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United States ex rel. Scott v. Pacific Architects and Engineers (PAE), Inc.

United States District Court, District of Columbia

September 13, 2017

PACIFIC ARCHITECTS AND ENGINEERS PAE, INC. dba PAE Government Services, Inc, aka PAE Group, Defendant.


          COLLEEN KOLLAR-KOTELLY United States District Judge.

         In this action under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, Relators Patricia Scott and John L. Turbury principally allege that Defendant Pacific Architects and Engineers, Inc. (“PA E ”) engaged in improper billing practices in Beirut, Lebanon pursuant to civil police training contracts awarded by the Department of State. Pending before the Court is Defendant's [33] Motion to Dismiss the Second Amended Complaint, brought pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Upon consideration of the pleadings, [1] the relevant legal authorities, and the record for purposes of the pending motion, the [33] Motion to Dismiss is GRANTED-IN-PART and DENIED-IN-PART . As explained further below, Relators' claim pursuant to section 3729(a)(1)(G), and Relator Tudbury's claim pursuant to section 3730(h), are dismissed without prejudice. However, Relators have stated viable claims pursuant to sections 3729(a)(1)(A) and 3729(a)(1)(B), and Relator Scott has stated a viable retaliation claim pursuant to section 3730(h).

         I. BACKGROUND

         The following factual narrative is gleaned from the allegations of the complaint, which are taken as true solely for purposes of the pending motion.

         Defendant is “a company operating in 45 countries that has many contracts with the United States for logistics, construction, services including peace keeping, justice programs, capacity building, and international policing programs.” Compl. ¶ 8. Since 2007, the Department of State's Bureau of International Narcotics and Law Enforcement Affairs (“INL”) has awarded Defendant contracts to provide civil police training and administrative services in Beirut, Lebanon, among other locations around the world. Id. ¶ 9. Relator Scott worked for Defendant in Lebanon from February to August 2011 as a Human Resource and Administrative Manager. Ex. A, ¶ 3. Relator Tudbury worked for Defendant in Lebanon from October 2009 to October 2011 as an International Police Trainer. Ex. B, ¶ 3. The crux of Relators' allegations is that from approximately December 2007 to December 2011, Defendant submitted false claims for reimbursement, on a monthly basis, pursuant to the civilian police contracts awarded by INL. Relators allege that this conduct was facilitated by PAE employees Thomas Barnes, who was a Deputy Program Manager in Lebanon, and Dan Moritz, who was a Program Manager in Lebanon. Compl. ¶ 12.

         In particular, Relators allege that Defendant routinely falsified GSA 139 forms, which Defendant used to record the hours worked by its personnel and to seek compensation when invoicing the government. Compl. ¶ 16. Several strategies were allegedly used to have personnel record hours when they were not actually working. One such strategy was a system of “team building” exercises. Id. ¶ 35. According to the complaint, PAE management would “send out emails for ‘team building' events as a facade to hide the fact that their employees were going on hikes and sightseeing (including trips to Byblos and other sites) and shopping trips, all the while billing hours worked to the U.S. Government.” Id. At a June 2011 meeting, Mr. Moritz allegedly suggested how certain non-work could be called “team building” and thereby invoiced to the government. Id. ¶ 36. Relator Scott recalls that Mr. Barnes said that “you have to be ‘creative' with your billing and . . . gave the example that if you go to the mall you should record the time on the timesheet and call it ‘Team Building.'” Id. ¶ 37. According to Relator Scott, although training classes were not held on Friday or Saturday, Defendant “billed the government using fictitious time sheets [that] they instructed the employees to fill out as if they worked full days. Instead of working, employees went out on the town. This was done with the knowledge, approval and participation of management.” Ex. A, ¶ 10.

