Justia Government Contracts Opinion Summaries

The Supreme Court affirmed the order of the circuit court granting a motion to dismiss filed by the Arkansas State Highway Commission and the Arkansas Department of Transportation and its director in this challenge to a contract entered into between the Department and the United States Fish and Wildlife Service (USFWS), holding that the circuit court correctly found that the complaint failed to state facts upon which relief could be granted.Under the contract in this case the Department would cede certain property to USFWS in exchange for a fifty-acre easement over land in the Cache River and White River Wildlife Refuges in order to build a new bridge on Highway 79. The agreement further required the Department to convey additional land to USFWS and to demolish three bridges. Appellants filed a motion for preliminary injunction and complaint for declaratory and injunctive relief, arguing that the contract was unconscionable, entered into under duress, and constituted a windfall to USFWS. The circuit court dismissed the complaint. The Supreme Court affirmed, holding that the complaint lacked sufficient facts to state a claim for an illegal exaction. View "Prince v. Arkansas State Highway Commission" on Justia Law

The Medicare program offers additional payments to institutions that serve a “disproportionate number” of low-income patients, 42 U.S.C. 1395ww(d)(5)(F)(i)(I), calculated using the hospital’s “Medicare fraction.” The fraction’s denominator is the time the hospital spent caring for patients entitled to Medicare Part A benefits; the numerator is the time the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act. Medicare Part C (Medicare Advantage) was created in 1997. Part C, beneficiaries may choose to have the government pay their private insurance premiums rather than pay for their hospital care directly. Part C enrollees tend to be wealthier than Part A enrollees, so counting them makes the fraction smaller and reduces hospitals’ payments. In 2014, the Medicare website indicated that fractions for fiscal year 2012 included Part C patients. Hospitals sued, claiming violation the Medicare Act’s requirement to provide public notice and a 60-day comment period for any “rule, requirement, or other statement of policy . . . that establishes or changes a substantive legal standard governing . . . the payment for services.”The Supreme Court affirmed the D.C. Circuit in agreeing with the hospitals. The government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations. The 2014 announcement established or changed a “substantive legal standard” not an interpretive legal standard. The Medicare Act and the Administrative Procedures Act do not use the word “substantive” in the same way. The Medicare Act contemplates that “statements of policy” can establish or change a “substantive legal standard." Had Congress wanted to follow the APA in the Medicare Act and exempt interpretive rules and policy statements from notice and comment, it could have cross-referenced the APA exemption, 5 U.S.C. 553(b)(A). View "Azar v. Allina Health Services" on Justia Law

Medicare pays for doctors’ home visits if a patient is homebound. Mobile Doctors offered physician services to homebound Medicare beneficiaries, hiring doctors who assigned their Medicare billing rights to the company. Upon receipt of payment, Mobile would pay the physician-employee a percentage of what Mobile received from billing Medicare. Many of Mobile’s patients did not actually qualify as homebound. Some doctors signed certifications for additional unneeded treatment from companies that provided at-home nursing or physical therapy services—companies that had referred the patients to Mobile. Mobile submitted Medicare codes for more serious and more expensive diagnoses or procedures than the provider actually diagnosed or performed. Mobile instructed physicians to list at least three diagnoses in the patient file; if the doctors did not list enough, a staff member added more. Mobile only paid the physicians if they checked at least one of the top two billing codes. Doctors who billed for the higher of the top two codes were paid more. Mobile also paid for “standing orders” for testing, although Medicare prohibits testing done under standing orders. Daneshvar joined Mobile as a physician in 2012. After following Mobile’s policies Daneshvar was convicted of conspiracy to commit healthcare fraud but found not guilty of healthcare fraud; he was sentenced to 24 months' imprisonment. The Sixth Circuit affirmed. Daneshvar’s trial was fair; none of the district court’s rulings during that proceeding should be reversed. There was no reversible error with his sentencing. View "United States v. Daneshvar" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in part and rendered judgment dismissing Plaintiff's claims that a governmental entity breached a contractual promise to make a good faith effort to obtain authorization for a higher payment than the parties' written contract required the entity to make, holding that governmental immunity applied and that chapter 271 of the Texas Local Government Code did not waive the entity's immunity.Vizant Technologies sued the Dallas-Fort Worth International Airport Board for, inter alia, breach of contract, alleging in part that the Board failed to make a promised good-faith effort to authorize increased compensation than that set forth in the parties' contract. The Board filed a plea to the jurisdiction, asserting that governmental immunity barred Vizant's claims. The trial court denied the plea. The court of appeals affirmed the trial court's denial of the Board's plea against Vizant's breach of contract claim, holding that, while governmental immunity applied, chapter 271 of the Texas Local Government Code waived the Board's immunity against that claim. The Supreme Court reversed, holding that governmental immunity barred all of Vizant's claims against the Board and that chapter 271 did not waive that immunity. View "Dallas/Fort Worth International Airport Board v. Vizant Technologies, LLC" on Justia Law

