Triple Canopy, a private security service provider based in Reston, Va., has agreed to a $2.5 million settlement with the government. The firm was accused of falsifying marksmanship records for its Ugandan employees in Iraq in 2009. The case, which hinged on the legal theory of “implied certification,” went to the U.S. Supreme Court before it was remanded to lower courts last year.
Triple Canopy did not admit to any wrongdoing.
(In the interest of full disclosure, I was director of communications for Triple Canopy’s parent company Constellis in 2015 when the case progressed from the Fourth Circuit Court of Appeals to the Supreme Court. However, I was laid off after a high-profile merger, so I hold no particular loyalty to the company, nor is this article based on any inside knowledge.)
the false claims act and implied certification
The False Claims Act grew from the Informers Act, passed in 1863 at the height of the Civil War. Congress intended the Informers Act to encourage independent reporting of fraudulent claims for payment by awarding whistleblowers up to 50 percent of the recovered damages. The law was amended several times and became the False Claims Act in 1986.
Under the current law, anyone found guilty of filing a false claim resulting in government payment is subject to a fine of up to $10,000 per violation, and treble damages (repaying three times what the government paid). A private citizen with knowledge of the false claim, called the “relator,” may file a False Claims Act complaint in Federal court — which the government may decide to join — and if the suit is successful, he is entitled to between 15 and 25 percent of the awarded damages, plus attorney’s fees. This creates a powerful incentive for private citizens to pursue claims against employers, as Congress intended.
In 2009, Triple Canopy provided security at the Al Asad Airbase in Iraq under a Department of Defense contract. In 2011, Omar Badr, a former Ranger who worked as a medic for Triple Canopy, filed an FCA complaint in U.S. District Court for Eastern Virginia, alleging many of Triple Canopy’s guards were not properly qualified on their individual weapons, and that its employees falsified weapons scorecards indicating they met qualifications. The U.S. Government intervened on Badr’s behalf in 2012.
Because the government did not allege the contracting officer relied on those scorecards when processing Triple Canopy’s invoices for payment, the district court dismissed the claims in June 2013. It stated that implied certification – the legal theory that says by submitting the invoices, Triple Canopy was implying it was in compliance with every contract provision – was not a “viable theory” for establishing False Claims Act liability; and, in any case, the government had not relied on the allegedly falsified scorecards when paying Triple Canopy’s invoices.
The Fourth Circuit Court of Appeals reversed those decisions in January 2015, ruling the government need only show the defendant knew it was in breach of contract when it filed a request for payment, and that the government need not show it relied on any particular claim when making payment.
the supremes have their say
The Supreme Court vacated the decision and remanded it to the district court after ruling in another FCA case that implied certification could be a basis for an FCA claim if the contractor “makes specific representations about the goods or services provided, but fails to disclose noncompliance with material statutory, regulatory, or contractual requirements that make those representations misleading with respect to those goods or services.”
This particular application of the FCA remains unresolved; however, since Triple Canopy did not have to admit fault, the underlying question of whether its actions constitute an FCA violation remains open.
Life goes on. Badr (and his lawyer) will collect about half a million dollars for successfully blowing the whistle, while Triple Canopy remains one of the government’s highest-paid and most-respected security contractors.
For its part, Triple Canopy made the smart move, saving itself additional legal fees and the potential of more than $13 million in damages if it lost. But the lesson for other contractors considering cutting corners is that once the government joins an FCA case, it won’t stop until it collects something.
