USN4U, LLC v. Wolf Creek Federal Services, Inc., No. 20-4246 (6th Cir. 2022)
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USN4U brought a qui tam action under the False Claims Act, alleging that Wolf Creek and its employees submitted falsely inflated project estimates to NASA for facilities maintenance, resulting in the negotiation of fraudulently induced, exorbitant contract prices. USN4U alleged that “[t]he Government paid Wolf Creek and its union employees for labor not actually performed,” described specific projects, and alleged that when Wolf Creek performed NASA projects, workgroup leads instructed “participating union employee[s]” to falsely report their labor hours to “justify the inflated [labor] estimate.” USN4U identified several Wolf Creek employees who were allegedly active members of the fraudulent scheme
Citing NASA’s subsequent decision to pay the invoices and continue to contract with Wolf Creek, and the government’s decision not to intervene in USN4U’s claim, the district court dismissed the suit.
The Sixth Circuit reversed. USN4U adequately alleged fraud. NASA asked Wolf Creek for estimates and always awarded the contracts for the quoted amount, which could indicate that NASA trusted and relied upon the purported accuracy of Wolf Creek’s estimates. NASA plausibly would not have agreed to pay Wolf Creek the quoted amount if NASA knew that it was being grossly overcharged.
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