Court Opinion

ID: 1029496
Source: CourtListenerOpinion
Date Created: 2013-07-05 07:58:38.370028+00
Date Added: 2024-06-11T12:39:10.808346
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                             No. 07-1361

UNITED STATES OF AMERICA ex rel. PETER M. ELMS,

                 Plaintiff - Appellant,

           v.

ACCENTURE LLP,

                 Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt.      Roger W. Titus, District Judge.
(8:04-cv-04077-RWT)

Argued:   May 13, 2009                     Decided:   July 22, 2009

Before DUNCAN, Circuit Judge, HAMILTON, Senior Circuit Judge,
and Malcolm J. HOWARD, Senior United States District Judge for
the Eastern District of North Carolina, sitting by designation.

Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.

ARGUED:   Stephen Z. Chertkof, HELLER, HURON, CHERTKOF, LERNER,
SIMON & SALZMAN, PLLC, Washington, D.C., for Appellant. Joseph
H. Young, HOGAN & HARTSON, Baltimore, Maryland, for Appellee.
ON BRIEF: Douglas B. Huron, HELLER, HURON, CHERTKOF, LERNER,
SIMON & SALZMAN, PLLC, Washington, D.C., for Appellant.
Nicholas G. Stavlas, Allison J. Caplis, HOGAN & HARTSON,
Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

      Peter Elms appeals the district court’s dismissal of this

qui tam action brought under the Federal False Claims Act, 31

U.S.C. §§ 3729-3733 (2000) (the “FCA”) in which it is alleged

that his employer, Accenture LLP (“Accenture”), submitted false

claims to the government in connection with a cost-plus contract

and alleging that he was terminated in retaliation for engaging

in    protected    activity     under   the   FCA.      Because      this   court

concludes that Elms has pled sufficient facts to satisfy Rule 8

of the Federal Rules of Civil Procedure as to the retaliation

claim but has not pled sufficient facts to satisfy Rule 9(b) as

to the fraud claim, we affirm in part and reverse in part and

remand this matter to the district court for further proceedings

as to the retaliation claim.

                                        I.

      The facts of this case arise out of a contract between

Accenture, an international consulting and technology firm, and

the   federal     government     regarding    the    FVAP   Secure   Electronic

Registration      and   Voting    Experiment    (“SERVE”),     an     initiative

headed by the Department of Defense for registering and voting

on the internet.        The SERVE contract was a cost-plus-fixed-fee

contract, with the fee in this particular contract being nine

and one-half percent.          The provisions of the contract expressly

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exempt     certain    named        subcontractors,       including     Avanade,   an

affiliate in which Accenture held a controlling interest, from

the     cost-plus-fixed-fee         provisions.          Instead,     the    contract

contemplates that Accenture will pay for Avanade’s services at

the “Time and Materials” rate, which includes profit. Accenture

then bills the government at this “Time and Materials” rate.

      Elms, who designed the software for the SERVE contract, was

assigned as Project Manager for the contract.                  Although he felt

he was better suited to be Chief Technical Architect (“CTA”) for

the project, that position was staffed by someone from Avanade.

Elms’ superior, Meg McLaughlin, informed Elms that they were

going to staff the project with as many Avanade personnel as

possible in order to maximize profit.                    When Elms asked for an

explanation    of     how     using    Avanade     personnel    on     the   project

maximized profit, McLaughlin explained that Accenture paid full

rates for the Avanade employees and passed that cost along to

the government, but Accenture would then receive a rebate of

fifty    percent     or     more     from   Avanade,      thereby     boosting    the

profits.     In August 2002, Elms expressed concern to McLaughlin

that the Avanade rebate did not seem ethical and asked if the

rebate     would     be   a   problem       with   the     government       auditors.

McLaughlin told Elms that she would seek a fuller explanation

and get back to him, but not to worry about it.                      She never gave

him an explanation.

                                            4
       In September 2008, Elms discussed his concerns about the

rebates     with    Adrian    Wilcox,       who   was   responsible         for    Client

Financial Management at Accenture.                 Wilcox stated that he did

not    fully    understand     how    the    system     worked,    but      that    fifty

percent of Accenture’s payment to Avanade “came back to the job”

to boost the bottom-line profit margin.                      Elms also expressed

concerns to Wilcox about what government auditors would think of

such    a   system,    and    Wilcox    assured       him   that     the      government

auditors    would     only    match    invoices    to     payments      and      that   any

accounting documents showing a rebate would be internal to the

firm.

