Court Denies Stay and Revives FCA Claims Based on "Implied Certification" Theory
By Jason Hicks
In a False Claims Act lawsuit against an armored car manufacturer, Judge Kiser recently denied a motion to stay the case, pending resolution of related criminal charges, and granted a motion for reconsideration, thus reviving FCA claims based on the "implied certification" theory.
The Complaint alleged that defendant, a government contractor, knew that the vehicles for which it was billing the government did not meet the ballistic protection requirements of its contracts with the government; nevertheless, defendant billed and collected for these vehicles it knew did not meet contract specifications. Judge Kiser determined that, under U.S. ex rel Badr v. Triple Canopy Inc., 775 F.3d 628 (4th Cir. 2015), these allegations make out a claim for "implied certification" under the False Claims Act. Judge Kiser had previously granted a motion to dismiss those claims. However, finding that Triple Canopy constituted a "change in the law," Judge Kiser granted the motion for reconsideration, thus reviving Plaintiff's "implied certification" claims.
The Court also denied defendants' motion to stay because, among other things, plaintiff had an interest in proceeding expeditiously, defendants were seeking what could be an indefinite stay, the Western District of Virginia has a strong policy of efficient and expeditious resolution of cases, and the public has an interest in seeing a swift resolution of the matter. The Court explained that since plaintiff was accused of defrauding taxpayer money, the public interest is served by investigating the merits and, if plaintiff is found liable, recovering ill-gotten gains. Likewise, the public interest would be served if plaintiff is not found liable because "[t]he peace of mind that comes with knowing that one has not been defrauded can be just as valuable as recovering any defrauded funds."
The Court concluded: "Considering all of the factors, a stay is not warranted. [Defendant] is free to exercise his Fifth Amendment rights in this case. Doing so places him at no greater disadvantage than every other litigant who wishes to protect his rights."
The Complaint alleged that defendant, a government contractor, knew that the vehicles for which it was billing the government did not meet the ballistic protection requirements of its contracts with the government; nevertheless, defendant billed and collected for these vehicles it knew did not meet contract specifications. Judge Kiser determined that, under U.S. ex rel Badr v. Triple Canopy Inc., 775 F.3d 628 (4th Cir. 2015), these allegations make out a claim for "implied certification" under the False Claims Act. Judge Kiser had previously granted a motion to dismiss those claims. However, finding that Triple Canopy constituted a "change in the law," Judge Kiser granted the motion for reconsideration, thus reviving Plaintiff's "implied certification" claims.
The Court also denied defendants' motion to stay because, among other things, plaintiff had an interest in proceeding expeditiously, defendants were seeking what could be an indefinite stay, the Western District of Virginia has a strong policy of efficient and expeditious resolution of cases, and the public has an interest in seeing a swift resolution of the matter. The Court explained that since plaintiff was accused of defrauding taxpayer money, the public interest is served by investigating the merits and, if plaintiff is found liable, recovering ill-gotten gains. Likewise, the public interest would be served if plaintiff is not found liable because "[t]he peace of mind that comes with knowing that one has not been defrauded can be just as valuable as recovering any defrauded funds."
The Court concluded: "Considering all of the factors, a stay is not warranted. [Defendant] is free to exercise his Fifth Amendment rights in this case. Doing so places him at no greater disadvantage than every other litigant who wishes to protect his rights."
Labels: Badr, False Claims Act, FCA, Fifth Amendment, government contractor, implied certification, Judge Kiser, stay, Triple Canopy
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