Fourth Circuit affirms dismissal of whistleblower suit alleging fraud in construction of US Embassy in Baghdad

by Ben Vernia | July 27th, 2010

On July 16, in United States ex rel. Owen v. First Kuwaiti Gen’l Trad. & Cont. Co., the Fourth Circuit upheld the district court’s dismissal of a declined qui tam brought by a former construction foreman at the new US Embassy in Baghdad against his employer. In the case, the foreman alleged that the firm violated the False Claims Act by failing to meet contractual standards and for submitting false progress reports and a final inspection request. The court found that all of the items of which the whistleblower complained amounted to normal events in a complicated construction contract, and were rebutted by a consultant’s report commissioned by the government. The court wrote:

The sorts of allegations Owens makes are not ones that we take lightly. But neither is their accuracy a conclusion that may lightly be reached. To be entitled to a trial on his claims, Owens was obliged to come forward with evidence that First Kuwaiti knowingly made false representations. He largely failed to show that First Kuwaiti’s claims and statements were arguably false and he failed entirely to show that First Kuwaiti either had actual knowledge or recklessly disregarded he possibility of its billing for work that was anything other than was claimed. What Owens has presented are garden variety issues of contractual performance—in this case, under a series of complex contracts pertaining to a construction project of massive scale.

There is a difference between a false statement sufficient to support a claim of fraud, on the one hand, and honest disagreements, routine adjustments and corrections, and sincere and comparatively minor oversights, on the other. “Bad math is no fraud, proof of mistakes is not evidence that one is a cheat, and the common failings of engineers and other scientists are not culpable under the Act.” Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1478 (9th Cir. 1996) (internal quotation marks omitted). Likewise, “[a]n FCA relator cannot base a fraud claim on nothing more than his own interpretation of an imprecise contractual provision.” Wilson, 525 F.3d at 378.

The court likewise upheld the dismissal of his retaliation claims, finding that he had proved neither that he had engaged in protected activity, nor that the company had retaliated against him because of his actions.

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