Qui tam relators appealed the district court's dismissal of their False Claims Act (FCA) suit against several hospice organizations owned and operated by Walter Crowder, the president and director of Nurses to Go.The Fifth Circuit considered the materiality factors in Universal Health Services, Inc. v. United States ex rel. Escobar, and held that relators' alleged violations were material. In this case, defendants' alleged fraudulent certifications of compliance with statutory and regulatory requirements violated conditions of payment under 42 U.S.C. 1395(a)(7), and relators' allegations were sufficient to state a claim that the Government would deny payment if it knew of defendants' false certifications. The court reversed and remanded for further proceedings to allow the district court to conduct a Rule 9(b) particularity analysis consistent with United States ex rel. Grubbs v. Kanneganti. View "United States ex rel Lemon v. Nurses To Go, Inc." on Justia Law

Under the Medicare administrative contractor (MAC) program, 42 U.S.C. 1395kk1, the Centers for Medicare & Medicaid Services (CMS) use contractors to administer Medicare claims and benefits. CMS must use competitive procedures when entering into contracts with MACs, taking into account performance quality, price, and other factors. In 2010, CMS prepared solicitations to replace the original MAC contracts and implemented a policy in the solicitations for several jurisdictions, placing a limit on the amount of MAC contract responsibility that any single entity could win in a prime contractor capacity. CMS would not award more than 26% of the national A/B Medicare workload to any single contractor or more than 40% of the national A/B Medicare workload to any one set of affiliates. An “Exception” stated that, for the sake of continuity of service, CMS retained the discretion to award a particular prime contract to a particular contractor, even where doing so would exceed the policy workload. Because of the policy, with NGS’s current contracts, NGS cannot win the MAC contract for Jurisdiction H. NGS filed a pre-award protest. The Government Accountability Office rejected the protest. The Claims Court affirmed. The Federal Circuit reversed. The policy precludes “full and open competition through the use of competitive procedures,” 41 U.S.C. 3301(a)(1). Congress outlined the circumstances under which an agency may avoid the full and open competition requirement. The court rejected the government’s argument that the workload caps fall within an exception for “procurement procedures otherwise expressly authorized by statute.” View "National Government Services, Inc. v. United States" on Justia Law

Julie Reed sued her former employer, KeyPoint Government Solutions, LLC (“KeyPoint”), for violating the federal False Claims Act. Her qui tam claims alleged KeyPoint violated the Act by knowingly and fraudulently billing the government for work that was inadequately or improperly completed. Reed also claimed that KeyPoint fired her in retaliation for her efforts to stop KeyPoint’s fraud. The issues this case presented for the Tenth Circuit's review centered on whether: (1) the district court erred in granting summary judgment in KeyPoint's favor on Reed's qui tam claims; and (2) whether the district court erred in dismissing Reed's retaliation claim under Federal Rule of Civil Procedure 12(b)(6). According to Reed, KeyPoint’s management not only knew of systemic violations but also encouraged them by pressuring investigators to rush investigations to maximize revenue. Alarmed by the abuses, Reed voiced her concerns within the company. Reed’s efforts to curb the violations failed. Eventually, KeyPoint fired Reed. About a month later, Reed and her counsel contacted the Department of Justice (“DOJ”) and discussed the abuses she claimed to have witnessed while at KeyPoint. At the government’s urging, Reed sued KeyPoint in January 2014. Her operative complaint raised three qui tam claims and a retaliation claim. The qui tam claims alleged that KeyPoint violated the False Claims Act by: (1) falsely certifying that it performed complete and accurate investigations, (2) falsely certifying that it did proper case reviews and quality-control checks, and (3) falsifying corrective action reports. Reed’s retaliation claim alleged that KeyPoint fired her for trying to stop it from violating the False Claims Act. The Tenth Circuit determined Reed pled sufficient facts to survive a motion for summary judgment with respect to the False Claims Act, but not enough to survive dismissal of her retaliation claim. The Tenth Circuit concluded Reed failed to show KeyPoint knew of her protected activities such that the company was on notice of her efforts to stop its alleged violations. View "United States ex rel. Reed v. Keypoint Government Solutions" on Justia Law

