance accounts. No one in management attempted to match the $5 deductions to each employee’s eligibility to receive benefits, even though as an experienced contractor on Davis-Bacon Act projects Horning’s executives must have known about the statute’s requirements. See United States ex rel. Wall v. Circle C Construction, L.L.C., 697 F.3d 345, 356-57 (6th Cir. 2012). If they didn’t know, it must have been because they closed their eyes to those requirements — a good example of ostrich behavior, itself a good example of deliberate indifference within the meaning of the False Claims Act.
A nontrivial part of the investment fund financed by the $5 wage deductions — at least $54,000 — was diverted to the company’s owner and to a relative of the general manager, neither of whom, so far as the record reveals, was entitled to receive money from the insurance fund. This is further evidence that Horning knowingly made false statements in claiming that the $5 of “fringe benefits” it took out of each worker’s hourly salary went to “appropriate programs for the benefit of such employees,” that is, by buying insurance for the employee. When “a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant’s representations misleading with respect to the goods or services provided.” Universal Health Services, Inc. v. United States, supra, 136 S.Ct. at 1999. That’s this case.
To understand the full scope and gravity of Horning’s conduct, we need to remand the case for a trial. We need to know how many employees were forced to contribute $5 of their compensation to a trust from which they could not benefit or how much less they received than they were entitled to. But we need to know even more. The company’s principal defense is not that it never underpaid its workers, in violation of the Davis-Bacon Act, but that it had relied on its accountants to advise it with respect to its duty to pay its workers the minimum wage required by that Act, and that since *597it followed their advice it can’t have knowingly violated the False Claims Act. But no evidence has been presented that the accountants in question had the necessary expertise, understood the Davis-Bacon Act (the source of Horning’s duty to pay its workers the prevailing wage), actually advised Horning of the Act’s requirements, or received full disclosure from Horning concerning the administration of the trust. There is also reason to believe that Horn-ing didn’t rely on the accountants’ advice in good faith.
In short, it is premature to exonerate Horning.