Relator v. Cdw Tech. Serv. Inc., Civil Action No. 07-2009(ESH).

• Decision Date: 28 June 2010
• Docket Number: Civil Action No. 07-2009(ESH).
• Citation: 722 F.Supp.2d 37
• Court: U.S. District Court — District of Columbia
• Parties: UNITED STATES of America ex rel. Brady FOLLIARD, Plaintiff-Relator, v. CDW TECHNOLOGY SERVICES, INC., and CDW Government, Inc., Defendants.

722 F.Supp.2d 37

UNITED STATES of America ex rel. Brady FOLLIARD, Plaintiff-Relator,

v.CDW TECHNOLOGY SERVICES, INC., and CDW Government, Inc., Defendants.

Civil Action No. 07-2009(ESH).

United States District Court,District of Columbia.

June 28, 2010.

H. Vincent McKnight, Jr., McKnight & Kennedy, LLC, Silver Spring, MD, for Plaintiff-Relator.

David M. Nadler, David Lee Tayman, Dickstein Shapiro LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

ELLEN SEGAL HUVELLE, District Judge.

Plaintiff-relator Brady Folliard (“relator”) brings this qui tam action under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., on behalf of the United States against defendants CDW Technology Services, Inc. (“CDWTS”) and CDW Government, Inc. (“CDWG”) (collectively “CDW”). Defendants now move to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), arguing that another qui tam complaint, filed two years before the instant complaint, deprives the Court of subject matter jurisdiction under the “first-to-file” bar of 31 U.S.C. § 3730(b)(5). For the reasons discussed herein, defendant's motion will be granted.

BACKGROUND

The Court need not repeat the facts and procedural history previously set forth in a prior Memorandum Opinion, see United States ex rel. Folliard v. CDW Tech. Servs., Inc., No. 07-CV-2009, 722 F.Supp.2d 20, 21-25, 2010 WL 1541224, at *1-*3 (D.D.C. Apr. 21, 2010), but will limit its discussion to those facts that relate only to this motion.

I. THE LIOTINE ACTION

In 2005, Joseph Liotine filed a qui tam suit under the FCA against CDWG in the U.S. District Court for the Southern District of Illinois. See Compl., United States ex rel. Liotine v. CDW-Government, Inc., No. 05-CV-033 (S.D. Ill. filed Jan. 19, 2005) (“Liotine Compl.”). Paragraph 70(F) of the Liotine complaint alleges that CDW violated the FCA in part by

[s]elling non trade compliant items such as certain Tektronix printers (from 1999 to 2001) and accessories which originated from non trade compliant countries. While the government could purchase such items through an open market card, the items could not be listed in the GSA schedule. Despite this, Defendant knowingly listed approximately 20-25 similar items (such as certain HP backup tapes) which were created or assembled in non-trade compliant countries. Because Defendant deliberately placed every item into one database, trade compliant and non trade compliant goods were commingled.

Id. ¶ 70(F).

II. THE INSTANT MOTION

Relator Folliard filed the instant suit in 2007. The gravamen of Folliard's complaint is that from 2007 to the present, CDW submitted false claims to the government by selling Hewlett-Packard (“HP”) computer products and supplies in contravention of the Trade Agreements Act (“TAA”), 19 U.S.C. §§ 2501 et seq., through the GSA Advantage and Solutions for Enterprise-Wide Procurement (“SEWP”) websites maintained by the General Services Administration (“GSA”) and the National Aeronautics and Space Administration (“NASA”), respectively. As alleged in the complaint, when federal agencies make purchases for public use pursuant to acquisition contracts, they may only buy products from “designated” countries as specified in the TAA and its related regulations. See Folliard, 722 F.Supp.2d at 21-23, 2010 WL 1541224, at *1. The Court previously dismissed Folliard's claims relating to the GSA procurement portal under Federal Rule of Civil Procedure 12(b)(6). See id. at 37, at *14.

Defendants now argue that Folliard's lawsuit is barred under 31 U.S.C. § 3730(b)(5), which provides that “no person other than the Government may ... bring a related action based on the facts underlying” an earlier-filed qui tam action. In response, Folliard argues that his complaint is distinguishable from Liotine's because they allege different types of fraud involving different federal contracts and agencies. ( See Pl.'s Opp'n to Defs.' Mot. to Dismiss [“Pl.'s Opp'n”] at 2, 5.) The United States, which has not intervened in this case, filed a statement of interest that largely echoes Folliard's position. Defendants respond that Folliard's argument elevates form over substance, and that in light of the analysis of § 3730(b)(5) in United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214 (D.C.Cir.2003), Folliard's claims are barred because they are based on the “same material elements of fraud” as Liotine's. See id. at 217.

