False Claims Counsel

On June 28, District Judge Ellen Segal Huvelle of the District of Columbia District Court granted a technology company’s motion to dismiss a qui tam, U.S. ex rel. Folliard v. CDW Tech. Servs., Inc.. The relator alleged that the company had offered goods through GSA and NASA websites that it had falsely represented were compliant with the Trade Adjustment Act. The company had previously been sued by another relator in Colorado, who raised similar allegations concerning GSA contracts, but who alleged simply that the company had sold non-TAA compliant goods, and not that it misrepresented the goods’ status.

Judge Huvelle agreed with the company that the first-to-file rule of the False Claims Act, 31 USC 3730(b)(5), barred the relator’s suit. While acknowledging the difference in the allegations concerning misrepresentation of the goods, she reasoned that this was immaterial to the first-to-file analysis, which must be conducted “at a sufficiently high level of generality.” She rejected the argument, adopted in the government’s brief, that the relator’s allegations of a completely different agency and different contracts distinguished the subsequent qui tam from the earlier one, because the purpose of the rule was to ensure that the affected agency had notice. To the contrary, she wrote, the False Claims Act vests responsibility to investigate the case in the Attorney General, and so notice to the Department of Justice should suffice to put a DOJ attorney on notice that other agencies may have been harmed by the same defendant. The policy of the first-to-file rule, Judge Huvelle wrote, quoting from the D.C. Circuit’s decision in United States ex rel. Hampton v. Columbia/HCA Healthcare Corp. is to “walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior.”