Allegations of Fraud? Court Affirms Its Decision to Deny Defendant’s Motion to Dismiss

The relator alleged that a government contractor fraudulently billed the United States for unqualified security guards under State Department contracts by falsifying training and qualification records. The defendant moved to dismiss. The court only dismissed one of the counts asserted by the relator. The defendant moved for reconsideration. The court granted the defendant’s motion for reconsideration but reaffirmed its earlier ruling that the relator adequately pleaded False Claims Act violations.

Sovitsky v. SOC LLC, United States District Court, D. Maryland, Civil Action No. GLR-19-2281

• Background – Plaintiff-Relator Paul Sovitsky, a former Training Manager at the U.S. Embassy in Baghdad, Iraq, filed a qui tam action alleging that SOC LLC violated the False Claims Act while performing security contracts under the Department of State’s Worldwide Protective Services Program (“WPS”). Under the contracts, security guards were required to meet specific qualifications, including physical readiness and firearms proficiency. Sovitsky alleged that SOC billed the government for guards who did not meet these requirements and falsified records to make it appear that the guards had passed required tests. SOC moved to dimiss. The court granted the motion with respect to one count, but denied it on the relator’s three other counts.
• Motion for Reconsideration – SOC moved for reconsideration under Federal Rule of Civil Procedure 54(b), arguing that the court had misapprehended its argument regarding whether the relator adequately pleaded that false claims were presented to the government. The court agreed that its prior opinion had not fully addressed the defendant’s argument and agreed to reconsider. Nevertheless,  analyzing the issue, the court reaffirmed its earlier decision that the complaint sufficiently alleged that SOC caused false claims to be presented to the government. The court explained that a relator may satisfy the False Claims Act pleading standard either by identifying specific false claims or by alleging a fraudulent scheme that necessarily led to the submission of claims. The court concluded that Sovitsky’s allegations describing falsified physical fitness and firearms qualification records, combined with allegations that SOC invoiced the government for guards based on those records, plausibly supported an inference that false claims were submitted.