Justia Government Contracts Opinion Summaries

In 1998 Prazen retired as superintendent of the City of Peru electrical department. He had more than 27 years of service and purchased five years of age-enhancement credit. Prazen had an unincorporated electrical business, which was incorporated just before he retired. Before he retired, the City entered into an agreement with his corporation for operation of the City’s electrical department, including management and supervision. First year compensation under the contract was about $7,000 higher than Prazen’s prior annual salary. The relationship lasted until 2009, when the corporation was dissolved. In 2010, the Illinois Municipal Retirement Fund notified Prazen that, after participating in the early retirement incentive plan, he had violated the statutory prohibitions (40 ILCS 5/7-141.1(g)) against returning to work. The Fund recalculated his years of service as 27 and claimed he should repay $307,100 as a statutory forfeiture. The circuit court agreed. The appellate court reversed and the Illinois Supreme Court agreed. The work done between 1999 and 2009 was done by a separate corporate entity and was not precluded by statute. If the legislature had wanted to specifically prohibit this, it could have said so. The statute does not show intent to prohibit outsourcing to a retired employee’s corporation and the legislature did not grant the Trustees of the Fund authority to find that a corporation was a “guise.” The court noted that, earlier in the period under consideration, the Board had expressed the view that what the arrangement was pView "Prazen v. Shoop" on Justia Law

Northern, operated by VanDuinen, was a general contractor on public construction projects, legally required to obtain surety bonds. Hanover was Northern’s bonding agent and required Northern to enter into an Indemnity Agreement, which VanDuinen signed in his individual capacity and as Northern’s President. The Midway Airport Project was financed by the FAA and managed by Parsons. In 2008 Northern won the bid and began subcontracting. in 2009 subcontractors complained that Northern failed to pay them in accordance with the bonds and contracts. Work was halted, resulting in a separate complaint, by Parsons, for failure to complete the Project as required. The FAA opted to retain possession of remaining contract funds, $127,086.00, pending resolution of the disputes and completion of the work. Hanover received claims from subcontractors McDaniel ($127,452.78) and Rex Electric ($78,495.00) and a claim for performance from Parsons. Hanover demanded collateral under the Agreement. Northern refused to post collateral or to indemnify Hanover. In 2009 McDaniel filed for bankruptcy; the bankruptcy trustee sued Hanover seeking payment for work performed. In 2012, Hanover paid the trustee $127,452.78 to resolve both McDaniels’s and Rex Electric’s claims. Hanover resolved Parson’s claim by stepping in as general contractor and arranging for completion of the Project. Parsons paid Hanover the $127,086.00 of contract funds the FAA had withheld. Hanover sued Northern and VanDuinen. The district court granted summary judgment in Hanover’s favor. The Seventh Circuit affirmed. The Agreement is unambiguous. Northern breached it, and Hanover is entitled to contractual damages. View "Hanover Ins. Co. v. Northern Bldg. Co." on Justia Law

These appeals concerned a suit filed under the False Claims Act (FCA), 31 U.S.C. 3729 et seq., and two bankruptcy proceedings. The district court concluded that the bankruptcy trustee had exclusive standing to assert the FCA claims at issue because those claims belonged to the bankruptcy estate. The court agreed with the district court that only the trustee had standing to prosecute the FCA lawsuit; affirmed the district court's dismissal under Rule 12(b)(6); and concluded that the district court did not abuse its discretion in denying the motion for reconsideration. View "Westbrook Navigator L.L.C., et al v. Navistar, Inc., et al." on Justia Law

Plaintiff alleged that Bayer defrauded the United States government through its marketing and sale of the cholesterol-lowering drug Baycol. On appeal, plaintiff challenged the dismissal of the qui tam action she brought against Bayer Healthcare under the False Claims Act (FCA), 31 U.S.C. 3729-3733. Based upon the court's review of plaintiff's allegations regarding the Department of Defense (DoD) contracts, the court concluded that her complaint satisfied Rule 9(b)'s requirements and survived a motion to dismiss under Rule 12(b)(6). Accordingly, the court reversed the district court's judgment with regard to her allegations regarding the DoD contracts and remanded for further proceedings. However, the court affirmed the district court's judgment with respect to the allegations involving federal health insurance reimbursement claims under United States v. ex rel. Roop v. Hypoguard USA, Inc.View "Simpson v. Bayer Healthcare, et al." on Justia Law

