United States ex rel. Fadlalla v. DynCorp Int'l LLC
| Decision Date | 29 August 2022 |
| Docket Number | Civil Action 8:15-cv-01806-PX |
| Parties | UNITED STATES OF AMERICA, ex rel. ELGASIM MOHAMED FADLALLA, et al. Plaintiffs, v. DYNCORP INTERNATIONAL LLC, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Pending before the Court are the motions for leave to amend answers to the Second Amended Complaint filed by Defendants KMS Solutions, LLC (“KMS”) (ECF No. 324); Global Linguist Solutions, LLC (“GLS”) (ECF No. 326) Thomas Wright, Inc. (“Wright”) (ECF No. 327) Tigerswan, Inc. (“Tigerswan”) (ECF No. 328) Dyncorp International, LLC (“Dyncorp”) (ECF No 329); and Shee Atika Languages, LLC (“Shee Atika”) (ECF No. 330). The motions have been fully briefed, and no hearing is necessary. See D. Md. Loc. R. 105.6. For the following reasons, the motions are DENIED.
Plaintiff-Relators (“Relators”) were hired to provide translation services to the United States armed forces in the Middle East. ECF No. 286 ¶ 5. They bring this qui tam action pursuant to the False Claims Act, 31 U.S.C. §§ 3729, et seq.(“FCA”), and the Trafficking Victims Protections Reauthorization Act, 18 U.S.C. §§ 1581, et seq. Id. ¶¶ 528-633. The Court previously summarized the relevant factual and procedural background at length in its September 5, 2019 Memorandum Opinion and Order (ECF No. 145) and incorporates those facts here. See ECF No. 145 at 1-7.
The Court focuses only on those facts necessary to resolve the pending motions.
On December 5, 2007, the Commander, Headquarters, United States Army Intelligence and Security Command (“INSCOM”) identified Defendant GLS as a “proposed awardee” of Contract W911W4-08-D-0002 (“Contract 1”), a $4.6 billion contract for “the provision of linguists to support U.S. military and intelligence-gathering efforts in the middle east.” ECF No. 286 ¶¶ 2-3, 91-92. To secure Contract 1, INSCOM required GLS to submit a “Small Business Subcontracting Plan” which set forth the portion of contract funds to be expended through various categories of small businesses. Id. ¶¶ 101-102. As part of this plan, and as a material term of Contract 1, INSCOM required GLS to submit annual reports itemizing the subcontractor expenditures. Id. ¶¶ 109-11.
To win the bid, GLS teamed up with Defendants Dyncorp and AECOM National Security Programs, Inc. (“AECOM”),[1] and entered into “Teaming Agreements” with Defendants KMS, Shee Atika, Wright, Tigerswan, and Invizion. (“Small Business Defendants”). ECF No. 286 ¶¶ 20-29. GLS represented to INSCOM “that it intended to utilize the Small Business Defendants in accordance with the subcontracting requirements of Contract 1.” Id. ¶ 116. Unbeknownst to INSCOM, however, the Teaming Agreements defined the Small Business Defendants as “GLS affiliates” and not “bona fide independent small business entities.” Id. ¶¶ 117-18.
Relators allege that GLS, with DynCorp and AECOM, performed on Contract 1 while misleading INSCOM into believing that in fact the Small Business Defendants had performed the same work. Id. ¶ 120. Relators particularly aver that they interacted exclusively with GLS managers, and the Small Business Defendants only nominally appeared on the employment contracts. Id. ¶¶ 119-22. Relators thus claim that “GLS received unjustified payments from the U.S. by falsely representing its employees, including Relators, as working for the Small Business Defendants.” Id. ¶ 149.
On June 19, 2015, Relators filed this qui tam action on behalf of the United States pursuant to the FCA. ECF No. 1. The FCA generally assigns liability to “any person who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to the United States. 31 U.S.C. § 3729(a)(1)(A). Private parties, like Relators, may bring FCA actions on behalf of the United States when the Department of Justice declines to pursue the action. See id. § 3730(b)(4)(B).
Although this litigation has gone on for years, Defendants now claim that Relators are likely barred from pursuing the FCA claim. ECF Nos. 326-3 at 8-9; 327-1 at 8-12; 328-3 at 710; 329-1 at 1; 330-1 at 9-12. Defendants ground this argument in GLS having sought previous reimbursement on behalf of KMS and Invizion, pursuant to the Contract Disputes Act, 41 U.S.C. §§ 7101-7109 (“CDA”), for services rendered pursuant to Contract 1. See, e.g., ECF No. 326-3 at 8-12; see also ECF No. 331-3 at 5.
