Breaking: United States Files False Claims Act Suit for “Overstatement of Services”

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The United States filed a False Claims Act suit on Tuesday (12/29/15) against Pacific Coast Maritime Agency (PCMA) and its president, Paul Sogotis. According to the complaint, the US Transportation Maritime Administration (MARAD) had a contract with “Interocean American Shipping (IAS) which designated IAS as a general agent for MARAD to manage the Pacific Collector and Pacific Tracker (vessels) operated by MARAD.” IAS contracted with PCMA to “serve as a ship agent to obtain tug services for the vessels.” PCMA in turn “retained Shaver Transportation Company (Shaver) to provide services” in Oregon.

The alleged fraud scheme was straightforward: Shaver provided invoices to PCMA, which PCMA padded before submitting to the government. Specifically, PCMA supposedly increased certain charges and deleted discounts that Shaver provided. Those falsified invoices were then provided up the chain–from PCMA to IAS to MARAD–for payment.

Even though the complaint is not a model of clarity or accuracy concerning the legal basis of its claims (it cites to just one provision of the pre-FERA version of the Act in its single count), it appears the government intends to take full advantage the amendments to the False Claims Act by the 2009 Fraud Enforcement and Recovery Act, which made it easier for the government to bring claims against subcontractors. (Strangely, however, the provision of the False Claims Act cited in the single count of the complaint is not the provision that, post-FERA, made it easier to target subcontractors.)