         Another alleged strategy was to mark employees as “available” for work, and thereby bill for their services, even though they were not actually present and ready to work. Compl. ¶ 34. In particular, Relator Scott alleges that Lebanese nationals employed by Defendant did not work on Saturdays, but that Defendant nonetheless billed for those days. Ex. A, ¶ 24. On other occasions, Relator Scott was allegedly required to mark employees as “available” for work, even though they were not. Id. The complaint lists numerous examples of this behavior, by employee name and date. Compl. ¶ 34. This allegation is corroborated by the statement of Relator Tudbury, who alleges that “we were supposed to submit time sheets for 8 hours of work, 6 days a week, which is what the contract with [the Department of State] called for.” Ex. B, ¶ 9. He recounts that although “we were required to have academies for local police on Saturdays, there were no academies on Saturdays when I worked there. This was because we had no cadets (locals) who were there on that day. [Defendant] was aware [that] the cadets were off on Saturdays due to Lebanese custom and religious practices.” Id. ¶ 11. According to Relator Tudbury, out of approximately “70 foreign workers, there were about 50 who were billing for Saturdays and for 2 week breaks where no work was done.” Id. ¶ 19. Harkening back to Relator Scott's allegations regarding the “team building” strategy, Relator Tudbury alleges that Defendant instructed him to find another way to bill time on Saturdays, such as by going to the gym and checking his emails, and labeling the time as “Team Building.” Id. ¶ 13. He recalls a particular occasion on which Mr. Moritz and Mr. Barnes provided suggestions for how to address time billing issues with auditors. Id. ¶ 14. One suggestion was that if a “company guy calls for [a] team meeting, [and it] only lasts an hour, [you] can charge 8 hours.” Id. According to Relator Tudbury, Mr. Moritz and Mr. Barnes referred to this practice as “creative billing.” Id.

         Another alleged example of billing impropriety occurred between December 2009 and January 2010. According to the complaint, “Defendant submitted time sheets for the period of December 28, 2009 through January 31, 2010 requesting reimbursement for time worked by its employees who worked as ‘International Trainers' for the period of December 15, 2009 through January 26, 2010 even though Defendant knew [that] International Trainers did not work from December 15, 2009 through January 26, 2010 as they were not scheduled to do so nor were any . . . classes . . . held during this period.” Compl. ¶ 27. The complaint provides a list of trainer names, dates, and the number of hours allegedly billed inappropriately to the government. Id. Similar allegations are made for several other time periods. Id. ¶¶ 28-29.

         Other improprieties are also alleged. According to the complaint, “Relator Tudbury and other employees were instructed by PAE management (and specifically David Kynoch) to submit time sheets prior to the end of the period of the time sheet-thus requiring PAE employees to fabricate at least one week of time worked.” Id. ¶ 30. The complaint specifies which of Relator Tudbury's timesheets were affected by this practice. Id. Relators also allege that Defendant hired personnel in Lebanon that did not meet the minimum requirements for their jobs, and three specific examples are provided. Id. ¶¶ 42- 48. They further allege that on several occasions, drivers paid for by the government were used by Defendant's employees-in particular, Mr. Barnes-for recreational purposes unrelated to government work. Id. ¶ 49. Three specific examples, with dates, descriptions, and sources of information, are provided. Id. Relators also allege that Defendant encouraged employees to purchase exorbitantly priced airfare, despite the availability of lower-priced options, because Defendant received ten percent of the purchase price. This practice was allegedly contrary to Defendant's internal policy and the Fly America Act, 49 U.S.C. § 40118. Id. ¶¶ 50-56. The specifics of two tickets allegedly purchased pursuant to this practice are described in the complaint. Id. ¶ 56.

         Finally, Relators allege that they were terminated in retaliation for their efforts to investigate the allegedly fraudulent activities described above. Id. ¶¶ 57-75.


         A. Motion to Dismiss for Failure to State a Claim

         Defendant moves to dismiss the complaint for “failure to state a claim upon which relief can be granted” pursuant to Federal Rule of Civil Procedure 12(b)(6). “[A] complaint [does not] suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         In deciding a Rule 12(b)(6) motion, a court may consider “the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, ” or “documents upon which the plaintiff's complaint necessarily relies even if the document is produced not by the plaintiff in the complaint but by the defendant in a motion to dismiss.” Ward v. District of Columbia Dep't of Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011) (internal quotation marks omitted). The Court shall consider for purposes of the pending motion the Statement of Material Disclosure by Patricia Scott, ECF No. 1 at ...

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