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United States ex rel Bender v. North American Telecommunications

November 4, 2010

UNITED STATES OF AMERICA, EX REL. ROBERT KEITH BENDER, PLAINTIFF,
v.
NORTH AMERICAN TELECOMMUNICATIONS, INC., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Gladys Kessler United States District Judge

MEMORANDUM OPINION

Plaintiff-Relator Robert Bender brings this qui tam suit under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq., on behalf of the United States against seven Defendants. This matter is before the Court on Defendants' Motions to Dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) [Dkt. Nos. 51-52].

Upon consideration of the Motions, Oppositions, Replies, and the entire record herein, and for the reasons set forth below, the Motion to Dismiss the Amended Complaint of Defendant PAE Government Services, Inc. is granted and the Motion to Dismiss the Amended Complaint of Defendants North American Telecommunications, Inc. ("NATI"), Capitol Technology Services, Inc. ("CTSI"), Chang D. Hwang, John G. Carothers, Heys S. Hwang, and James W. Ruest is granted.

I. BACKGROUND*fn1

Plaintiff is an electrician formerly employed by Defendant NATI. From October 1, 1997, to March 31, 2003, NATI had an Operations and Maintenance contract with the United States Department of Agriculture ("USDA" or the "Government") to maintain four USDA buildings in Washington, D.C. Under the contract, NATI was responsible for day-to-day maintenance of the buildings. Defendant CTSI took over the contract on April 1, 2003. Defendant PAE Government Services, Inc. ("PAE") is a subcontractor of CTSI and performed electrical work on the buildings. Plaintiff was never employed by either CTSI or PAE. The other four defendants are or were officers or employees of NATI and CTSI: Chang D. Hwang, President of NATI; John G. Carothers, former Operations Coordinator for NATI and CTSI; Heys S. Hwang, President of CTSI; and James W. Ruest, project Manager at CTSI.

The Amended Complaint alleges five violations of the FCA. Count I alleges that NATI and CTSI falsified response times to service calls in order to claim the monthly bonuses provided for in their contract. Count II alleges that NATI and CTSI misrepresented non-reimbursable repairs as reimbursable repairs. Count III alleges that NATI, CTSI, and PAE charged the USDA for work performed by employees who did not possess the qualifications required by the governing contract. Count IV alleges that NATI and CTSI billed the USDA for overtime work that their contracts excluded from overtime status. Count V alleges that NATI and CTSI misrepresented the amount of work they performed.

On August 14, 2006, Plaintiff filed his Complaint [Dkt. No. 1]. On September 27, 2007, The United States filed a Notice of Election to Decline Intervention [Dkt. No. 22].*fn2 On May 14, 2008, all of the Defendants except PAE filed a joint Motion to Dismiss pursuant to Rule 12(b)(6)[Dkt. No. 31]. On the same date, PAE filed a separate Motion to Dismiss [Dkt. No. 32]. Upon consideration of these Motions, along with Plaintiff's Oppositions [Dkt. Nos. 34-35] and Defendants' Replies [Dkt. Nos. 36-37], the Court dismissed the Complaint with leave to file an Amended Complaint on February 25, 2010 ("February 25 Opinion") [Dkt. Nos. 47-48]. United States ex rel. Bender v. N. American Telecomms., Inc. et al., 686 F. Supp. 2d 46 (D.D.C. 2010).

On April 26, 2010, Plaintiff proceeded to file his Amended Complaint [Dkt. No. 50]. On May 10, 2010, all Defendants except PAE filed a Motion to Dismiss the Amended Complaint ("NATI Motion") [Dkt. No. 51]. On the same date, PAE filed its separate Motion to Dismiss the Amended Complaint ("PAE Motion") [Dkt. No. 52]. On June 7, 2010, Plaintiff filed his respective Oppositions [Dkt. Nos. 54-55]. On June 14, 2010, Defendants filed their separate Replies [Dkt. Nos. 58-59].

II. STANDARD OF REVIEW

To survive a motion to dismiss under Rule 12(b)(6), a plaintiff need only plead "enough facts to state a claim to relief that is plausible on its face" and to "nudge[ ] [his or her] claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Id. at 563. A complaint will not suffice, however, if it "tenders 'naked assertions' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1948 (2009) (citing Twombly, 550 U.S. at 557).

Under the Twombly standard, a "court deciding a motion to dismiss must not make any judgment about the probability of the plaintiffs' success . . . must assume all the allegations in the complaint are true (even if doubtful in fact) . . . [and] must give the plaintiff the benefit of all reasonable inferences derived from the facts alleged." Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotation marks and citations omitted).

To prove a violation of the FCA, a plaintiff must show either that the defendant (1) "knowingly presents, or causes to be presented [to the Government] a false or fraudulent claim for payment or approval," 31 U.S.C. § 3729(a)(1), or (2) "knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved." 31 U.S.C. 3729(a)(2).*fn3 A "claim" includes "any request or demand . . . for money or property" made to a recipient if the Government provides or reimburses the recipient any portion of the money requested. 31 U.S.C. § 3729(c). The knowledge requirement is satisfied if a person "has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information." 31 U.S.C. § 3729(b). Finally, the Complaint must allege materiality. See United States ex rel. Ervin and Assocs., Inc. v. Hamilton Sec. Group, 370 F. Supp. 2d 18, 36 (D.D.C. 2005) ("The great weight of case law holds that the materiality of a false record or statement is an element of False Claims Act liability.").

"[B]ecause the False Claims Act is self-evidently an anti-fraud statute, complaints brought under it must comply with Rule 9(b) [of the Federal Rules of Civil Procedure]" in order to state a claim. United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542, 551-52 (D.C. Cir. 2002). Rule 9(b) requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). Thus, to satisfy Rule 9(b), a FCA relator must state the time, place, and contents of the false representations, the facts ...


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