Bender v. North American Telecomunications Inc. ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, :
:
ex rel. :
:
ROBERT KEITH BENDER, :
:
Plaintiff, :
:
v. : Civil Action No. 06-1432 (GK)
:
NORTH AMERICAN TELECOMMUNI- :
CATIONS, INC., et al. :
:
Defendants. :
MEMORANDUM OPINION
Plaintiff-Relator Robert Bender brings this qui tam suit under
the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., on behalf
of the United States against seven Defendants. This matter is
before the Court on Defendants’ Motions to Dismiss the Amended
Complaint pursuant to Fed. R. Civ. P. 12(b)(6) [Dkt. Nos. 51-52].
Upon consideration of the Motions, Oppositions, Replies, and
the entire record herein, and for the reasons set forth below, the
Motion to Dismiss the Amended Complaint of Defendant PAE Government
Services, Inc. is granted and the Motion to Dismiss the Amended
Complaint of Defendants North American Telecommunications, Inc.
(“NATI”), Capitol Technology Services, Inc. (“CTSI”), Chang D.
Hwang, John G. Carothers, Heys S. Hwang, and James W. Ruest is
granted.
I. BACKGROUND1
Plaintiff is an electrician formerly employed by Defendant
NATI. From October 1, 1997, to March 31, 2003, NATI had an
Operations and Maintenance contract with the United States
Department of Agriculture (“USDA” or the “Government”) to maintain
four USDA buildings in Washington, D.C. Under the contract, NATI
was responsible for day-to-day maintenance of the buildings.
Defendant CTSI took over the contract on April 1, 2003. Defendant
PAE Government Services, Inc. (“PAE”) is a subcontractor of CTSI
and performed electrical work on the buildings. Plaintiff was never
employed by either CTSI or PAE. The other four defendants are or
were officers or employees of NATI and CTSI: Chang D. Hwang,
President of NATI; John G. Carothers, former Operations Coordinator
for NATI and CTSI; Heys S. Hwang, President of CTSI; and James W.
Ruest, project Manager at CTSI.
The Amended Complaint alleges five violations of the FCA.
Count I alleges that NATI and CTSI falsified response times to
service calls in order to claim the monthly bonuses provided for in
their contract. Count II alleges that NATI and CTSI misrepresented
non-reimbursable repairs as reimbursable repairs. Count III alleges
1
For purposes of ruling on a motion to dismiss, the factual
allegations of the complaint must be presumed to be true and
liberally construed in favor of the plaintiff. Aktieselskabet AF
21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 15 (D.C. Cir.
2008); Shear v. Nat’l Rifle Ass’n of Am., 606 F.2d 1251, 1253 (D.C.
Cir. 1979). Therefore, the facts set forth herein are taken from
the Amended Complaint.
-2-
that NATI, CTSI, and PAE charged the USDA for work performed by
employees who did not possess the qualifications required by the
governing contract. Count IV alleges that NATI and CTSI billed the
USDA for overtime work that their contracts excluded from overtime
status. Count V alleges that NATI and CTSI misrepresented the
amount of work they performed.
On August 14, 2006, Plaintiff filed his Complaint [Dkt. No.
1]. On September 27, 2007, The United States filed a Notice of
Election to Decline Intervention [Dkt. No. 22].2 On May 14, 2008,
all of the Defendants except PAE filed a joint Motion to Dismiss
pursuant to Rule 12(b)(6)[Dkt. No. 31]. On the same date, PAE filed
a separate Motion to Dismiss [Dkt. No. 32]. Upon consideration of
these Motions, along with Plaintiff’s Oppositions [Dkt. Nos. 34-35]
and Defendants’ Replies [Dkt. Nos. 36-37], the Court dismissed the
Complaint with leave to file an Amended Complaint on February 25,
2010 (“February 25 Opinion”) [Dkt. Nos. 47-48]. United States ex
rel. Bender v. N. American Telecomms., Inc. et al., 686 F. Supp. 2d
46 (D.D.C. 2010).
2
The United States, pursuant to 31 U.S.C. § 3730(b)(1),
requests that if either Plaintiff or Defendants move to dismiss,
the Court solicit the Government’s written consent before granting
approval. Notice of Election to Decline Intervention, at 1 [Dkt.
