While the defendant had initially submitted a valid claim, the relators argued the defendant’s subsequent actions made that valid claim false. The court rejected this theory. The FCA is only concerned with what a defendant thought when they submitted the claim.
United States ex rel. McSherry v. Sisco, L.P. et al., E.D.N.Y, 18-CV-5981
- The Alleged Fraud – Congress allocated funds to New York City to elevate homes vulnerable to hurricanes. The relators’ home was elevated under the program. The relators filed a qui tam action alleging the contractors that elevated their home billed the program for work they didn’t perform. The relators also sued New York City, alleging the City participated by looking the other way while the contractors overbilled.
- Transformation of Valid Claim Into False Claim – The City moved to dismiss. The court granted the motion, finding no evidence the city submitted a false claim. Indeed, the relators acknowledged the City’s initial application for federal funds was a valid claim. But, the relators maintained, the City’s subsequent inaction in the face of the contractors’ fraud made the initially valid claim false. The court reasoned a defendant’s actions cannot turn a valid claim into a false claim. The FCA is only concerned with what the defendant thought when it filed the claim.
–Case summary by Craig LaChance, Senior Editor
