United States ex rel. Badr v. Triple Canopy, Inc.
857 F.3d 174
| 4th Cir. | 2017Background
- Triple Canopy held a one-year contract to provide security at Al Asad Airbase in Iraq requiring guards to qualify on a U.S. Army marksmanship course.
- Relator Omar Badr alleged Triple Canopy employed Ugandan guards who failed the marksmanship requirement and falsified scorecards rather than disclose noncompliance.
- Triple Canopy submitted monthly invoices for guard services but invoices did not expressly certify compliance with contractual responsibilities.
- The Government intervened under the False Claims Act (31 U.S.C. §§ 3729, 3730), alleging Triple Canopy knowingly submitted false claims by billing for unqualified guards.
- The district court dismissed; the Fourth Circuit reversed in part, endorsing an implied-certification theory where a contractor withholds material noncompliance when seeking payment.
- The Supreme Court’s decision in Universal Health Services v. Escobar (2016) prompted remand to assess falsity and materiality under that decision; on remand the Fourth Circuit again held the Government stated an FCA claim and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of implied-certification theory | Government: contractor’s payment request impliedly certified compliance; withholding material noncompliance makes the claim false | Triple Canopy: implied-certification is invalid or limited; invoices lacked express falsehoods | Court: theory valid in certain circumstances per Universal Health; earlier panel’s formulation stands |
| Falsity — what constitutes a "specific representation" | Government: invoices requesting payment for guards were half-truths that implied compliance with core contract requirements | Triple Canopy: invoices only listed guards/hours and contained no facial falsity like specific billing codes in Universal Health | Court: omissions here are actionable half-truths — invoices would lead reviewer to (wrongly) conclude compliance; falsity adequately pleaded |
| Materiality — required showing under Universal Health | Government: marksmanship is central to security; noncompliance would influence payment decisions; cover-up and contract nonrenewal show materiality | Triple Canopy: must show contract term was an express condition of payment or widespread Government refusal to pay for such noncompliance | Court: applied Universal Health’s demanding materiality test and found allegations (common-sense importance of marksmanship, Triple Canopy’s cover-up, nonrenewal/intervention) sufficient to plead materiality |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (U.S. 2016) (endorses implied-certification theory in certain circumstances and imposes a rigorous materiality requirement)
- Triple Canopy, Inc. v. United States ex rel. Badr, 775 F.3d 628 (4th Cir. 2015) (earlier Fourth Circuit panel decision recognizing implied-certification liability and finding falsity/materiality)
- Vazquez-Valentin v. Santiago-Diaz, 459 F.3d 144 (1st Cir. 2006) (remand/entry-of-judgment jurisprudence cited for explaining effect of Supreme Court vacatur)