No. 22]. However, that provision pertains to voluntary dismissals
only, and does not prevent the Court from dismissing an action for
failure to state a claim. United States ex rel. Fletcher v. Fahey,
121 F.2d 28, 29 (D.C. Cir. 1941).
-3-
On April 26, 2010, Plaintiff proceeded to file his Amended
Complaint [Dkt. No. 50]. On May 10, 2010, all Defendants except PAE
filed a Motion to Dismiss the Amended Complaint (“NATI Motion”)
[Dkt. No. 51]. On the same date, PAE filed its separate Motion to
Dismiss the Amended Complaint (“PAE Motion”) [Dkt. No. 52]. On June
7, 2010, Plaintiff filed his respective Oppositions [Dkt. Nos. 54-
55]. On June 14, 2010, Defendants filed their separate Replies
[Dkt. Nos. 58-59].
II. STANDARD OF REVIEW
To survive a motion to dismiss under Rule 12(b)(6), a
plaintiff need only plead “enough facts to state a claim to relief
that is plausible on its face” and to “nudge[ ] [his or her] claims
across the line from conceivable to plausible.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “[O]nce a claim has been stated
adequately, it may be supported by showing any set of facts
consistent with the allegations in the complaint.” Id. at 563. A
complaint will not suffice, however, if it “tenders ‘naked
assertions’ devoid of ‘further factual enhancement.’” Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1948 (2009) (citing Twombly, 550 U.S. at
557).
Under the Twombly standard, a “court deciding a motion to
dismiss must not make any judgment about the probability of the
plaintiffs’ success . . . must assume all the allegations in the
-4-
complaint are true (even if doubtful in fact) . . . [and] must give
the plaintiff the benefit of all reasonable inferences derived from
the facts alleged.” Aktieselskabet AF 21. November 2001 v. Fame
Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotation
marks and citations omitted).
To prove a violation of the FCA, a plaintiff must show either
that the defendant (1) “knowingly presents, or causes to be
presented [to the Government] a false or fraudulent claim for
payment or approval,” 31 U.S.C. § 3729(a)(1), or (2) “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.” 31
U.S.C. 3729(a)(2).3 A “claim” includes “any request or demand . .
3
As part of the Fraud Enforcement and Recovery Act of 2009
(“FERA”), Pub. L. No. 111-21, 123 Stat. 1617 (2009), Congress made
a number of changes to the FCA. FERA includes a retroactivity
clause which states that a new subsection would apply to all FCA
“claims” pending as of June 7, 2008. 123 Stat. at 1625 (codified as
a note following 31 U.S.C. § 3729). However, as courts that have
considered this clause have noted, “claims” refers only to a
defendant’s request for payment, and not to pending cases. See
United States v. Sci. Applications Int’l Corp., -- F. Supp. 2d --
No. CV-04-1543, 2009 WL 2929250 at * 14 (D.D.C. Sept. 14, 2009)
(“Congress did not intend ‘claims’ . . . to mean ‘cases.’”); United
States ex rel. Sanders v. Allison Engine Co., -- F. Supp. 2d -- No.
95-CV-970, 2009 WL 3626773 at *4 (S.D. Ohio, Oct. 27, 2009) (“[A]
plain reading of the retroactivity language reveals that the
relevant change is applicable to ‘claims’ and not to ‘cases.’”).
As the original Complaint was filed on August 14, 2006, there
are no allegations here of any pending claims by the Defendants on
June 7, 2008. Therefore, the retroactivity clause does not apply,
and the prior version of the FCA (last amended in 1994) will be
(continued...)
-5-
. for money or property” made to a recipient if the Government
provides or reimburses the recipient any portion of the money
requested. 31 U.S.C. § 3729(c). The knowledge requirement is
satisfied if a person “has actual knowledge of the information,
acts in deliberate ignorance of the truth or falsity of the
information, or acts in reckless disregard of the truth or falsity
of the information.” 31 U.S.C. § 3729(b). Finally, the Complaint
must allege materiality. See United States ex rel. Ervin and
Assocs., Inc. v. Hamilton Sec. Group, 370 F. Supp. 2d 18, 36
(D.D.C. 2005) (“The great weight of case law holds that the
materiality of a false record or statement is an element of False
Claims Act liability.”).
