Justia Government Contracts Opinion Summaries

PegaStaff, an agency that provides temporary staffing, provides staffing to Pacific Gas & Electric (PG&E), through a staffing agency with which PG&E directly contracted, initially Corestaff and later Agile. The California Public Utilities Commission (CPUC) adopted General Order 156 to implement Public Utilities Code Article 5, the purpose of which is to encourage and develop the use of women, minority and disabled veteran-owned business enterprises (WMDVBEs) within the public utility sector. PegaStaff is not a WMDVBE and after PG&E adopted a program to increase the utilization of WMDVBEs, its provision of staff to PG&E was substantially reduced. PegaStaff filed suit against the CPUC, PG&E, Corestaff and Agile, challenging the constitutionality of Article 5 and General Order 156. The trial court determined that it did not have subject matter jurisdiction, entered judgment in favor of the CPUC, and denied PegaStaff’s motion to transfer its claims. The court of appeal affirmed. PegaStaff was required to first exhaust its administrative remedies and it has not done so. View "PegaStaff v. Cal. Pub.Utils. Comm'n" on Justia Law

Former employees filed a qui tam False Claims suit against Heritage College, a for-profit school, alleging it fraudulently induced the Department of Education (DOE) to provide funds by falsely promising to keep accurate student records as required by 20 U.S.C. 1094(a)(3). They claimed that Heritage altered grade and attendance records from 2006 to 2012 to ensure students made satisfactory progress and to avoid refunds, thereby maximizing Title IV funds. Around 97% of Heritage students receive Title IV aid, accounting for about 90% of gross tuition. From 2009 to 2012, the DOE disbursed $32,817,727 to Heritage. Each relator also alleged retaliation under the FCA and wrongful discharge under state law. For purposes of summary judgment, Heritage did not dispute that it altered records. The district court granted summary judgment to Heritage, finding that any false statements were not material to government funding decisions. The Eighth Circuit reversed and remanded the FCA claim, but affirmed the employment claims. Heritage could not have executed the participation agreement without stating it would maintain adequate records and without the agreement Heritage could not have received any Title IV funds. Heritage's actions with respect to the plaintiffs were not retaliatory. View "Miller v. Weston Educ., Inc." on Justia Law

In 1996, SUFI contracted with the Air Force to operate telephone systems in lodging facilities on bases in Germany. SUFI installed equipment at no cost to the Air Force, which agreed that guests would make calls exclusively through SUFI’s network. The Air Force quickly broke its promise of exclusivity. SUFI initiated administrative proceedings. In 2004, the Armed Services Board of Contract Appeals found the Air Force in material breach. The parties entered into a partial settlement in 2005. SUFI then submitted claims to the contracting officer, totaling $131 million. The contracting officer failed to issue a decision for more than six months before issuing a final decision denying all of SUFI’s claims except one. The Board found in SUFI’s favor on 22 claims. In 2010, SUFI submitted a claim for attorney fees and requested a decision within 60 days. More than six months passed; Air Force counsel told SUFI to consider its claim “deemed denied.” SUFI filed suit The Court of Federal Claims awarded attorney fees with interest but denied overhead and lost profit. The Federal Circuit rejected the government’s argument that SUFI failed to exhaust administrative remedies. The contracting officer’s delay rendered the contractual remedy inadequate and unavailable, regardless of the Board’s discretionary authority to review an appeal where the contracting officer fails to issue a decision in “a reasonable time.” The court held that SUFI is entitled to attorney fees under common law; vacated the denial of overhead and profit; and remanded for recalculation of interest. View "SUFI Network Servs., Inc. v. United States" on Justia Law

