Updated: Jul 6, 2020
By Dick Lieberman, Consultant and Retired Attorney
The Civil False Claims Act, 31 U.S.C. §§ 3729-3733, generally prohibits any person from knowingly causing to be presented to the government a false or fraudulent claim for payment or approval, or making or using a false record or statement to get a false claim paid or approved.
To prove a false claim, there are four elements:
(1) a false statement or fraudulent course of conduct
(2) made with the knowledge of falsity (actual knowledge, acting in deliberate ignorance of the truth or acting in reckless disregard of the truth, and no proof of specific intent to defraud is required)
(3) that is material (has a natural tendency to influence or be capable of influencing the government’s decision to pay)
(4) that results in a claim to the government.
But what about routine invoices that are submitted to the Government which do not contain an “objectively false” statement, but where the contractor knows that it has failed to comply with a material provision of a government contract? In other words, are the company’s actions a breach of contract, or a violation of the False Claims Act? The Fourth Circuit recently joined some other circuits in declaring that such invoices, although not actually certified, had “implied certification” and were false claims under the False Claims Act. United States v. Triple Canopy, Inc ex rel Badr. Nos. 13-2190, 13-2191 (Fourth Cir. Jan. 8, 2015).
In Triple Canopy, the Government awarded a fixed price contract for security guard services in Iraq. The contract required that all employees receive initial training on the weapon they carried, and that they had qualified on a U.S. Army qualification course, by meeting a marksmanship score of 23 out of 40. The contractor was to maintain qualifying scores in personnel files for one year. There was nothing in the contract which conditioned payment on compliance with these requirements.
Triple Canopy hired 332 Ugandan guards to serve in Iraq under the supervision of 18 Americans. Although the guards’ personnel files indicated that they met the marksmanship score, upon arrival, the supervisors learned that these guards could not “zero” their rifles and were unable to satisfy the qualifying score of 23 on marksmanship. Regardless, Triple Canopy used the guards and submitted its monthly invoices for them. After a failed attempt at training the guards, a Triple Canopy supervisor directed that false scorecards be created for the guards and placed in their personnel files. The guards never qualified, even upon leaving the guarded facility.
Triple Canopy presented 12 monthly invoices during its one year contract totaling over $4 million. Each invoice listed the number of guards, and each was approved and accepted by a Contracting Officer Representative (“COR”) who filled out a DD-250 form, Material Inspection and Receiving Report, although no DD-250 included any certification from Triple Canopy. A Whisleblower (Badr) began a false claims action against Triple Canopy, but a District court in Alexandria dismissed the action because the invoices did not contain an “objectively false statement.” On appeal, the Government said that Triple Canopy had submitted false claims because the monthly invoices billed for services even though the company knew its guard