“[B]ecause the False Claims Act is self-evidently an anti-
fraud statute, complaints brought under it must comply with Rule
9(b) [of the Federal Rules of Civil Procedure]” in order to state
a claim. United States ex rel. Totten v. Bombardier Corp., 286 F.3d
542, 551-52 (D.C. Cir. 2002). Rule 9(b) requires that “[i]n
alleging fraud or mistake, a party must state with particularity
the circumstances constituting fraud or mistake.” Fed. R. Civ. P.
9(b). Thus, to satisfy Rule 9(b), a FCA relator must state the
time, place, and contents of the false representations, the facts
3
(...continued)
used throughout the remainder of this opinion.
-6-
misrepresented, and what was obtained or given up as a consequence
of the fraud. United States ex rel. Joseph v. Cannon, 642 F.2d
1373, 1385 (D.C. Cir. 1981).
III. ANALYSIS4
A. Plaintiff’s Claims Against PAE Are Dismissed
The Amended Complaint alleges that “each of the above-named
Defendants have caused the submission of false claims” in Counts I,
II, and V. Am. Compl. ¶¶ 188, 195, 257. In Counts III and IV, the
Amended Complaint alleges, in substance, that PAE used false
records in the preparation of fraudulent claims submitted by
others, knew of the fraudulent claims, and acted in deliberate
ignorance of that knowledge. Id. at ¶¶ 219-222, 236-239. PAE argues
that Plaintiff fails to allege any facts relating to PAE’s
wrongdoing under Counts I, II, IV, and V. PAE Mot. 5-7. PAE further
argues that, in Count III, Plaintiff fails to allege a knowing
violation of the False Claims Act and fails to identify any
4
The applicable statute of limitations under the FCA is six
years. 31 U.S.C. § 3731(b) (“A civil action under Section 3730 may
not be brought more than six years after the date on which the
violation of Section 3729 is committed.”). See United States ex
rel. Pogue v. Diabetes Treatment Ctrs. of Am., 474 F. Supp. 2d 75,
89 (D.D.C. 2007) (holding that the statute of limitations applies
to relators when the Government does not intervene). The original
Complaint was filed on August 14, 2006. The Plaintiff concedes that
potential FCA violations that occurred prior to August 14, 2000,
are time-barred. Pl.’s Opp’n. to NATI Mot. at 11. The Court
therefore dismisses any allegations of claims accruing prior to
August 14, 2000.
-7-
particular false claim. Id. at 8-13. For these reasons, PAE seeks
dismissal of the Amended Complaint.
As noted in the February 25 Opinion, a “complaint must make
specific allegations against each individual defendant rather than
collective allegations against ‘each of the above-named
Defendants,’ since one of the main rationales behind Rule 9(b)’s
particularity requirement is to ‘guarantee all defendants
sufficient information to allow for preparation of a response.’”
United States ex rel. Bender, 686 F. Supp. 2d at 50 (quoting United
States ex rel. Joseph, 642 F.2d at 1385). Therefore, Plaintiff must
specifically allege facts giving rise to liability for each
defendant individually. See United States ex rel. Grynberg v.
Alaska Pipeline Co., Civ. No. 95-725, 1997 WL 33763820, at *4
(D.D.C. Mar. 27, 1997) (dismissing FCA claim where complaint
alleged only that “each Defendant engaged in at least one of the
[alleged] practices”).
The allegations against PAE in Plaintiff’s original Complaint
were dismissed because the allegations contained in Counts I, II,
IV, and V were “silent regarding PAE’s liability.” United States ex
rel. Bender, 686 F. Supp. 2d at 50. In an effort to correct this
deficiency, Plaintiff has merely inserted in his Amended Complaint
the single sentence that, under Counts I, II, IV, and V, CTSI and
NATI’s fraudulent “practice[s] continued by PAE employees.” Am.
