by bvernia | September 22nd, 2009
On September 14, District Judge Richard Roberts issued an order denying a motion of Science Applications International Corp. (SAIC) for a new trial or judgment notwithstanding the verdict. The US accused the company of failing to disclose organizational conflicts of interests in two contracts in the 1990s with the Nuclear Regulatory Commission. Judge Roberts:
- Found sufficient evidence that SAIC’s failure to disclose the conflicts was not merely based on a reasonable interpretation of a regulation;
- Upheld the US’s use of a “collective knowledge” theory to prove SAIC’s scienter under the FCA;
- Found sufficient evidence that the company acted with reckless disregard or deliberate ignorance;
- Rejected SAIC’s argument that its work for other companies did not trigger its obligation to disclose; and
- Found sufficient evidence that the company’s conflict representations to the NRC were critical to the agency’s decision to make payments under the contracts.
Judge Roberts disagreed with the US, however, that the 2009 Fraud Enforcement and Recovery Act’s legislative overruling of the Supreme Court’s decision in Allison Engine Co., Inc. v. United States applied to the case. The Court noted that the Act made its false records amendments applicable to “claims under the False Claims Act” pending on June 7, 2008. Reviewing the statutory language, the Court concluded that Congress intended “claims” to have the same meaning as under the FCA — i.e., all requests for payment — and not to “cases.”
He nevertheless let stand the US’s treble-damages award of $5.9 million, plus nearly $600,000 in penalties.
SAIC is represented by DC’s Holland & Knight. DOJ’s Michael Friedman, Chris Larson, and Dodge Wells handled the case for the US.