Justia Government Contracts Opinion Summaries

Hirt, owner of Andy’s Pharmacies, alleged that Walgreen Company distributed kickbacks ($25 gift cards) to Medicare and Medicaid recipients when they transferred their prescriptions to Walgreens, in violation of the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b). Hirt claimed that Walgreens violated the False Claims Act, 31 U.S.C. 3729, by sending these fraudulent insurance claims to the government. The Sixth Circuit affirmed dismissal of his qui tam suit. Individual plaintiffs cannot bring qui tam complaints based upon information already in the public domain and must state with “particularity the circumstances constituting fraud or mistake.” Hirt’s complaint described the unlawful distribution of gift cards in general but not the submission of any claims obtained with those gift cards. He did not identify customers, dates on which they filled prescriptions at Walgreens, dates on which Walgreens filed reimbursement claims with the government, or even say that these unnamed customers filled any prescriptions at Walgreens at all, let alone that Walgreens processed them and filed reimbursement claims with the government. He did not allege personal knowledge of Walgreen’s claim submission procedures or allege facts “from which it is highly likely that a claim was submitted to the government.” View "Hirt v. Walgreen Co." on Justia Law

Cardi Corporation contracted with the State to construct a portion of a highway construction project dealing with Interstate 195 in Rhode Island (I-Way Project). Cardi subcontracted with High Steel to supply steel for the project. Asserting that it was never paid for 182,873 pounds of temporary steel bracing, High Steel brought suit against Cardi. In response, Cardi filed a third-party action for breach of contract against the State. The superior court granted summary judgment in favor of the State on the third-party suit. The Supreme Court affirmed, holding that the contract was clear and unambiguous and did not require payment for temporary bracing steel. View "High Steel Structures, Inc. v. Cardi Corp. v. State" on Justia Law

Plaintiff filed suit in state court against Crane and 24 other defendants to recover injuries allegedly caused by exposure to asbestos. After removal to federal district court, the district court remanded to state court. The court concluded that the military specifications and affidavits at issue provide a not-insubstantial and non-frivolous basis upon which Crane may assert government-contractor immunity. The court concluded, under 28 U.S.C. 1442(a)(1), that the facts in the record before it are sufficient to establish that Crane was “acting under” the Navy. In this case, Crane has established the requisite causal nexus between the charged conduct and its official authority. The court explained that Crane’s relationship with Zeringue derives solely from its official authority to provide parts to the Navy, and that official authority relates to Crane’s allegedly improper actions, namely its use of asbestos in those parts. Because Crane has established the right to remove the suit pursuant to section 1442, the court need not determine whether Crane independently established the right to remove Zeringue’s failure to warn claim. Accordingly, the court reversed and remanded. View "Zeringue v. Allis-Chalmers Corp." on Justia Law

Relator filed a qui tam suit against his former employer, Serco, under the False Claims Act (FCA), 31 U.S.C. 3729-3733, alleging, inter alia, that the company submitted fraudulent claims for payment to the United States for work done under a government contract. The district court granted summary judgment for Serco. In Universal Health Servs., Inc. v. United States ex rel. Escobar, the Supreme Court rejected the contention that a government contract or regulation must expressly designate a requirement as a condition of payment in order to trigger liability under the theory of implied certification. The court affirmed the district court's grant of summary judgment on relator's FCA claim for submitting false or fraudulent claims for payment under an implied false certification theory of liability. In this case, relator has failed to establish a genuine issue of material fact regarding the materiality of Serco’s obligations to comply with ANSI-748 or provide valid EVM reports. The court concluded that no reasonable jury could return a verdict for relator given the demanding standard required for materiality under the FCA, the government’s acceptance of Serco’s reports despite their non-compliance with ANSI-748, and the government’s payment of Serco’s public vouchers for its work under Delivery Orders 49 and 54. The court also concluded that relator failed to raise a genuine issue of material fact regarding the submission of a false or fraudulent claim. Finally, the court rejected relator's conspiracy claim, FCA claim for wrongful retention of overpayments; and Tameny claim for wrongful termination. View "United States ex rel. Kelly v. Serco" on Justia Law

The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), enacted in 2016 to address Puerto Rico’s financial crisis, provides for a temporary stay of debt-related litigation against the Puerto Rico government. The statute, however, allows creditors to move for relief from the stay and directs courts to grant such relief “after notice and a hearing…for cause shown.” Movant Peaje Investments LLC and various appellants in Altair Global Credit Opportunities Fund (A), LLC v. Garcia-Padilla (the Altair Movants) filed lift-stay motions. The First Circuit (1) affirmed the district court’s denial of the Peaje Movant’s motion, holding that Peaje failed to set forth a legally sufficient claim of “cause” to lift the PROMESA stay; and (2) the Altair Movants presented sufficient allegations to entitle them to a hearing. View "Peaje Investments LLC v. Garcia-Padilla" on Justia Law