-8-
Compl. ¶¶ 73, 90, 102, 153, 171. Aside from this conclusory
statement regarding PAE’s practices, Plaintiff fails to allege the
date of any fraud perpetrated by PAE or any other information
regarding specific fraudulent claims submitted or prepared by PAE.
It is insufficient to allege a scheme against one defendant
and merely ascribe similar behavior to another. See U.S. v. N.Y.
City Health and Hosp. Corp., No. 95 Civ. 7649(LMM), 2000 WL
1610802, at *3 (Oct. 27, 2000 S.D.N.Y.) (dismissing the complaint
as to defendants against whom plaintiff made no specific factual
allegations but whom plaintiff claimed must have been engaged in
the same conduct as other defendants because they operated under
the same contract). Therefore, Counts I, II, IV, and V must be
dismissed against PAE for failure to state a claim.
Count III alleges that PAE employed unlicensed electricians,
thereby causing CTSI to falsely certify to the USDA that it was in
compliance with its contractual obligation to use only licensed
electricians. Am. Compl. ¶¶ 104-22, 211-22. Now, Plaintiff does
make specific allegations against PAE. In particular, Plaintiff has
responded to the finding in the February 25 Opinion that Plaintiff
had failed to specify which PAE employees were allegedly unlicensed
by naming several of the unlicensed employees. See Am. Compl. ¶¶
109-112.
-9-
Nonetheless, the Amended Complaint, like the Complaint before
it, fails to identify what particular false claims were allegedly
submitted by PAE, the content of any such false claims, and “who
precisely was involved in the fraudulent activity.” United States
ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1257
(D.C. Cir. 2004); see also United States ex rel. Brown v. Aramark
Corp., 591 F. Supp. 2d 68, 74 (D.D.C. 2008) (“[A] relator must
provide details that identify particular false claims for payment
that were submitted to the government.”). Plaintiff merely alleges
that the “work of unlicensed and/or unqualified electricians . . .
was billed by PAE to CTSI, and then by CTSI to USDA.” Am. Compl. ¶
113. Whether or not PAE’s conduct violated its contract, Plaintiff
has not made any allegation that PAE submitted or caused to be
submitted any claim containing false or fraudulent information.
Further, the Amended Complaint, like the Complaint before it,
does not allege that PAE acted to knowingly cause CTSI to submit
false claims to the USDA, as required by 31 U.S.C. § 3729(b).5 For
5
“If a subcontractor . . . makes a false statement to a
private entity and does not intend the Government to rely on that
false statement as a condition of payment, the statement is not
made with the purpose of inducing payment of a false claim ‘by the
Government.’ In such a situation, the direct link between the false
statement and the Government's decision to pay or approve a false
claim is too attenuated to establish liability.” Allison Engine Co.
v. United States ex rel. Sanders, -- U.S. –- 128 S. Ct. 2123, 2130
(2008), superseded by statute, Pub. L. No. 111-21, 123 Stat 1617
(2009).
-10-
example, there is no allegation that PAE was aware of CTSI’s
contract requiring it to employ only licensed electricians, or that
CTSI’s contract even applied to PAE as a subcontractor. See United
States ex rel. Alexander v. Dyncorp., Inc., 924 F. Supp. 292, 303
(D.D.C. 1996) (noting that FCA plaintiffs need to state facts from
which the court can infer a knowing violation on the part of the
defendants).
Thus, because it fails to meet Rule 9(b)’s particularity
requirement, as well as the FCA’s knowledge requirement, Count III
must be dismissed against PAE for failure to state a claim.
B. Plaintiff’s Claims Against NATI, CTSI, Chang D. Hwang,
John G. Carothers, Heys S. Hwang, and James W. Ruest Are
Dismissed
The remaining Defendants filed a joint Motion to Dismiss. Each
count will be addressed in turn.
