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Fourth Circuit Court Denies Stay and Revives FCA Claims Based on "Implied Certification" Theory

In a False Claims Act lawsuit against an armored car manufacturer, Judge Kiser recently denied a motion to stay the case, pending resolution of related criminal charges, and granted a motion for reconsideration, thus reviving FCA claims based on the "implied certification" theory. 

The Complaint alleged that defendant, a government contractor, knew that the vehicles for which it was billing the government did not meet the ballistic protection requirements of its contracts with the government; nevertheless, defendant billed and collected for these vehicles it knew did not meet contract specifications.  Judge Kiser determined that, under U.S. ex rel Badr v. Triple Canopy Inc., 775 F.3d 628 (4th Cir. 2015), these allegations make out a claim for "implied certification" under the False Claims Act.  Judge Kiser had previously granted a motion to dismiss those claims.  However, finding that Triple Canopy constituted a "change in the law," Judge Kiser granted the motion for reconsideration, thus reviving Plaintiff's "implied certification" claims.

The Court also denied defendants' motion to stay because, among other things, plaintiff had an interest in proceeding expeditiously, defendants were seeking what could be an indefinite stay, the Western District of Virginia has a strong policy of efficient and expeditious resolution of cases, and the public has an interest in seeing a swift resolution of the matter.  The Court explained that since plaintiff was accused of defrauding taxpayer money, the public interest is served by investigating the merits and, if plaintiff is found liable, recovering ill-gotten gains.  Likewise, the public interest would be served if plaintiff is not found liable because "[t]he peace of mind that comes with knowing that one has not been defrauded can be just as valuable as recovering any defrauded funds." 

The Court concluded: "Considering all of the factors, a stay is not warranted.  [Defendant] is free to exercise his Fifth Amendment rights in this case.  Doing so places him at no greater disadvantage than every other litigant who wishes to protect his rights."

Copyright © 2023 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume V, Number 75
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About this Author

Jason Hicks, Antitrust Attorney, Womble Carlyle, Government Contracting Lawyer
Partner

Jason Hicks is a member of the Firm's Antitrust, Distribution and Franchise Law Practice Group. Jason has experience litigating cases and counseling clients in a wide variety of matters involving federal and state antitrust laws, franchise and dealer protection statutes, unfair and deceptive trade practices, advertising laws and regulations, industry-specific trade regulations, contract disputes, business torts, and constitutional law. Jason's practice focuses on helping clients efficiently and effectively move their products through various levels of distribution by developing strategies...

202-857-4536
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