This case concerned a dispute relating to contracts for the construction of a municipal transportation terminal on land owned by a municipality (Municipality). Municipality awarded the construction project to OSSAM Construction Inc. (OSSAM). After disputes arose regarding payments for the work performed in connection with the construction contracts, Municipality notified OSSAM that the contract between the parties was being terminated. Municipality then took control of the construction site. OSSAM and related individuals (Plaintiffs) filed suit against Municipality and its officials, claiming, inter alia, that Defendants violated 42 U.S.C. 1983 when they acted under color of law to interfere with Plaintiffs' constitutional rights during the construction site takeover and that these actions consisted a breach of contract. The district court (1) dismissed Plaintiffs’ section 1983 claim, concluding that it lacked subject matter jurisdiction because the parties had failed to comply with the mediation/arbitration clause in their contract; and (2) declined to exercise supplemental jurisdiction over related state law claims. The First Circuit affirmed, albeit on different grounds, holding (1) the section 1983 claim should be dismissed for failure to state a claim; and (2) accordingly, there is no supplemental jurisdiction over the state law claims. View "Masso-Torrellas v. Municipality of Toa Alta" on Justia Law

JEM Contracting, Inc. (JEM) and Ohio Farmers Insurance Company (OFIC) executed two indemnity agreements so that JEM could obtain bonding from OFIC for construction projects. Thereafter, OFIC executed and delivered two surety bonds on behalf of JEM for two construction projects. JEM hired a subcontractor, Hollow Contracting (Hollow), to furnish labor and equipment for both projects. After a dispute arose between JEM and Hollow regarding payment for the work performed, Hollow filed a complaint against JEM and OFIC. The lawsuit was resolved, and the district court dismissed the litigation. Thereafter, OFIC filed a complaint seeking indemnification from JEM for attorney fees and costs incurred in the underlying litigation. In its answer, JEM alleged that the fees and costs OFIC incurred in the litigation were not covered under the indemnity agreements. The district court granted partial summary judgment on the pleadings in favor of OFIC, concluding that JEM was required to indemnify OFIC for “appropriate expenses.” The Supreme Court affirmed, holding that the district court did not err in granting partial summary judgment on the pleadings to OFIC on the limited issue of whether OFIC may seek indemnification from JEF pursuant to the indemnification agreements. View "Ohio Farmers Insurance Co. v. JEM Contracting, Inc." on Justia Law

This case involved a contract dispute between a local governmental entity that oversaw federal funded rebuilding projects in areas of Texas that were struck by Hurricane Ike and a construction contractor. After a dispute arose between the governmental entity and the contractor regarding the quality of the contractor’s work and payment due under the contracts, the contractor filed suit against the governmental entity for payments allegedly due. The governmental entity filed a plea to the jurisdiction, alleging governmental immunity. The trial court denied the plea, concluding that immunity had been waived by chapter 271 of the Local Government Code, which waives immunity if the contract provides “goods or services to the local governmental entity.” The court of appeals reversed. The Supreme Court reversed, holding that that the chapter 271 immunity waiver applied in this case. View "Byrdson Services, LLC v. South East Texas Regional Planning Commission" on Justia Law

Before Hurricane Katrina, State Farm issued federal government-backed flood insurance policies and its own homeowner policies. Relators, former claims adjusters for a State Farm contractor (Renfroe) filed a complaint under seal in April 2006, claiming that State Farm instructed adjusters to misclassify wind damage as flood damage to shift its insurance liability to the government. The district court extended the seal several times at the government’s request, lifting it in part in January 2007 for disclosure to another district court hearing a suit by Renfroe against the relators. In August, the court lifted the seal. The government declined to intervene. State Farm moved to dismiss on grounds that the relators’ attorney had disclosed the complaint’s existence to news outlets, which issued stories about the fraud allegations, but did not mention the False Claims Act (FCA, 31 U.S.C. 3729) complaint and the relators had met with a Congressman who later spoke against the purported fraud. Under the FCA: “The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.” The court decided against dismissal, balancing actual harm to the government, severity of the violations, and evidence of bad faith. The Fifth Circuit and a unanimous Supreme Court affirmed. A seal violation does not mandate dismissal. The FCA has several provisions expressly requiring the dismissal, indicating that Congress did not intend to require dismissal for a violation of the seal requirement. This result is consistent with the purpose of section 3730(b)(2), which was enacted to “encourage more private enforcement suits,” and to protect the government’s interests when a relator filing a civil complaint could alert defendants to a pending federal criminal investigation. View "State Farm Fire & Casualty Co. v. United States ex rel. Rigsby" on Justia Law

Henderson, Nevada executed an agreement with Developer to construct sports venues on 480 acres of federally-owned public land. The city requested the Bureau of Land Management in the Department of Interior to convey the land to Developer. After completion of the project, Developer was to transfer ownership of the land and the sports complex to the city; the city would lease back the venues to Developer. The Bureau agreed to conduct a modified competitive sealed-bid auction, so that Developer had the right to match the highest bid. After the bidding, Developer paid the balance and requested the land patent for recording. Within hours after the funds transferred to the Bureau, Developer terminated its agreement with Henderson. Henderson requested the Bureau to cancel the sale and sued Developer. The parties settled. Developer agreed to give the city $4.25 million after it recorded the patent and not to pursue any development in Henderson. The city agreed to withdraw its objection. The Department determined that the Bureau should not release a patent for the land. Developer alleged violation of the Federal Land Policy and Management Act by canceling the sale more than 30 days after it paid for the land. The district court held that the Secretary had plenary power to terminate the sale because its consummation would have been contrary to law, given that the Bureau had authorized a modified land auction, only because of the anticipated public benefits. The D.C. Circuit affirmed, rejecting a claim that the Secretary’s action was arbitrary. The auction sale was rendered unlawful when Developer terminated the agreement; it did not suffer a due process violation because it never acquired a property interest in the land. View "Silver State Land, LLC v. Schneider" on Justia Law