753 F. Supp. 2d 569
E.D. Va.2011Background
- Relators Brad and Melan Davis filed a qui tam FCA action in E.D. Va. alleging private security firms defrauded the government on DHS Katrina and State Department WPPS II contracts.
- Defendants include Blackwater entities and Erik Prince (The Prince Group LLC); the SAC re-pleads claims from prior filings and cites six discrete fraud theories.
- Plaintiffs allege falsified time sheets, inflated expenses, and worthless services on the Hurricane Katrina contract; and falsified muster sheets, inflated expenses, and worthless services on the WPPS II contract.
- The court must apply the public disclosure bar under 31 U.S.C. § 3730(e)(4), requiring disclosure plus the relator’s status as an “original source.”
- Jurisdictional discovery was completed; the court granted in part and denied in part the motion to dismiss, leaving three Katrina claims and two WPPS II claims viable.
- The court holds that the WPPS II “worthless services” claim is barred, while Katrina claims and other WPPS II claims survive.
- An order will issue consistent with this partial grant of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Public disclosure bar applicability by claim | Davis claims not barred for Katrina or WPPS II | Public disclosures cover some WPPS II elements | Partially granted: WPPS II worthless services barred; Katrina and some WPPS II claims survive |
| Whether a public disclosure exists for Katrina claims | No Katrina disclosures identified | WPPS II disclosures exist | Katrina claims not barred by public disclosures |
| Whether WPPS II muster sheets claim is based on public disclosures | No disclosure of muster-sheet fraud | 2005 OIG Audit Report publicly discloses muster issues | Not barred for muster sheets; possible later reconsideration on merits |
| Whether WPPS II expenses claim is derived from public disclosures | Relators have independent knowledge | Public disclosures show related-entity billing | Partially barred; derived from disclosures; but relators may rely on original-source analysis for some aspects |
| Whether Worthless Services claim is barred and/or original source applies to Prince | Public disclosures support claim; Prince may be liable | Disclosures not qualifying sources for this claim | Worthless services barred; Prince claims not barred due to lack of qualifying disclosures |
Key Cases Cited
- Siller v. Becton Dickinson & Co., 21 F.3d 1339 (4th Cir. 1994) (origin-source and derived-from distinctions in public disclosure)
- Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645 (D.C. Cir. 1994) (definition of allegations or transactions for public disclosure)
- Rockwell Int'l Corp. v. United States, 549 U.S. 457 (Supreme Court 2007) (claim-by-claim public-disclosure analysis)
- Wilson v. Graham County Soil & Water Conservation Dist., 528 F.3d 292 (4th Cir. 2008) (claim-by-claim jurisdictional application of public disclosure bar)
- Grynberg v. Praxair, Inc., 389 F.3d 1038 (10th Cir. 2004) (context for public-disclosures and fraud theories)
- Poteet v. Bahler Med., Inc., 619 F.3d 104 (1st Cir. 2010) (public disclosure meets elements of fraud disclosure)
- Jadhav v. United States ex rel., 555 F.3d 337 (4th Cir. 2009) (burden-shifting on public disclosures and original source)
- Glaser v. Wound Care Consultants, Inc., 570 F.3d 907 (7th Cir. 2009) (majority view on “based upon” as substantially similar allegations)
- Feingold v. AdminaStar Federal, Inc., 324 F.3d 492 (7th Cir. 2003) (public disclosures and fraud allegations in public domain)
- Siller v. Becton Dickinson & Co., 21 F.3d 1339 (4th Cir. 1994) (earlier framework for public disclosures)