1. Count I Is Dismissed
Count I alleges that Defendants falsified response times to
service calls in order to obtain contractual bonuses for prompt
service. Am. Compl. ¶ 52. Defendants argue that Count I of the
Amended Complaint “fails to supply any of the specifics this Court
already ruled must be produced.” NATI Mot. 9. Defendants contend
that the Amended Complaint does not allege the content of the false
claims, identify the employees who made them, state how many times
-11-
or when the false claims were submitted, or describe any specific
false bonus claims submitted. Id.While Rule 9(b) is “not intended to be a formalistic bar to
sub-standard pleadings,” an FCA Plaintiff must set out the details
of the specific scheme, supply the time, place, and content of
false representations, and link that scheme to claims for payment
made to the United States. United States ex rel. Brown v. Aramark
Corp., 591 F. Supp. 2d 68, 75 (D.D.C. 2008); United States ex rel.
Barrett v. Columbia/HCA Healthcare Corp., 251 F. Supp. 2d 28, 35
(D.D.C. 2003).
Although the Amended Complaint does describe how the alleged
scheme was carried out, it contains no allegations as to any
specific false claims submitted by any Defendant. Nor does the
Amended Complaint offer any specific information as to the time or
place of false representations. Rather, the Amended Complaint
merely alleges that NATI and CTSI employees submitted claims with
false completion times for service calls “on numerous occasions.”
Am. Compl. ¶ 55.
The Court is sympathetic to Plaintiff’s difficulty in gaining
access to documents that may provide details about specific false
claims submitted to the Government. See Opp’n to NATI Mot. 16-17.
Plaintiff points out that, as an electrician, he had no access to
the types of documents that would confirm the improprieties he
-12-
regularly observed. Id. However, Rule 9(b) is clear in requiring
plaintiffs to allege specific times, places, and contents of false
representations. See United States ex rel. Lee v. SmithKline
Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001) (finding that,
although “Rule 9(b) may not require [plaintiff] to allege, in
detail, all facts supporting each and every false” claim, plaintiff
must be specific enough to give defendants notice of the particular
misconduct alleged); United States ex rel. Barrett, 251 F. Supp. 2d
at 35 (“While a complaint that covers a multi-year period may not
be required by Rule 9(b) to contain a detailed allegation of all
facts supporting each and every instance of submission of a false
claim, some information on the false claims must be included.”).
Critically, plaintiffs must provide “defendants sufficient
information to allow for preparation of a response.” United States
ex rel. Joseph, 642 F.2d at 1385.
In only one instance does Plaintiff attempt to overcome the
lack of specificity by describing an incident in “the Summer of
2002,” when he “personally witnessed NATI employee Daniel Thayer .
. . locking the times of service calls in order to make them appear
as if they had been completed with the times applicable for a
bonus.” Am. Compl. ¶ 70. Plaintiff goes on to allege that he
confronted Daniel and Kenneth Thayer about the incident, but
neither gave any response. Id. at ¶ 71. While these allegations do
-13-
present some specific facts, the crucial fact Plaintiff fails to
allege is whether any NATI employee filed a false claim with the
Government based on the conduct described. Without an allegation of
a false claim submitted to the Government, Plaintiff cannot
overcome the requirements of Rule 9(b). See United States ex rel.
Barrett, 251 F. Supp. 2d at 35 (a viable complaint must allege
“that claims for payment were made to the federal government”).
Therefore, Count I must be dismissed for failure to state a claim.
2. Count II Is Dismissed
Count II alleges that NATI and CTSI, through named Defendants
and other employees, fraudulently accumulated minor repairs until
the aggregated repairs reached a dollar threshold entitling
Defendants to extra compensation. Am. Compl. ¶¶ 192-93. Defendants
argue that the Amended Complaint fails to allege specific false
claims, dates of specific false claims, or employees who submitted
such false claims under Count II. NATI Mot. 10-14.
Many of Plaintiff’s allegations in Count II neglect to allege
specific instances of employees submitting false claims. Rather
than allege any particular times or examples of claims falsely
submitted for additional compensation, Plaintiff relies on words
like “routinely,” “occasionally,” and “frequently.” Am. Compl. ¶¶
92-93, 98. These allegations alone do not set out the time of the
false representations with sufficient specificity. See United
-14-
States ex rel. Totten, 286 F.3d at 552; United States ex rel.
Joseph, 642 F.2d at 1385 (plaintiffs must provide “all defendants
sufficient information to allow for preparation of a response.”).
