WHISTLEBLOWER NEWS QUOTE OF THE DAY:

"And you should not assume we will be amenable to releasing individuals from False Claims Act liability when we settle with the organization. The presumption is flipped in the other direction. Admittedly, this is a departure from past practice, where a settlement would release not only the corporation, but also its individual directors, officers and agents. But it is a change we view as necessary to pursue company officials involved in the wrongdoing."

— Acting Associate Attorney General Bill Baer in a speech regarding the impact of the Yates Memorandum’s focus on individual accountability and corporate cooperation at the American Bar Association’s 11th National Institute on Civil False Claims Act and Qui Tam Enforcement

DAILY WHISTLEBLOWER HEADLINES:

Appeals court sides with Boeing in whistleblower lawsuit

A federal appeals court sided with Boeing and one of its suppliers in the whistleblower lawsuit brought by three ex-workers at the aircraft manufacturer’s former plant in Wichita.

The 10th U.S. Circuit Court of Appeals agreed on Monday with a federal judge’s decision that the former workers failed to show Boeing defrauded the U.S. government in a $1.6 billion contract.

The three-judge appellate panel said it found no evidence Boeing knowingly submitted a false claim to the government. It upheld the 2014 summary judgment in favor of Boeing and California-based supplier Ducommun Inc., rejecting claims brought by former employees Taylor Smith, Jeannine Prewitt and James Ailes.

Their 2005 lawsuit alleged that Boeing defrauded the government in a contract for two dozen 737 Next Generation aircraft by using “bogus parts.” 

Acting Associate Attorney General Remarks on Yates Memorandum and False Claims Act

On June 9, 2016, Acting Associate Attorney General Bill Baer delivered a speech regarding the impact of the Yates Memorandum’s focus on individual accountability and corporate cooperation at the American Bar Association’s 11th National Institute on Civil False Claims Act and Qui Tam Enforcement.  The focus of the speech was on the interplay between the Yates Memorandum and investigations and litigation under the False Claims Act (FCA), underscoring the fact that the US Department of Justice’s (DOJ’s) focus on individuals is not limited to the criminal context.
 
Baer led by highlighting the fact that FCA filings “are trending at all-time highs” – with 630 qui tam actions filed last year alone – and that since 2009, FCA recoveries have exceeded $29.5 billion.  He then moved on to a discussion of individual accountability under the FCA, and observed: read more »

Contractor Accused Of Overbilling USAID On Pakistan Project

A would-be whistleblower alleges CDM Inc. overbilled and underperformed on a series U.S. Agency for International Development projects rebuilding Pakistan’s infrastructure after a 2005 earthquake, according to a lawsuit unsealed in New York federal court Thursday.

Former CDM project manager Saif Hussain says he tried to investigate and point out practices that included hiring unqualified personnel, hiding basic plumbing deficiencies within building walls, and billing contracts for work either performed on different projects or not at all, but he was fired for his efforts.

Hussain brings counts for False Claims Act violations, retaliation for his firing, breach of contract, payment by mistake and unjust enrichment. read more »

Furniture Makers' Bid For Whistleblower Sanctions Tossed

A Texas federal judge recommended nixing a bid for sanctions and disqualification Friday brought by a group of furniture manufacturers who are being sued for antitrust and False Claims Act violations, finding they failed to prove that the rival attorneys who brought the case broke discovery rules.
 
U.S. Magistrate Judge Pamela A. Mathy wrote in her report and recommendation to U.S. District Judge Orlando Garcia that defendants Atveq Inc., KLN Steel Products Co LLC., Thurston Manufacturing Co. and Dehler Manufacturing Inc. hadn't shown that attorneys for whistleblower University Loft Co. wrongly secured three witness statements, so sanctions aren't appropriate. University Loft claims the companies used unfair techniques to outbid it on furniture contracts for government buildings and student housing.
 
University Loft accuses the Avteq companies of bid-rigging, saying Avteq units would bid as separate companies on government contracts that required the government to obtain a set number of bids. Doing so, University Loft claims, allowed the companies to appeal to a purchaser inclined to get a project done quickly. The suit also says the Avteq companies would falsely certify Colombian products as made in the U.S. and falsely certify that some Avteq units were owned by women. read more »

‘Lincoln’s law’: The most important Supreme Court case under the radar

It is an end-of-June ritual nearly as reliable as the Summer Solstice. As the Supreme Court term draws to a close, the national press and general public await the court’s opinions in a handful of blockbuster cases. In the meantime, under everyone’s noses the court issues one or two opinions of enormous consequence that escape general notice.

The strongest candidate for sleeper status this term, which will end in the next few days, is Universal Health Services v. United States ex rel Escobar.

The “ex rel” signals that the case is brought under the False Claims Act, the most important federal law that most people have never heard of. The act provides for treble damages against contractors who defraud the government. And it incentivizes whistleblowers with knowledge of government fraud to come forward, by providing a potential share — generally between 15 percent and 30 percent — of the eventual recovery.

The central legal issue in the Escobar case is whether a contractor can be liable to the government if it makes an implied, as opposed to an express, false certification. What happens if a contractor delivers goods to the government that it knows aren’t suitable, but there is no false statement on the face of the invoice?

In fact, that’s the sort of conduct that led to the enactment of the False Claims Act in the first place. Passed during the Civil War, the act, also known as “Lincoln’s law,” was a response to crooked contractors who bilked the Union Army by selling inferior goods — sand in place of sugar, sawdust for gunpowder, crippled horses and boots made of cardboard. It’s safe to assume that these fraudsters didn’t submit bills that expressly made false claims, such as stating that the horses were healthy or the boots sturdy. read more »