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United States Ex Rel. Thomas v. Black & Veatch Special Projects Corp.

United States District Court, Tenth Circuit

July 26, 2013

UNITED STATES OF AMERICA, ex rel., THOMAS, et. al., Relators/Plaintiffs,
v.
BLACK & VEATCH SPECIAL PROJECTS CORP., Defendant.

MEMORANDUM AND ORDER

CARLOS MURGUIA, District Judge.

This matter is before the court on defendant's motion to dismiss the second amended complaint (Doc. 49). For the following reasons, the court dismisses relators' express false certification claim and denies the remainder of the motion.

I. FACTUAL BACKGROUND[1]

In December 2010, the United States awarded defendant a contract to provide goods and construction services for electrical facilities in and around the Kandahar Province in Afghanistan in support of the Kandahar Power Initiative ("KPI") project ("the KPI Contract"). The KPI Contract required defendant to comply with Afghan law while working in Afghanistan.

Afghan law requires foreign citizens working in Afghanistan for a foreign organization to obtain a work permit. To obtain a work permit, the foreign worker must present original study documents to the Afghan government.

Defendant experienced delays in getting visas and work permits for its employees and this delay impacted the scope, schedule, and budget of the KPI Contract. Beginning in March 2011 and continuing through June 2011, defendant created falsified study documents for seven employees to obtain Afghan work permits. This was done through defendant's Human Resource department and at the immediate direction of defendant's Human Resource Director working in Afghanistan.

Defendant created the falsified documents by altering the name that appeared on genuine study documents. As one example, on May 7, 2011, defendant created a diploma for relator Kevin Thomas. The diploma indicated that Mr. Thomas received a degree of Bachelor of Material Science and Engineering from the University of Minnesota. Mr. Thomas did not receive such a degree from the University of Minnesota. To create this diploma, defendant used a copy of a real diploma that had been awarded to another employee, relator Carolyn Thomas, obscured Ms. Thomas's name, and added Mr. Thomas's name. The Afghan government issued a work permit for Mr. Thomas and at least three other employees.

Defendant then submitted claims for payments to the United States for work performed in Afghanistan, including work performed by employees for whom defendant had created falsified study documents. For example, on June 30, 2011, defendant submitted Invoice #12 for the period May 28, 2011, to June 10, 2011, to the United States. Invoice #12 included Standard Form 1034 that contained a certification that "this voucher is correct and proper for payment." Defendant did not indicate in Invoice #12 that defendant had created falsified educational documents and submitted them to the Afghan government to obtain work permits for defendant's employees. The United States paid these invoices.

Relators filed a complaint on August 23, 2011, alleging that defendant violated the False Claims Act ("FCA"). After an investigation, the government declined to intervene. Defendant filed the instant motion on June 4, 2013, and argues that the second amended complaint should be dismissed under Federal Rules of Civil Procedure 12(b)(6) and 9(b).

II. ANALYSIS

The FCA is an antifraud statute that allows a private individual to bring a claim on behalf of the government against a party that defrauded the government. There are two types of actionable fraud claims under the FCA: factually false claims and legally false claims. See United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1168 (10th Cir. 2010) (explaining the difference between factually false and legally false claims).

Relators assert a legally false claim-namely, that defendant falsely certified compliance with the terms of the KPI Contract in seeking payment from the government. Relators contend that the KPI Contract required compliance with foreign laws and that defendant violated Afghan law by presenting forged educational documents to obtain work permits. Relators assert this claim based on two theories: (1) express false certification and (2) implied false certification. Defendant argues that relators have failed to state a claim under either theory. Defendant also contends that relators have not alleged the underlying fraud with sufficient particularity.

To survive a Rule 12(b)(6) challenge, the second amended complaint must contain enough facts to state a claim for relief that is plausible on its face. Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). The court is also mindful of Rule 9(b) because relators' claims involve allegations of fraud. Lemmon, 614 F.3d at 1171. To plead fraud with particularity, the second amended complaint must contain "factual allegations regarding the who, what, when, where and how of the alleged claims." Id. at 1172.

A. Relators failed to state a claim based on an express-false-certification theory but stated a claim based on an ...


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