       Elms alleges that it soon became clear that the Avanade

personnel were not up to the challenge of working on SERVE.

Elms    requested     that    McLaughlin        replace     some   of      the    Avanade

project personnel with more qualified staff from Accenture, but

McLaughlin told Elms that they needed to keep as many Avanade

personnel on the project as possible to maintain a higher profit

margin.

       In early 2003, Elms again questioned McLaughlin about the

personnel      staffing      the   project.        This     time   he      insisted      on

removal of the Chief Technical Architect, an Avanade employee,

whom he believed to be unqualified for the position.                              Shortly

thereafter, he was informed that he was being removed as Project

Manager.       Elms then proposed that he assume the Chief Technical

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Architect role.         McLaughlin refused, saying this would result in

an unacceptably low profit margin.                  Elms protested, accusing

Accenture       of    “short-changing”   the    government.      On   April    15,

2003, Elms’ employment was terminated.

        Elms filed the complaint in this matter on December 30,

2004 alleging violations of the FCA and the Age Discrimination

in Employment Act (“ADEA”).          After the United States declined to

intervene, the district court unsealed the complaint in June

2006.       Accenture moved to dismiss the complaint.             The district

court       granted   Accenture’s   motion     to   dismiss,   concluding     that

Elms had failed to meet the heightened pleading requirements on

his fraud claim, that he had not alleged sufficient facts to

make out a retaliation claim, and that his ADEA claim was time

barred. ∗     Elms has not appealed the dismissal of his ADEA claim.

        ∗
       Prior to the dismissal of his claims, Elms moved to amend
his complaint, consistent with a proffer he filed in response to
Accenture’s motion to dismiss.    The district court denied the
motion to amend as futile.       In his reply brief, appellant
attempts to challenge the district court’s denial of his motion
to amend.   However, appellant waived his right to challenge on
appeal the district court’s denial of his motion to amend the
complaint because he raised no contention in the Argument
section of his opening brief that the district court abused its
discretion in denying his motion to amend the complaint.
United States v. Al-Hamdi, 356 F.3d 564, 571 n. 8 (4th Cir. 2004)
(“It is a well settled rule that contentions not raised in the
argument section of the opening brief are abandoned.”).

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                                              II.

       We    review      de    novo    the    district     court’s       order      granting

Accenture’s Rule 12(b)(6) motion to dismiss.                          Parrington v. Am.

Int’l Specialty Lines Ins. Co., 443 F.3d 334, 338 (4th Cir.

2006); Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002).

                                              A.

       The     FCA      imposes       civil     liability        on   any    person       who

“knowingly presents, or causes to be presented to [the United

States government] a false or fraudulent claim for payment or

approval” or who “knowingly makes, uses, or causes to be made or

used, a false record or statement to get a false or fraudulent

claim       paid   or    approved      by     the    Government.”           31   U.S.C.    §

3729(a)(1), (2).             This court has established the following test

for FCA liability:             “(1) whether there was a false statement or

fraudulent course of conduct; (2) made or carried out with the

requisite scienter; (3) that was material; and (4) that causes

the government to pay out money or to forfeit moneys due (i.e.,

that involved a ‘claim’).”                    Harrison v. Westinghouse Savannah

River Co., 176 F.3d 776, 788 (4th Cir. 1999).

        A     claim     of     fraud    under       the   FCA,    like      fraud    claims

generally,         is subject to the heightened pleading standard of

Rule 9(b) of the Federal Rules of Civil Procedure which requires

that    a    plaintiff        “state   with     particularity         the   circumstances

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constituting fraud or mistake.”                     Fed. R. Civ. P. 9(b).               In his

pleading,      therefore,      Elms      was       required     to    allege    “the       time,

place, and contents of the false representations, as well as the

identity of the person making the misrepresentation and what he

obtained thereby.”          Harrison, 176 F.3d at 784.

       Elms’    FCA    claim      fails       to     meet    the     heightened      standard

imposed by Rule 9(b).              While Elms alleges that a scheme existed

between   Accenture         and    Avanade,          whereby       Avanade    would     rebate

approximately fifty percent of Accenture’s payments to Avanade,

Elms   fails    to    allege      with    specificity          the    “who,     what,      when,

where and how” of the rebate scheme.                        At most, Elms alleges (i)

that there was a cost-plus contract with a nine and one-half

percent markup, (ii) that Accenture used personnel from Avanade

and paid full rates for the Avanade employees, which it passed

along to the government, and (iii) that Accenture later received

a rebate or credit of fifty percent or more from Avanade, which

Accenture      did    not   credit       to    the    government.            Elms,   however,

fails to allege specifics of any single credit or rebate and

provides no detail of his conclusory allegations that Accenture

engaged in fraudulent billing practices.                           Although Elms alleges

that    Accenture        affirmatively             misrepresented            that     it    was

Accenture’s “established practice” to pay Avanade at full value

for its services and that it was not getting any rebates, Elms

does    not    attribute          this    alleged           misrepresentation         to     any

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Accenture     employee       or   identify        where     or    when       any   such

representation was made.

