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False Claims Act: The Fourth Circuit’s Triple Canopy Decision

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Authored by attorney Megan Caramore

The False Claims Act, 31 U.S.C. §§3729-3733, also known as the “Lincoln Law,” is a federal law that imposes liability on individuals and companies (often federal contractors) who defraud the government.  The Act prohibits contractors from presenting the government with a false or fraudulent claim for payment.

The Fourth Circuit recently examined the issue of what constitutes a false or fraudulent claim in the case ofU.S. v. Triple Canopy, Inc., 775 F.3d 626 (2015). Triple Canopy contracted with the government to provide security services at an airbase in Iraq. Triple Canopy was required to ensure that the guards provided satisfied certain U.S. Army marksmanship requirements; however, the contract did not specifically provide that payment was conditioned on compliance. To fulfill its contract, Triple Canopy hired hundreds of Ugandan guards to serve at the airbase. After the Ugandan guards arrived in Iraq, Triple Canopy supervisors became aware that the guards did not meet the marksmanship requirements. Despite this knowledge, Triple Canopy submitted invoices to the government for payment. After a failed training attempt, a Triple Canopy supervisor directed the creation of false scorecard sheets to be placed in the guards’ personnel files.

The government action against Triple Canopy alleged that it knowingly presented false claims because it knew that the guards did not satisfy the contract requirements but nonetheless billed the government the full price anyway and falsified documents in its own files to show that guards qualified as marksmen. Triple Canopy argued that the invoices it submitted to the government contained no false statements and that the government was improperly attempting to turn a breach of contract claim into a False Claim Act action.

The Fourth Circuit determined that claims can be false when a party impliedly certifies compliance with a material contract condition. The court found that the “straight shooting” requirement was a material term of the contract, given that the contract was for base security guards in a war zone. By submitting the bills, Triple Canopy impliedly certified that it was complying with the material terms of the contract. This amounted to a false statement due to Triple Canopy’s knowledge that it was not in compliance with contract requirements.

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