The defendant’s motion to dismiss a False Claims Act case because it submitted no claims to the federal government is denied, where the claims were submitted to a state entity in relation to a project partially funded by the federal government. The defendant argued that the requests for payment were made before enactment of the Fraud Enforcement Recovery Act, which amended the FCA to remove language stating that claims must be submitted directly to the federal government in order for FCA liability to apply. However, citing rulings by the Sixth and Seventh Circuits, the court held that Congress intended FERA to apply to cases filed after the enactment date, not to claims for payment. Because the current action was filed after enactment of FERA, FCA liability attached to the contractor’s claims for payment to the state entity.
The court also applied the Supreme Court’s holding in Cochise in holding that the claims were not time-barred.
The International Brotherhood of Electrical Workers Local Union No. 98 filed a qui tam lawsuit alleging that the Farfield Company failed to pay employees at the prevailing wage required by the Department of Labor under its federally-funded contract with the Southeastern Pennsylvania Transit Authority. The union alleged the contractor submitted false certified payrolls and certificates of compliance to the municipal authority by having its groundmen employees—who are neither classified as nor paid by the contractor as journeymen electricians—perform journeyman electrical work beyond simply assisting the journeymen.
Two years into work on the project, DOL audited Farfield’s classification of its workers and found that four carpenters should have been paid at a higher prevailing rate. The parties disputed whether DOL investigated Farfield’s payment to electrical workers and the department’s findings. After conducting its own investigation, the union filed its qui tam complaint. The government declined to intervene and the case was unsealed. In an amended complaint, the union also alleged Farfield submitted fraudulent certified payroll records supporting its fraudulent invoicing.
In these proceedings, Farfield moved for summary judgment, arguing that the union’s own witnesses and evidence disprove their misclassification, liability and damages theories; that it did not knowingly submit false claims; and that the union’s claims are time-barred. The defendant also argued that that it submitted its bills to the state entity in charge of the project, not the U.S. government, and therefore federal FCA liability did not attach under the law as enacted at the time the claims accrued.
In response, the plaintiff argued that (1) the record shows Farfield falsely certified compliance with the Davis-Bacon Act; (2) the amended False Claims Act applies to bills submitted to the state entity; (3) Farfield’s reliance on DOL’s 2004 audit is not relevant to its state of mind and the question of whether it knowingly submitted a false claim is a question for trial; and, (4) the statute of limitations does not bar its claims.
First, the court considered whether the FCA applied even though Farfield performed work under a contract with a state transportation entity. Farfield argued it did not submit false claims to the federal government because its invoices were directed to the state agency. Before May 2009, the FCA imposed liability in relation to false claims for payment made to the federal government. However, in 2009, Congress enacted the Fraud Enforcement Recovery Act of 2009, which amended the FCA to strike language stating that false claims must be submitted directly to a representative of the federal government. Congress also backdated FERA to June 7, 2008, and applied it to any cases pending on the date of enactment.
In this case, the state entity made its final payment to Farfield before the effective date of FERA. However, the union filed its complaint after the effective date. Farfield argued the FCA did not apply, because the act, as enacted on the date of its final payment, required claims to be submitted to the federal government directly. The defendant argued that the use of federal funds to pay for the project was not sufficient to render its invoices claims to the federal government for FCA liability. Farfield also argued that Congress retroactively applied the law to claims—i.e.: requests for payment—pending on June 7, 2008, not to cases pending on or after that date. Farfield cited prior cases in which the court interpreted the term claims to mean demands for payment.
However, the court noted that the Court of Appeals for the Sixth and Seventh Circuits have held that FERA’s reference to claim means a civil action or case pending on or after June 7, 2008. By this reasoning, the court held that FERA applies to the union’s case and denied the motion for summary judgment on this ground.
Farfield also argued that the statute of limitations bars all claims before September 18, 2003, because the United States did not file a complaint in this action. Farfield argued that the latest the United States could have filed a complaint was September 21, 2014, three years after it became aware of the allegations and declined to intervene. According to the defendant, if the United States had filed a complaint by September 20, 2014, it would have related back to Local 98’s complaint first filed on September 17, 2009. Because the law requires Local 98 to file a complaint within six years of a violation, the scope of the suit goes back to September 18, 2003 and the statute of limitations bars any claims against Farfield before September 18, 2003.
In response, the union noted the recent Supreme Court decision finding that a relator is not an official of the United States triggering a three-year statute of limitations period. Because it filed its complaint on September 17, 2009, seven years after Farfield’s first violation in September 2002, the union argued it complaint is timely. The court agreed, applying the Supreme Court’s holding in Cochise.
Finally, the court held that fact issues precluded summary judgment on the union’s misclassification theory and its theory that Farfield intended to submit false claims.