The National Institute on Drug Abuse (NIDA) within the National Institutes of Health issued Request for Proposal for the “NIH Pain Consortium Centers of Excellence in Pain Education Coordination Center.” NIDA initially issued the solicitation as a small business set-aside under North American Industry Classification System code 541712, “Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology),” which limits offerors to small businesses with 500 employees or fewer. A prospective offeror appealed the NAICS code designation to the U.S. Small Business Administration Office of Hearings and Appeals, which ordered NIDA’s contracting officer to amend the solicitation to change the NAICS code designation to 541611, “Administrative Management and General Management Consulting Services.” Palladian sought to enjoin NIDA from accepting and evaluating proposals under the new code, which rendered Palladian ineligible to compete. The Court of Federal Claims granted Palladian’s motion for judgment on the administrative record, finding that the contracting officer’s NAICS code amendment was arbitrary and capricious because NAICS code 541611 did not best describe the statement of work for the solicitation. The Federal Circuit reversed, finding that Palladian failed to exhaust its administrative remedies. View "Palladian Partners, Inc. v. United States" on Justia Law

The Medicare program provides federally funded healthcare to the elderly and the disabled. See Title XVIII of the Social Security Act, 42 U.S.C. 1395. Under a “complex statutory and regulatory regime” called Medicare Part A, the Government reimburses participating hospitals for care that they provide to inpatient Medicare beneficiaries. Most hospitals are reimbursed for inpatient hospital services pursuant to a standardized rate, but the Social Security Act also provides a method for calculating reimbursement rates for certain rural hospitals that qualify as “sole community hospital[s]” (SCHs) or that qualify as “medicare-dependent small rural hospital[s]” (MDHs). SCHs and MDHs receive reimbursement based on either the standard rate or a hospital-specific rate derived from its actual costs of treatment in one of the base years specified in the statute, whichever is higher. MDHs and SCHs challenged revisions to the rules covering their Medicare reimbursements for inpatient hospital services, arguing that the Medicare statute forbids the Secretary from modifying the hospitals’ reimbursements with budget neutrality adjustments from years prior to the base year. The district court rejected the claims. The D.C. Circuit affirmed, finding that the revisions were neither arbitrary nor manifestly contrary to the statute. View "Adirondack Med. Ctr. v. Burwell" on Justia Law

In 1983, Pratt & Whitney made false statements to the Air Force while competing with GE to supply fighter jet engines. Pratt did not obtain more business and the fraud was discovered. The government filed a 1998 action before the Armed Services Board of Contract Appeals seeking relief under the Truth in Negotiations Act, and a 1999 federal court action, seeking relief under the False Claims Act and common law restitution. The government lost the administrative action. While Pratt’s statements violated the truth-in-negotiation requirements, the Board refused to lower the price of the contracts retroactively (the remedy permitted by the Act) because the Air Force had relied on the competitive bids, not the 1983 false statements, in determining a reasonable price for the contracts. The Federal Circuit affirmed. After it was established that Pratt violated the False Claims Act and that it owed the government $7 million in statutory penalties, the case was remanded for damages calculation. The district court awarded $657 million. The Sixth Circuit remanded again, noting that the matter has been in litigation for 17 years. The award was not supported by the evidence given the government expert’s refusal to account for the competition between the companies in setting a fair market value for the engines. View "United States v. United Techs. Corp." on Justia Law

After Rio School District’s new school was completed, the District and its general contractor (FTR) engaged in a decade-long legal battle, resulting in a judgment for FTR exceeding $9 million. Public Contract Code section 7107 allows a public entity to withhold funds due a contractor when there are liens on the property or a good faith dispute concerning whether the work was properly performed. The trial court assessed penalties against District because it did not timely release the retained funds. The court of appeal affirmed in part. A dispute over the contract price does not entitle a public entity to withhold funds due a contractor; the doctrine of unclean hands does not apply to section 7107; the trial court properly rejected the District's action under the False Claims Act, Government Code section 12650 and properly assessed prejudgment interest, subject to adjustment for any extra work claims found untimely on remand. The trial court erred in its interpretation of a contract provision imposing time limitations to submit the contractor's claims for extra work as requiring a showing of prejudice and erred in awarding fees for work not solely related to FTR's section 7107 cause of action. View "East West Bank v. Rio School Dist." on Justia Law