In the course of GLS submitting requests for periodic payment under Contract 1, the Defense Contract Audit Agency (“DCAA”)[2] began investigating various irregularities in the execution of the contract to include whether GLS' payment requests complied with the contract terms, were free of misrepresentation or other fraud, and whether the payment was properly supported. ECF No. 326-3 at 2-3; see generally ECF No. 331-3. As part of DCAA's due diligence, it conducted several audits, specifically of Invizion and KMS, and ultimately concluded that neither KMS nor Invizion maintained a “labor force of its own regarding the GLS contract.” See ECF No. 331-3 at 6, 8. DCAA next issued several “Form 1 Notices,” which are referrals to the Army Criminal Investigation Command for subsequent possible investigation of potential contractor fraud. Id. at 6. DCAA also denied GLS' request for payment totaling $4,505,280. Id. at 11.
In response, GLS went on the offensive. It submitted a “certified claim” on behalf of KMS and Invizion pursuant to the procedures set forth in the CDA (“the CDA Action”). See ECF No. 331-1 at 53. The CDA provides a comprehensive administrative scheme whereby government contractors may seek review of the suspended payments through submitting a certified claim to a Government Contracting Officer (“GCO”). See 41 U.S.C. §§ 7103-7104. If the GCO denies the certified claim, the contractor may appeal the decision to the appropriate Board of Contract Appeals within 90 days or file a claim against the government in the Court of Federal Claims. See 41 U.S.C. § 7104 (a)-(b).
Ultimately, the GCO denied GLS' claim because the demand for payment was “inadequately supported or otherwise questionable, and not appropriate for reimbursement under the contract terms.” ECF No. 331-3 at 11. GLS then appealed the denial to the Armed Services Board of Contract Appeals (“ASBCA”). ECF No. 331-1 at 56. On appeal, the Army, through the United States Army Legal Services Agency, defended the GCO's denial of the claim. See generally ECF No. 331-1.
After a two-day hearing, GLS and the Army entered into a settlement agreement that fully resolved the CDA Action. ECF No. 331-2. The parties agreed that GLS was to be paid $3,275,000 on the claim as amounts owed for Invizion and KMS' pass-through claims for compensation. See id. In exchange, GLS withdrew its appeal. Id.
Relevant here, the parties also agreed to a mutual release of all liabilities related to the “matters appealed” to the ASBCA. ECF No. 331-2 at 3. Notably, the parties expressly agreed that this release did not preclude the United States from pursuing future litigation for claims arising under the FCA. The settlement agreement reads in relevant part:
Notwithstanding any terms of this Agreement, specifically reserved and excluded from the scope and terms of this Agreement as to any entity or person (including Appellant) are the following claims of the United States: (a) any civil, criminal or administrative liability arising under the Title 26, U.S. Code (Internal Revenue Code); (b) any criminal liability; (c) any civil liability for false or fraudulent claims, including civil liability arising under the False Claims Act, 31 U.S.C. §§ 3729-3733, and/or claims at common law; (d) any liability for personal injury, property damage or liability to third parties; and (e) any administrative liability outside the scope of the Contracting Officer's authority to release, including the suspension and debarment right of any federal agency. Further, both the Government and Appellant reserve and exclude from this Settlement Agreement any liability based upon such obligations as are created by this Settlement Agreement.
ECF No. 331-2 at 5-6 (emphasis added).
Defendants now move to amend their Answers to plead as an affirmative defense that Relators are precluded from bringing a qui tam action under what is known as the “government action bar” of the FCA. The government action bar precludes an FCA qui tam suit that is “based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.” See 31 U.S.C. § 3730 (e)(3). Defendants allege that the ASBCA appeal and related events qualify as “a civil suit or an administrative civil money penalty proceeding” under this bar and thus precludes Relators' FCA claims. See ECF Nos. 326-3 at 8-9; 327-1 at 8-12; 328-3 at 7-10; 329-1 at 1; 330-1 at 9-12. Relators oppose Defendants' amendment as futile and prejudicial. See generally ECF No. 331.
The Court agrees with Relators that amendment would be futile as a matter of law, and so amendment will be denied.
Federal Rule of Civil Procedure 8(c)(1) requires a defendant's responsive pleading to “affirmatively state any avoidance or affirmative defense.” Fed.R.Civ.P 8(c)(1). At the same time, Rule 15 permits courts to grant leave to amend such a pleading “when justice so requires.” Fed.R.Civ.P. 15(a)(2). The decision to grant or deny a motion for leave to amend is confined to the discretion of this Court. See Foman v. Davis, 371 U.S. 178, 182 (1962); McCall-Scovens v. Blanchard, No. ELH-15-3433, 2016 WL 6277668, at *4 (D. Md. Oct. 27, 2016). Leave to amend may be denied for prejudice to the opposing party, bad faith by...
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