When Plaintiff does describe specific instances of misconduct
in Count II, he fails to allege that false claims were actually
submitted to the Government. In particular, Plaintiff alleges five
instances from 2000 through 2003 in which Defendants accumulated
minor repairs in order to achieve the minimum threshold for
additional reimbursement. Am. Compl. ¶ 94. However, Plaintiff makes
no allegation that any claim submitted to the Government based on
the aggregate repairs actually contained any false or fraudulent
information. Without this critical allegation, Plaintiff has failed
to allege any statutory false claim with sufficient particularity.
United States ex rel. Barrett, 251 F. Supp. 2d at 35.6 Count II
must be dismissed for failure to state a claim.
3. Count III Is Dismissed
Count III alleges that Defendants billed the USDA for work
performed by unlicensed employees in violation of a contractual
clause. Am. Compl. ¶¶ 211-12. However, the Amended Complaint
6
Plaintiff also alleges that a memorandum, dated February 6,
1998, states that “NATI is pushing to get more MRWO because they
can ‘double dip’ the Government and make extra money.” Am. Compl.
¶ 89. For the reasons noted above, FCA violations that occurred
prior to August 14, 2000, are time-barred. See supra note 4, at 7.
Therefore, any allegations relating to claims accruing before
February 6, 1998 are not relevant.
-15-
contains no allegation that Defendants actually submitted a claim
to the USDA reflecting that the employees were licensed.7 See
Martin v. Arc of Dist. of Columbia, 541 F. Supp. 2d 77, 82-83
(D.D.C. 2008) (dismissing an FCA claim based on an allegation that
defendant did not comply with the government’s requirement for
hiring experienced employees because plaintiff made no allegation
that a fraudulent claim was submitted); United States ex rel. Ervin
and Assocs., Inc. v. Hamilton Sec. Group, 370 F. Supp. 2d 18, 36
(D.D.C. 2005) (“[A] relator must produce evidence that the
7
Although Plaintiff has not raised the theory of “implied
certification” in his papers, it is clear that, in certain
circumstances, this Circuit permits an FCA claim based on the
theory that a bill submitted to the government impliedly certified
that laws, regulations, or contractual provisions were complied
with. See United States v. TDC Mgmt. Corp., 288 F.3d 421, 426 (D.C.
Cir. 2002) (finding liability for false claims based on “reports in
support of payment that omitted information indicating that
[defendant] was acting in a manner that was contrary to the core
terms of the Program.”).
However, courts may infer a false claim from a bill silent as
to compliance with contractual provisions “only where certification
[of compliance] was a prerequisite to the government action
sought.” United States ex rel. Siewick v. Jamieson Science and
Engineering, Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000). This
crucial element has been described as requiring that
“[c]ertification of compliance with the statute or regulation
alleged to be violated must be so important to the contract that
the government would not have honored the claim presented to it if
it were aware of the violation.” United States ex rel. Barrett, 251
F. Supp. 2d at 33. Plaintiff has made no such allegation here. See
id. at 35 (dismissing plaintiffs’ claim due to failure to allege
that defendant’s violation rose “to the level of affecting the
government’s decision to pay”). Plaintiff similarly fails to make
this allegation in either Counts IV or V.
-16-
defendant actually submitted false demands for payment or submitted
false records or statements in order to get a false claim paid.”).
Whether Count III alleges breach of contract or common law fraud is
irrelevant since a qui tam plaintiff has no standing to bring such
causes of action under the statute. See, e.g., United States ex
rel. Long v. SCS Bus. & Tech. Inst., 999 F. Supp. 78, 92 (D.D.C.
1998) (common law cause of action distinct from claims under FCA)
rev’d on other grounds, 173 F.3d 870 (D.C. Cir. 1999). Hence, Count
III must be dismissed.
4. Count IV Is Dismissed
Count IV alleges that NATI and CTSI, through named Defendants
and other employees, billed the USDA for overtime that did not
qualify for overtime status, id. at ¶ 226, and then gave employees
“Compensation Time” in lieu of monetary compensation. Id. at ¶ 228.