Providers of “habilitation services” under Idaho’s Medicaid plan are reimbursed by the state Department of Health and Welfare. Section 30(A) of the Medicaid Act requires Idaho’s plan to “assure that payments are consistent with efficiency, economy, and quality of care” while “safeguard[ing] against unnecessary utilization of . . . care and services,” 42 U.S.C. 1396a(a)(30)(A). Providers of habilitation services claimed that Idaho reimbursed them at rates lower than section 30(A) permits. The district court entered summary judgment for the providers. The Ninth Circuit affirmed, concluding that the Supremacy Clause gave the providers an implied right of action, under which they could seek an injunction requiring compliance. The Supreme Court reversed, concluding that there is no private right of action. The Supremacy Clause instructs courts to give federal law priority when state and federal law clash, but it is not the source of any federal rights and does not create a cause of action. The suit cannot proceed in equity. The power of federal courts of equity to enjoin unlawful executive action is subject to express and implied statutory limitations. The express provision of a single remedy for a state’s failure to comply with Medicaid’s requirements, the withholding of Medicaid funds by the Secretary of Health and Human Services, 42 U.S.C. 1396c, and the complexity associated with enforcing section 30(A) combine to establish Congress’s “intent to foreclose” equitable relief. View "Armstrong v. Exceptional Child Ctr., Inc." on Justia Law

DiFoggio worked as an FBI cooperating witness and introduced Medrano to a man purporting to be Castro, a health care consultant. Castro told Medrano that by bribing a corrupt official he could obtain contract approval from Los Angeles County for the purchase of bandages for its hospital system. Castro was an undercover FBI agent. There was no corrupt official. When the medical bandages deal was concluded, Medrano approached Castro about making another deal to involve his friend, Buenrostro. Buenrostro and Castro brought Barta into the discussions; A bribe would be paid to the corrupt official by Castro to obtain a county contract for Sav‐Rx, a company founded by Barta, to provide pharmaceutical dispensing services. Sav‐Rx would service the contract through a business started by Buenrostro and Medrano. Barta wrote a check for $6,500 to Castro. Buenrostro and Medrano were to pay their 35 percent share after that last meeting. Before that happened, they were arrested. In a separate opinion, the Seventh Circuit held that Barta was entrapped as a matter of law. Neither Buenrostro nor Medrano argued entrapment. The Seventh Circuit affirmed their convictions for conspiracy to commit bribery, rejecting challenges to the sufficiency of the evidence and the sentences. View "United States v. Buenrostro" on Justia Law

In 2006, Robinson opened Paideia Academy, a non-profit charter St. Louis charter school. State and federal monies, disbursed through the Missouri Department of Elementary and Secondary Education, exclusively funded the school, and were restricted to operating kindergarten through eighth grade. Robinson directed $242,533 from Paideia to develop a pre-kindergarten child care center. Robinson also worked, beginning in 1990, purporting to inspect parking meters. On weekly timesheets, he always recorded 40 hours, regardless of holidays, and even after parking meter services were outsourced. In 2009, the FBI investigated his “employment,” interviewing former Parking Division employees and watching Robinson’s car. They reasonably suspected that Robinson did not inspect meters. The agents installed, without a warrant, a GPS device on his car while parked on a public street. Tracking confirmed that Robinson did not inspect meters. The government charged Robinson with Paideia-related wire fraud, 18 U.S.C. 1343; two Paideia-related counts of federal program theft, 18 U.S.C. 666(a)(1)(A); and five parking-related counts of federal program theft. The district court denied Robinson’s motion to suppress the GPS evidence, motion to sever counts 1-3 from counts 4-8, and Batson objection to the jury’s composition. At trial, the court rejected his challenges to certain testimony and parking-related jury instructions. The court sentenced him to 24 months’ imprisonment and awarded $419,333 in restitution. The Eighth Circuit affirmed View "United States v. Robinson" on Justia Law