United States ex rel. Kelly v. Serco, No. 14-56769 (9th Cir. 2017)
Annotate this CaseRelator 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.
Court Description: False Claims Act The panel affirmed the district court’s summary judgment in favor of the defendant in an action under the False Claims Act. The plaintiff alleged that his former employer Serco, Inc., a technology and project management services provider, submitted fraudulent claims for payment to the United States for work done under a government contract. The Department of Defense, Navy Space and Naval Warfare Systems Command (SPAWAR), contracted with Serco for work on the Advanced Wireless Systems Spectrum Relocation Project, a project to upgrade the wireless communications systems situated along the United States- Mexico border for the Department of Homeland Security, Customs and Border Protection (DHS). The interagency contract between SPAWAR and DHS required SPAWAR to implement a cost and progress tracking system known as an earned value management (EVM) system. The services provided by Serco were covered under its Naval Electronic Surveillance Systems contract with SPAWAR. The panel affirmed the district court’s summary judgment on a claim that Serco submitted false or fraudulent claims for payment under an implied false certification theory of liability under the False Claims Act. The panel applied Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which held that a UNITED STATES EX REL. KELLY V. SERCO 3 government contract need not expressly designate a requirement as a condition of payment in order to trigger liability under the theory of implied certification. Instead, what matters is whether the defendant knowingly violated a requirement that it knew was material to the government’s payment decision. To establish liability, the defendant’s claim for payment must make specific representations about the goods or services provided, and the defendant’s failure to disclose material statutory, regulatory, or contractual requirements must make those representations misleading half-truths. The panel held that the plaintiff did not satisfy the standard for materiality set forth in Escobar because there was no genuine issue of material fact as to the materiality of Serco’s compliance with the American National Standards Institute/Electronic Industries Alliance Standard 748 (ANSI-748) or its obligation to provide valid EVM reports. The panel also affirmed the district court’s summary judgment on claims that Serco violated the False Claims Act by making false records material to a false or fraudulent claim, conspired to violate the False Claims Act, wrongfully retained overpayments, and wrongfully terminated the plaintiff in violation of public policy under California state law.
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