Plaintiff alleges that NATI and CTSI’s contract specified that
certain work conducted outside of normal business hours would not
be reimbursable as overtime. Id. at ¶¶ 125-130. Plaintiff claims
that Defendants billed the Government for overtime work that should
have fallen into this non-reimbursable category. ¶ 123. Defendants
argue, in substance, that Plaintiff does not allege any false
claims submitted to the Government. See NATI Mot. 15-17.
Plaintiff does allege several specific instances in which
Defendants submitted bills to the Government for overtime work that
-17-
Plaintiff believes should not have been counted as overtime under
the contract. See Am. Compl. ¶¶ 124,8 135, 137. However, the claims
that Defendants submitted to the Government for payment were not in
and of themselves false or fraudulent. United States ex rel. Ervin
and Assocs., 370 F. Supp. 2d at 36. Indeed, Plaintiff’s description
of the bills submitted to the Government indicates that Defendants
very precisely described the work for which they sought overtime
reimbursement. See, e.g., Am. Compl. ¶ 135. At most, these
allegations describe a breach of contract claim, for which
Plaintiff has no standing under the False Claims Act. See United
States ex rel. Owens v. First Kuwaiti Gen. Trading & Contracting
Co., 612 F.3d 724, 728 (4th Cir. 2010) (the FCA “does not allow a
qui tam relator to shoehorn what is, in essence, a breach of
contract action into a claim that is cognizable under the False
Claims Act”) (internal quotations omitted); United States ex rel.
Hendow v. University of Phoenix, 461 F.3d 1166, 1171 (9th Cir.
2006) (“for a breach of contract . . . to give rise to an action
under the False Claims Act, it requires a false claim.”) (internal
8
Plaintiff refers to Exhibit A, which identifies eleven
Monthly Status Reports, presumably submitted to the Government,
which Plaintiff “personally knows involved overtime charges
improperly billed to the Government.” Am. Compl. ¶ 124. Ten of
these eleven Monthly Status Reports are irrelevant, as they are
dated prior to the August 14, 2000. Any claims based upon those
Monthly Status Reports are time-barred.
-18-
quotations omitted); United States ex rel. Long, 999 F. Supp. 78,
92.
Plaintiff’s allegations that Defendants improperly awarded
employees Compensation Time in lieu of monetary payment similarly
fail to encompass an actual false or fraudulent claim. Plaintiff
alleges that NATI persisted in using Compensation Time, despite the
fact that its use was both illegal and contrary to the Collective
Bargaining Agreement between the local union and NATI. Am. Compl.
¶¶ 140-41. Regardless of the propriety of NATI’s use of
Compensation Time, Plaintiff makes no allegation that Defendants
made any misrepresentation to the Government in claiming payment,
as required by the False Claims Act.9 Therefore, Count IV must be
dismissed.
5. Count V Is Dismissed
Count V simply alleges that NATI failed to complete
maintenance tasks required by contract. Am. Compl. ¶¶ 243-44.
Plaintiff alleges that the Defendants’ failure to perform
preventative and other required maintenance at an acceptable level
rendered their bills to the Government false claims. Am. Compl. ¶¶
156-71. Count V is insufficient for the same reasons as Count IV.
Although Plaintiff details many pieces of equipment that did not
9
As noted supra note 7, at 15-16, Plaintiff has also failed
to allege that the use of Compensation Time was “contrary to the
core terms” of the contract. TDC Mgmt. Corp., 288 F.3d at 426.
-19-
receive the maintenance required by NATI’s contract, Plaintiff does
not allege that claims were submitted to the Government containing
false or fraudulent information about such maintenance. As with
Count IV, the alleged conduct at most amounts to breach of
contract. Therefore, Count V must be dismissed.
IV. CONCLUSION
For the reasons set forth above, the Motion to Dismiss the
Amended Complaint of Defendant PAE is granted; the Motion to
Dismiss the Amended Complaint of Defendants NATI, CTSI, Chang D.
Hwang, John G. Carothers, Heys S. Hwang, and James W. Ruest is
granted. As Plaintiff has not sought leave to amend, the Amended
Complaint must be dismissed with prejudice.
An Order will issue with this opinion.
/s/
November 4, 2010 Gladys Kessler
United States District Judge
Copies to: counsel of record via ECF
-20-