       Plaintiff   submitted      only    one     invoice   (which,         ironically,

was signed by plaintiff) and failed to allege with particularity

any alleged rebate or credit.                  While Elms contends that the

evidence is within the possession of Accenture and the United

States, this does not excuse the lack of specificity with which

plaintiff has pled his FCA fraud claim.                   In fact, Rule 9(b) is

aimed at such fishing expeditions:                 “The clear intent of Rule

9(b) is to eliminate fraud actions in which all the facts are

learned     through      discovery      after     the     complaint      is     filed.”

Harrison, 176 F.3d at 789.                    The district court, therefore,

properly dismissed plaintiff’s fraud claim under the FCA.

                                          B.

       Plaintiff also brought a claim for retaliation under the

FCA,   asserting      that   he   was    dismissed      from     the   project     and,

subsequently,      the    company       because    he     engaged      in     protected

activity.     The FCA’s statutory ban on retaliation provides a

cause of action for

       [a]ny employee who is discharged, demoted, suspended,
       threatened,   harassed,  or   in  any   other   manner
       discriminated against in the terms and conditions of
       employment by his or her employer because of lawful
       acts done . . . in furtherance of an action under this
       section, including investigation for, initiation of,

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       testimony for, or assistance in an action filed or to
       be filed under this section.

31    U.S.C.   §    3730(h).       Courts    have   interpreted       FCA-protected

activity broadly to cover not only the filing of a qui tam suit

but also a variety of actions aimed at ascertaining whether or

not    a   fraud    has   been     committed    that   would    give       rise    to   a

possible FCA suit.            United States ex rel. Yesudian v. Howard

Univ., 153 F.3d 731, 739-40 (D.C. Cir. 1998).

       Unlike the fraud claim, a retaliation claim is not subject

to the heightened pleading standard of Rule 9(b); therefore,

plaintiff       need      only     satisfy      Rule    8’s     notice       pleading

requirements to survive a motion to dismiss.                  Fed. R. Civ. P. 8.

       We conclude that plaintiff has alleged sufficient facts to

survive a Rule 12(b)(6) motion to dismiss on the retaliation

claim.         Elms    has     sufficiently      alleged      that     he    suffered

retaliation, i.e., his employment was terminated as a result of

action taken in the course of investigating a fraud against the

United States.         Elms has alleged a fraudulent rebate scheme in

his   complaint,       even   if   those    allegations    do   not       survive   the

heightened pleading standard of Rule 9.                   He also alleges that

when he learned how Accenture was using Avanade to make a higher

return than the nine and one-half percent specified in the FVAP

contract,      he   was   concerned    about    the    legality      of    the    rebate

scheme and “expressed his misgivings” to McLaughlin, as well as

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to the accountant assigned to the project. (JA-010).                           Finally,

Elms alleges that he insisted on removing the Chief Technical

Architect from Avanade but that before Elms could remove him,

Elms himself was removed as Project Manager.                          When McLaughlin

refused to make Elms the CTA, Elms told her that Avanade was

“short-changing the government.”                 (JA-010).       Shortly after this

conversation, Elms was fired.                   Elms has alleged that he took

action in furtherance of a qui tam suit, that his employer knew

of these actions, and that he was terminated as a result.                            These

allegations are sufficient to put defendant on notice of the

nature of plaintiff’s retaliation claim and therefore survive

dismissal under Rule 12(b)(6).

                                      CONCLUSION

        We   affirm   the       district   court’s      ruling    that   Elms’       fraud

claim    under    the    FCA      fails    to    meet   the    heightened      pleading

standard     of   Rule   9(b).        However,     we    conclude      that   Elms     has

properly      alleged       a    retaliation      claim       under   the     FCA,     and

therefore      reverse      the     district      court’s      dismissal      of     Elms’

retaliation claim and remand this matter to the district court

for further proceedings not inconsistent with this opinion.

                                                                  AFFIRMED IN PART,
                                                                  REVERSED IN PART,
                                                                       AND REMANDED

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