The Virgin Islands is a U.S. territory that can set and receive proceeds from duties, Virgin Islands Port Authority (VIPA) is authorized to “determine, fix, alter, charge, and collect reasonable rates, fees, rentals, ship’s dues and other charges.” Since 1968, VIPA has set wharfage and tonnage fees for Virgin Islands ports. Customs collected those fees from 1969-2011, deducting its costs. The remaining funds were transferred to VIPA. In 1994, the Virgin Islands and Customs agreed to “the methodology for determining the costs chargeable to [the Virgin Islands] . . . for operating various [Customs] activities.” The agreement cited 48 U.S.C. 1469c, which provides: To the extent practicable, services, facilities, and equipment of agencies and instrumentalities of the United States Government may be made available, on a reimbursable basis, to the governments of the territories and possessions of the United States. Customs increased collection costs, which outpaced the collection of the disputed fees starting in 2004, leaving VIPA without any proceeds. After failed efforts to resolve the issue, VIPA notified Customs in February 2011, that VIPA would start to collect the fees in March 2011. VIPA sued Customs to recover approximately $ 10 million in disputed fees that Customs collected from February 2008 to March 1, 2011. The Federal Circuit affirmed a judgment in favor of Customs. Customs had authority to collect the disputed fees during the time at issue under the 1994 agreement, in combination with 48 U.S.C. 1469c. View "Virgin Islands Port Authority v. United States" on Justia Law

Montano, a service-disabled veteran, owns 51% of VCG, which qualified as a service-disabled-veteran-owned small business (SDVOSB) under the VA system, 38 U.S.C. 8127(e)–(f), and appeared on the VetBiz database as eligible for set-aside contracts. VCG was the lowest bidder on an SDVOSB set-aside contract for an agency working with the Small Business Administration (SBA). Another bidder challenged VCG’s eligibility. The SBA determined that, because of the limitations on Montano's ownership in case of his death or incapacity, Montano did not “unconditionally” own his interest, and VCG did not qualify as an SDVOSB under 15 U.S.C. 657f. VA regulations required the removal from VetBiz of any business found ineligible in an SBA proceeding. Before VCG’s removal from VetBiz, the VA solicited bids for SDVOSB set-aside contracts for a roof replacement and for relocation. Hours before the deadline on the roof solicitation, VCG filed a bid protest in the Court of Federal Claims. Because VCG was not listed on VetBiz on the day bidding closed, the contracting officer could not consider VCG’s roofing bid and recommended cancellation and reposting. VCG sought a preliminary injunction. The VA finalized cancellation; hours later, the Claims Court entered a preliminary injunction restoring VCG to VetBiz, noting that the VA and SBA differ in defining unconditional ownership, but specifically declined to address relief related to the roofing solicitation. The Federal Circuit affirmed, finding that the contracting officer acted rationally in requesting cancellation based on the record. View "Veterans Contracting Group, Inc. v. United States" on Justia Law

The Subletting and Subcontracting Fair Practices Act governs public works projects, requires a prime contractor to obtain the awarding authority's consent before replacing a subcontractor listed in the original bid (Pub. Contract Code 4107(a)), and limits the awarding authority’s ability to consent. If the original subcontractor objects to being replaced, the awarding authority must hold a hearing. San Francisco entered a contract with prime contractor Ghilotti for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy for excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the city invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors. Synergy objected. A hearing officer determined that Synergy’s poor performance established a statutory ground for substitution. Synergy and Ghilotti argued that the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution. The trial court agreed. The court of appeal reversed. Although the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” View "Synergy Project Management, Inc. v. City and County of San Francisco" on Justia Law