Industry groups urge Supreme Court to hear False Claims Act case

Three industry groups joined forces this week in asking the Supreme Court to consider an appeal of a False Claims Act ruling.

The gist of it is that there is too much inconsistency among the various appeals courts of what constitutes a False Claims Act violation.

The Professional Services Council, the National Defense Industrial Association and the International Stability Operations Association have filed an amicus brief.

To read the full text of the amicus brief, click here.

The case involves the security company Triple Canopy, which was accused by a former employee of billing the government for security guards who allegedly did not meet firearm qualifications. A former Triple Canopy employee, Omar Badr filed a False Claims Act lawsuit.

The case was first dismissed by the U.S. District Court for Eastern Virginia, which ruled that submitting invoices for unqualified guards didn’t rise to the level necessary to file a false claim, according to a description of the case on the Project on Government Oversight web page. 

However, the U.S. Court of Appeals for the 4^th Circuit reversed the lower court ruling and reinstated Badr’s False Claims Act standing.

Now, the case is being appealed to the Supreme Court and the three industry groups are urging that the court hear the case.

According to their filing, the 4^th Circuit decision is inconsistent with how most other appeals courts have ruled. The legal issue revolves around whether submitting an invoice for payment is an “implied certification” that the contractor is in compliance with all federal laws, regulations and terms of the contract and whether that implied certification rises to the level of a False Claim Act violation.

That question has divided lower federal courts for years, according to the filing.

“The division among lower courts has far-reaching consequences not only for defense contractors like petitioner [Triple Canopy]— but also for any of the myriad businesses, non-profit organizations, and even municipalities that work for the government, or receive funds through a vast range of federal programs, from Medicare, school lunches, and disaster relief services, to software licensing, cigarette manufacturing, crude oil purchasing, student loans, and residential mortgage issuance,” the group wrote in their brief.

The 4^th circuit has endorsed “the most extreme possible theory of 'implied certification,’” they said.

The question of whether something is a False Claims Act violation should center on whether it is a condition of payment. If it is a condition of payment, then it would qualify as a potential False Claims Act violation.

But if it isn’t a condition of payment, then people should not be able to file a claim, according to the position of the industry groups.

The problem with a broad interpretation of the False Claims Act is that it “transforms issues that at most would give rise to a breach of contract claim brought by the United States into punitive FCA liability that can be asserted by legions of bounty hunting private relators,” the industry groups wrote.

The Washington D.C. circuit and the 4^th circuit are the only appeals circuits that have taken such a broad view of the False Claims Act. Seven other circuits have ruled the other way.

What makes the D.C. and 4^th circuit decisions so important is the large number of government contractors who do business in their jurisdictions. They have the potential to see a much larger number of these cases than the other circuits.

But whichever side of the debate you fall on, it seems that this is the perfect kind of case for the Supreme Court to hear because their decision will standardize the test of whether something is a potential False Claims Act violation.

A decision on whether the Supreme Court will accept the case is expected soon.