False Claims Counsel

In a June 22 decision, the D.C. Circuit issued a ruling in the long-running case, U.S. ex rel. Miller v. Bill Harbert Int’l Const., Inc.. In the case, which began as a qui tam suit in 1995, the government and the relators alleged that five construction companies and four of their individual officers conspired to rig bids for USAID-funded sewer and water treatment projects in Egypt. The relator – a former vice-president with one of the companies (which subsequently declared bankruptcy and was dismissed from the case) – had initially alleged that one contract was affected, but later amended his complaint to add two others; the government’s complaint in intervention named all three contracts.

In a lengthy opinion, the D.C. Circuit principally ruled that the False Claims Act’s statute of limitations barred the plaintiffs’ claims regarding the two later-named contracts. The court held that the 2009 FCA amendments in the Fraud Enforcement and Recovery Act (FERA) applied to the then-14-year-old case, and rejected the defendants’ arguments that this violated the Ex Post Facto Clause of the Constitution. Nevertheless, after concluding that the new relation-back provision in the FCA’s statute of limitations, 31 USC 3731(c), applied the same standard as the civil rules’ provision, 15(c)(1)(B), the court found that the claims were time-barred. Comparing features of the contracts and their allegations in a table, the court concluded that the differences between the allegations prevented the application of the relation-back doctrine to salvage the later-filed claims. The court also rejected the relator’s argument that his use of plural nouns in his original complaint satisfied the statute; there was no congruence of “conduct, transactions, or occurrences,” the court noted, rejecting, too, the relator’s argument that his amended complaint related back to his initial one, under the civil rule.

In other rulings, the court:

• Agreed with the district court that the government’s misnaming of one defendant was curable under Rule 15(c)(1)(C), because the correct company should have known that it was the intended defendant;
• Rejected the defendants’ argument that the FCA conflicted with remedy provisions in the Foreign Assistance Act
• Upheld personal jurisdiction over one UK-based corporate defendant, noting the facts that it was created by Americans for the purpose of acting as agent for American corporations in a US-funded project;
• Found that the Government had violated an evidentiary stipulation regarding when one company had been created
• Found that even if one defendant was not collaterally estopped from denying facts admitted in its guilty plea, it was judicially estopped from doing so;
• Upheld liability findings regarding sufficiency of the evidence on liability and damages (evidence which included one coconspirator’s description of the profits – 52% vs. 7-15% normally – as “exorbitantly wonderful”)
• Found that the district court’s admission of evidence regarding the wealth of corporate defendants was so prejudicial as to warrant a new trial as to three of them.

In all, the court vacated most of the judgment on statute of limitations grounds, granted three corporate defendants a new trial, but upheld the judgment against two others for $29.9 million.