The pro se plaintiff sued her former employer, a private recipient of federal funding, alleging violation of the Rehabilitation Act of 1973, 29 U.S.C. 794, by requiring her to complete certain duties as a dental assistant that she was incapable of performing due to an unspecified disability that limits her strength and mobility, and then firing her because of her disability. The district judge dismissed for failure to exhaust administrative remedies. The Seventh Circuit reversed. A plaintiff under the Rehabilitation Act against a recipient of federal money is not required to exhaust the administrative remedies that the Act provides; an employee or former employee of a private company, such as the plaintiff, is not required Act to even file an administrative charge or complaint.View "Williams v. Milwaukee Health Servs., Inc." on Justia Law

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law

The Department of Human Services revoked a contractor's eligibility to provide home delivered meals to Medicaid clients because the contractor breached its contract with the department by failing to comply with certain food preparation and delivery standards. The contractor, Homestyle Direct, objected to the revocation, arguing that the standards in the contract were not enforceable because they should have been promulgated as administrative rules. The department rejected those arguments, concluding that whether the standards could have been promulgated as administrative rules was irrelevant to their enforceability as terms of a contract. The Court of Appeals reversed on the ground that the department could not enforce unpromulgated rules as terms of a contract. The Supreme Court disagreed with the appellate court and reversed its decision. The Court affirmed the final order of the department.View "Homestyle Direct, LLC v. DHS" on Justia Law

Relator filed a qui tam complaint against Verizon under the False Claims Act, 31 U.S.C. 3730(b)(5). On appeal, relator challenged the district court's dismissal of his qui tam complaint for lack of subject matter jurisdiction under Rule 12(b)(1). The court held that the complaint sufficiently related to relator's earlier action, that the first-to-file bar applied to relator even though he brought the first action, and that the bar remained in effect even after the first action was no longer pending. Accordingly, the court affirmed the judgment of the district court. View "United States v. Cellco Partnership, et al." on Justia Law

In 2006, the U.S. Army Contracting Agency solicited bids for repair, maintenance, and construction services at Fort Rucker, Alabama, with indefinite delivery and quantity terms. The mechanism for pricing such jobs involves identification of costs and multiplication by certain “coefficients” set in the contract. It was well known that construction costs in the region had increased after Hurricane Katrina, 15 months before the government solicited bids. The Army awarded the contract to Lakeshore in 2007. In 2008, Lakeshore began 78 construction projects at Fort Rucker. When the Army exercised its option to extend the contract, it increased payments based on the contract’s price-adjustment clause. Lakeshore began 74 more delivery orders. After two years under the contract, Lakeshore concluded that it had incurred higher costs than were covered by payments under the contract and requested an equitable adjustment. The government denied the request. Acting under the Contract Disputes Act, 41 U.S.C. 7101, the contracting officer denied a claim for recovery of $1,996,152.40. The Claims Court rejected claims of breach of contract, breach of the covenant of good faith and fair dealing, breach of implied warranty, and mistake on summary judgment, stating that the government was not obliged to provide accurate local prices or to bear “economic consequences if one or more prices in the guide proved inaccurate.” The Federal Circuit affirmed. View "Lakeshore Eng'g Servs., Inc. v. United States" on Justia Law

Relators filed several related qui tam actions against government contractors, including Cisco, alleging that they committed fraud against the government by means of a kickback and defective pricing schemes in violation of the False Claims Act (FCA), 31 U.S.C. 3729-3733, the Anti-Kickback Act, 41 U.S.C. 51-52, and other federal statutes. The government intervened in the action against Cisco, adopted the relators' complaint, and settled the action. Relators' action was dismissed with prejudice as part of the settlement and the district court awarded relators over eight million dollars. The government appealed. Based on the court's decision in Roberts v. Accenture, LLP, the court concluded that the district court did not err by refusing to apply Rule 9(b) pleading standards when determining whether relators were entitled to a statutory share of the government's recovery under section 3730(d)(1). The court also concluded that the district court correctly awarded relators a share of the government's recovery. Finally, the district court correctly awarded relators a share of the settlement funds the government received from both Cisco and its distributor. Accordingly, the court affirmed the judgment of the district court. View "Rille, et al. v. United States" on Justia Law