United States Ex Rel. Thomas v. Black & Veatch Special Projects Corp.
820 F.3d 1162
10th Cir.2016Background
- BVSPC contracted with USAID in 2010 to perform the Kandahar Helmand Power Project and submit biweekly invoices; USAID paid upon receipt of proper invoices and later issued notices of final completion for most subcomponents.
- Relators (Kevin and Carolyn Thomas), former BVSPC employees, discovered altered educational documents on a shared BVSPC/USAID computer in June 2011 and reported them to BVSPC and USAID OIG.
- BVSPC conducted internal and forensic (HP) investigations; HP found some altered documents on the USAID-provided computer and BVSPC later inadvertently submitted altered documents in 2012, which BVSPC disclosed to USAID.
- USAID learned of the allegations and the forensic findings, continued to accept BVSPC’s work, paid all invoices (including many submitted after notification), did not demand refunds or take adverse contractual actions, and even awarded BVSPC additional work.
- Relators sued under the False Claims Act, alleging BVSPC used forged documents to obtain visas/work permits and submitted false certifications for payment; the government declined to intervene.
- The district court granted BVSPC summary judgment, finding Relators failed to prove the alleged false certifications were material to USAID’s payment decisions (and alternatively failed to prove damages); the Tenth Circuit affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BVSPC’s alleged submission of altered documents and related certifications violated the FCA (materiality) | Relators: altering employee credentials to obtain visas/work permits and certifying compliance were legally false and could have influenced USAID’s payments | BVSPC: any document alteration was tangential to contract purpose; USAID knew allegations and continued to pay, so not material | Held: Not material — undisputed evidence shows USAID knew and nonetheless paid, so no FCA liability |
| Whether the government’s inaction can be credited absent definitive proof the falsity was true | Relators: materiality cannot be decided at summary judgment because USAID only knew allegations, not confirmed falsity | BVSPC: USAID’s continued payment after learning allegations and forensic results shows lack of materiality | Held: Government’s knowledge + continued payment is persuasive; summary judgment appropriate |
| Whether BVSPC misled USAID about source/extent of alterations such that materiality remains disputed | Relators: BVSPC made misleading statements and concealed documents/identity of responsible person | BVSPC: USAID knew altered docs were made on BVSPC computer and never altered payment decisions despite that knowledge | Held: No genuine dispute that USAID’s decisions were unaffected; misidentification/ concealment claims do not create materiality issue |
| Whether inadvertent 2012 submissions create a triable materiality issue | Relators: context and BVSPC characterizations prevent summary resolution | BVSPC: Relators admitted the 2012 submissions were inadvertent and USAID still took no adverse action | Held: Admission and undisputed facts show USAID continued to accept work and pay; materiality lacking |
Key Cases Cited
- Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238 (10th Cir. 1990) (summary judgment standard on appeal)
- Adler v. Wal-Mart Stores, Inc., 144 F.3d 664 (10th Cir. 1998) (view facts in light most favorable to nonmoving party)
- Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010) (materiality inquiry focuses on whether noncompliance may have influenced government payment decisions)
- Conner v. Salina Reg’l Health Ctr., 543 F.3d 1211 (10th Cir. 2008) (adopted materiality requirement for false-certification FCA claims)
- United States v. Triple Canopy, Inc., 775 F.3d 628 (4th Cir. 2015) (violation central to contract purpose can establish materiality)
- United States v. Sci. Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010) (caution against converting minor contractual breaches into FCA claims)
- Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (claims not legally false when noncompliance is tangential to reimbursement decision)
- United States ex rel. Yannacopoulos v. Gen. Dynamics, 652 F.3d 818 (7th Cir. 2011) (government’s knowledge and inaction can show lack of materiality)
- United States ex rel. Owens v. First Kuwaiti Gen. Trading & Contracting Co., 612 F.3d 724 (4th Cir. 2010) (government’s acceptance and satisfaction after investigation undermines materiality)