United States ex rel. Badr v. Triple Canopy, Inc.

• Decision Date: 19 June 2013
• Docket Number: Case No. 1:11–cv–288 (GBL/JFA).
• Citation: 950 F.Supp.2d 888
• Court: U.S. District Court — Eastern District of Virginia
• Parties: UNITED STATES of America ex rel., Omar BADR, Plaintiff–Relator, v. TRIPLE CANOPY, INC., Defendant.

950 F.Supp.2d 888

UNITED STATES of America ex rel., Omar BADR, Plaintiff–Relator,

v.TRIPLE CANOPY, INC., Defendant.

Case No. 1:11–cv–288 (GBL/JFA).

United States District Court,

E.D. Virginia,

Alexandria Division.

June 19, 2013.

Earl Neville Mayfield, III, Paul Anthony Prados, Day & Johns PLC, Fairfax, VA, for Plaintiff.

Joseph Cameron Davis, Tara Melissa Lee, DLA Piper U.S. LLP, Reston, VA, for Defendant.

MEMORANDUM OPINION AND ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Defendant Triple Canopy Inc.'s (“TCI”) Motion to Dismiss Relator Omar Badr's Complaint and Intervenor United States of America's Complaint for failure to state a claim. (Docs. 29, 31.) This case concerns allegations against a government contractor for fraudulent billing arising from the contractor's duty to provide security at United States military installations in Iraq. The instant motions present five issues before the Court.

The first issue is whether submission of an invoice listing the title of an employee whose services were billed, without reference to whether the employee met contractual conditions, constitutes a false claim under the False Claims Act (“FCA”), 31 U.S.C. § 3729(a), if submitted knowing that the employee failed to meet a certain contractual requirement. The Court holds that the Government fails to state a claim because it failed to sufficiently plead that Defendant submitted a demand for payment containing an objectively false statement. The Government's Complaint does not sufficiently allege that the types of services provided or the amount for which it was billed were false statements. Mere failure to comply with all contractual conditions does not necessarily render the billing for those services so deficient or inadequate that the invoice constitutes a false claim under the FCA. Nor does it constitute an incorrect description of services provided to constitute a false statement sufficient to impose FCA liability.

The second issue is whether Relator sufficiently states an FCA claim where he alleges that (1) certain personnel were deficient in weapons training and therefore did not meet contractual requirements, (2) these personnel were transferred to other military installments, (3) the Government paid Defendant for work performed at those other installments, and (4) work at the other installments was governed by contracts “similar” to the contract governing the installment where Relator worked. The Court holds that Relator fails to state a claim because Relator does not sufficiently allege with particularity the existence of any false claims or the submission of a false claim by Defendant. Furthermore, Relator lacks personal knowledge as to the particular relevant provisions of the contracts governing other military bases or the events that transpired at those bases. Accordingly, the Court grants Defendant's Motion to Dismiss Relator's Complaint.

The third issue is whether the Government sufficiently alleges a false records claim under the FCA on the basis of allegedly fabricated weapons qualification scorecards, the placement of those qualifications in personnel files, and the Government's payments to Defendant, without an allegation that the Government reviewed the weapons scorecards for the purposes of issuing payment. The Court holds that the Government fails to sufficiently allege the existence of a false claim or the Government's reliance upon the allegedly falsified records. A false records claim still requires the existence of a false claim, which the Government fails to sufficiently allege here. Furthermore, the Government's allegations fail to demonstrate its reliance upon the allegedly falsified records. The Government's broad and conclusory allegations fail to satisfy Rule 9(b)'s requirement regarding fraudulent behavior. Thus, Count II of the Government's Complaint fails.

The fourth issue is whether the Government sufficiently alleges actual fraud and constructive fraud based upon the alleged scheme of falsifying weapons qualification scorecards where the Complaint lacks any specific allegations that a government official actually reviewed the records and relied upon them in authorizing payment to TCI. The Court holds that the Government fails to state a claim because it does not plead reliance upon such submissions. Both actual fraud and constructive fraud require reliance upon a misrepresentation. Counts IV and V fail because the Government fails to allege with specificity that a government official actually reviewed and relied upon the allegedly false records in certifying an invoice and authorizing payment.

The fifth issue is whether the Government may maintain an unjust enrichment claim based upon its payment of funds to TCI where TCI allegedly falsified records that would not have been paid had the Government known of the alleged falsifications. The Court holds that the unjust enrichment claim cannot stand where an express contract controls the dispute. Thus, this claim cannot stand where the Government's Complaint insufficiently challenges the validity of an existing contract.