ANALYSIS

The parties agree that Hampton's analysis of the first-to-file rule governs the instant motion, but defendants advocate for dismissal by arguing that Hampton is controlling, while relator retorts that Hampton is distinguishable. Applying the controlling law to the allegations by Folliard and by Liotine, the Court is persuaded that Hampton and the statutory text require dismissal of Folliard's claims.

In Hampton, the D.C. Circuit found that the plaintiff's FCA qui tam action, in which she alleged that the defendants had engaged in Medicare home health care billing fraud, was barred by an earlier-filed action that alleged a similar fraudulent scheme by one of the same defendants. See 318 F.3d at 218-19. The Court of Appeals concluded that § 3730(b)(5) served to bar “ ‘actions alleging the same material elements of fraud ’ as an earlier suit, even if the allegations [of the later-filed complaint] ‘incorporate somewhat different details.’ ” Id. at 217 (quoting United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1189 (9th Cir.2001)) (emphasis added). In so doing, the Court rejected “another possible test, one barring claims based on ‘identical facts.’ ” Id. at 218. Acknowledging that there is no bright line rule for determining whether differences between complaints are “material,” the Court held that § 3730(b)(5) bars a subsequent action if it contains “merely variations” of the fraudulent scheme described in the first action. Id.

Here, Folliard's complaint alleges procurement fraud related to both the GSA and NASA contracts. ¹ He claims that CDW submitted false claims and made false statements with respect to HP products listed for sale on the GSA Advantage and SEWP websites, in that CDW falsely listed those products as originating in the United States or as TAA-compliant when, in fact, the products did not originate here or in any other designated country. ( See Am. Compl. ¶¶ 19-70, 73-75, Exs. 1A-1B; see also Pl.'s Opp'n at 7-8.) As Folliard alleges, these mislistings would be material because, by the express terms of its GSA contract and related federal acquisition regulations, CDWG “certified that it would only sell end products under these contracts to the United States Government that originate in designated countries,” and that it would not sell end products that originate in non-designated countries such as China, India, and Malaysia. (Am. Compl. ¶ 17.) Similarly, SEWP allegedly requires vendors to correctly indicate a product's country of origin so that NASA contracting officers can determine the TAA's applicability to that product on a case-by-case basis. ( See id. ¶ 23.) Liotine's complaint also alleges that CDWG listed and sold HP products on the GSA website that were not TAA-compliant, ² but unlike Folliard, Liotine does not allege that CDWG misrepresented those products as TAA-compliant. Rather, CDWG's claims were false because it had certified to GSA that it would not sell noncompliant products through the GSA portal. Therefore, according to Folliard, the fact that the fraudulent scheme alleged by Liotine did not involve misrepresentations about products' countries of origin means that Liotine alleged a materially different type of fraud than Folliard does. ( See Pl.'s Opp'n at 4-5.) In light of Hampton, the Court disagrees.

As the D.C. Circuit noted in Hampton, the “material elements” of a typical FCA claim-such as Folliard's-are that (1) the defendant presented a claim to the government, (2) the claim was false, and (3) the defendant knew that the claim was false. See 318 F.3d at 218 (citing 31 U.S.C. § 3729(a)(1)-(3)(2002)). The Court of Appeals then compared the text of the plaintiff's complaint and the earlier-filed complaint to determine if their differences were material. The plaintiff's complaint alleged, inter alia, that the defendants “submitted improper bills for services for her mother and other patients” by “bill[ing] for services that were miscoded; already paid for; performed by others; [or] never administered,” and by billing for “supplies and medications that were unnecessary or never received....” Id. at 219. The earlier-filed complaint contended that one of the defendant's “home health subsidiaries billed the government for services that did not meet the Medicare eligibility criteria, for undocumented services, and for services not medically necessary.” Id. Although the two complaints differed slightly in some of the types of billing fraud alleged ( e.g., “miscoded” bills versus “undocumented” services), the Court of Appeals found that both sets of allegations established the same material elements of fraud, and that the plaintiff's claims merely listed additional examples of how the common defendant defrauded the government within the context of home health services. See id. at 218-19.

Hampton thus counsels that this Court must compare the Liotine and Folliard complaints at a sufficiently high level of generality, because Folliard's later-filed complaint will not pass muster by merely providing additional details about “the nature and extent of [the] fraud in the provision of” a given set of services ( i.e., government procurement services), even if the manner of the later-alleged fraud “varie[s] greatly....” Id. at 219. Here, both Liotine and Folliard allege that (1) CDWG presented a claim to the government related to HP products listed through a procurement portal; (2) the claim was false by virtue of CDWG's failure to adhere to the requirements imposed upon government...