False Claims Act Suit Against Black & Veatch Dismissed in Kansas

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Earlier this year, the District of Kansas entered summary judgment in favor of Black & Veatch Special Projects Corporation in a False Claims Act case relating to B&V’s contract with the United States Agency for International Development to build a power project in Afghanistan. The gist of the claim was that B&V fraudulently obtained work visas from the Afghan government for certain employees. Because the USAID contract required B&V to comply with Afghan law, including obtaining legitimate work visas, the relators alleged that B&V presented false claims to the government when it sought payments under the contract.

While the court previously dismissed the relators’ express certification claims, it had allowed their implied false certification claims to continue. The government did not intervene in the case.

The court analyzed the relators’ claims under the well-established framework for implied certification liability. As the court noted, “to survive summary judgment, relators must adduce specific facts from which a rational jury could find that: (1) defendant knowingly submitted legally false claims for payment to the government; (2) the government paid the claims; and (3) had the government known of the falsity, it may not have paid the claims.”

While the defendant argued strenuously that the compliance with Afghan laws was not a prerequisite to payment under Tenth Circuit law, the court sidestepped the issue and concluded that even when viewed in the light most favorable to the relators, the evidence failed to demonstrate a genuine issue regarding “whether compliance with Afghan law was material to the government’s payment decision.”

The court reached this conclusion for two independent reasons. First, the court found that B&V had provided the government with all material information relating to the alleged fraud, but the government nevertheless continued to pay B&V on the contract. Since the government was aware of the basic issues, the court found that there was no evidence that B&V had misled the government in order to get paid. (Editor’s Note: Arguably, this is less of a materiality issue and more of a knowledge issue. B&V could not have knowingly committed fraud if it had disclosed the material facts to the government.)

Second, the court noted that the government tried unsuccessfully to investigate the relators’ claims of fraud, and even though it was unable to obtain any definitive information regarding the claims, it nevertheless continued to pay under the contract. B&V submitted declarations from the government representatives who had approved the payments, indicating that the representatives were fully aware of the allegations and nevertheless approved the payments. These two declarations clinched the factual issue for the court. As the court concluded, “USAID’s conduct after relators filed this action demonstrates that defendant’s compliance with Afghan work permit and visa requirements did not matter to the government’s payment decision.”

The court also granted summary judgment based on the lack of any damages. The court concluded that because the government continued to pay under the contract despite knowing about the allegations of fraud, the fraud must not have affected the value of B&V’s work under the contract. Since B&V’s work constructing power facilities with not materially affected by the alleged work visa fraud, the court reasoned that the government received the full value of its payments under the contract. Therefore, the government suffered no damages.