I. BACKGROUND and PROCEDURAL HISTORY

The United States of America, as Intervenor, brings this action against Defendant TCI for damages and civil penalties under the False Claims Act, 31 U.S.C. § 3729 (“FCA”), as well as under common law theories of breach of contract, fraud, constructive fraud, payment by mistake, and unjust enrichment. (Intervenor's Compl. ¶ 1, Doc. 21.) The Government alleges that TCI's fraudulent conduct related to TCI's performance of a firm fixed-price government contract W91GDW–07–D–4022 (“Task Order (TO) 11”) in Al Asad, Iraq. ( Id. ¶ 3.)

As discussed more fully below, Relator, Mr. Omar Badr, a former TCI employee, filed this action under the FCA's “whistleblower” qui tam provisions. ( Id. ¶¶ 2, 8.) Badr is Georgia resident who was employed as a TCI medic from February 2008 to June 2010. (Relator's Compl. ¶ 4, Doc. 1.) TCI is an Illinois corporation with a corporate office located in Reston, Virginia. (Intervenor's Compl. ¶ 9.) TCI is in the business of providing “mission support, security, and training services” to the United States government and private corporations. (Def.'s Mem. Supp. Mot. to Dismiss Intervenor's Compl. at 1, Doc. 32.)

In support of the Department of Defense (“DoD”), TCI was awarded government contracts to provide security services to various military installations overseas, including military bases located in Iraq. ( Id.) Relevant to the present litigation, TCI bid on and was awarded TO 11 to provide supplies and security services at Forward Operating Base Al Asad, Iraq and the Al Asad Airbase located in Iraq. (Intervenor's Compl. ¶¶ 11–13.) In part, TO 11 provided that TCI was “to provide all labor, weapons, equipment and other essential requirements to supplement and augment security operations at Al Asad Airbase, Iraq.” ( Id. ¶ 14.) Under its terms, TO 11 specified twenty responsibilities, three of which concerned security personnel whom TCI was to employ as security guards. ( Id. ¶ 14.)

Given the nature of the assignment to protect the military base, TCI was required to ensure compliance with TO 11's weapons qualification requirements. TO 11 was initiated to acquire perimeter defense and entry control point operation at the Al Asad installation. ( Id. ¶ 21.) Thus, TO 11 required that TCI personnel maintain U.S. Army standard weapons qualifications. Specifically, TO 11 required TCI to “ensure that all employees have received initial training on the weapons they carry, that they have qualified on a U.S. Army qualification course, and that they have received, at a minimum, annual training/requalification on an annual basis, and that the employee's target is kept on file for a minimum of 1 yr.” ( Id. ¶¶ 14–15.)

Under the terms of the contract, oversight of TCI's performance was to be conducted by an appointed Contracting Officer's Representative (“COR”), and TCI's training records were to be made available for inspection by the COR at any time. ( Id. ¶¶ 22, 28, 42, 47, 49.) The COR bore responsibility for ensuring that the goods and services provided by TCI conformed to the terms and conditions of TO 11. ( Id. ¶ 22.) The form by which the COR documented his acceptance was the Material Inspection and Receiving Report, also known as a “DD–250.” ( Id. ¶ 62.) The form required that the COR sign and select a box for “ACCEPTANCE” of the services once they “conform to contract, except as noted herein or on supporting documents.” ( Id. ¶ 64.) Part 22 of the DD–250 further required the COR to sign the form if the services provided “were received in apparent good condition except as noted.” ( Id. ¶ 65.) All of the relevant DD–250s in this case were appropriately signed and checked by the Government's COR. ( See generally Def.'s Mem. Supp. Mot. to Dismiss Intervenor's Compl. Ex. A, Doc. 32–1.) The DD–250s did not contain any certifications by Triple Canopy and were not endorsed by any Triple Canopy employee. ( See id.)

The Government alleges that TCI failed to comply with the terms and conditions of TO 11 from the outset. Specifically, the Government alleges that on June 21, 2009, 332 Ugandan TCI guards arrived for duty at Al Asad. (Intervenor's Compl. ¶ 30.) Shortly after arriving, all the Ugandan guards allegedly failed to zero their rifles—a basic skill required before even attempting to qualify on a qualification course. ( Id. ¶ 31.) Jesse Chavez, a TCI Site Manager, allegedly reported this to TCI Deputy Country Manager Mark Alexander and TCI Project Manager Terry Lowe. ( Id. ¶ 34.) As a result, the Government alleges that, as early as its first claim for payment, TCI knew the guards provided had a demonstrated inability to qualify on a U.S. Army qualification course and thus did not conform to the terms of TO 11. ( Id. ¶¶ 32–35.) On August 10, 2009, TCI presented its first claim for payment to the Government for its performance of TO...