US ex rel. Mike Ahumada v. NISH
2014 U.S. App. LEXIS 11751
| 4th Cir. | 2014Background
- Ahumada filed a qui tam FCA action in the Eastern District of Virginia alleging NCED and others defrauded the JWOD program.
- JWOD governs procurement from nonprofits employing severely disabled individuals; NISH oversees qualifications and contract awards under JWOD.
- Publicized allegations in 2004-2005 articles and subsequent FBI investigations prompted scrutiny of NCED’s JWOD compliance and supplier involvement.
- The district court dismissed claims against non-settling defendants, invoking the FCA public-disclosure bar and pleading deficiencies; Ahumada sought leave to amend.
- The Fourth Circuit affirmed, holding public disclosures barred jurisdiction over several defendants, while Weyerhaeuser remained within jurisdiction but failed to plead a viable FCA claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Public-disclosure bar jurisdiction | Ahumada contends bar does not preclude jurisdiction over NISH, Green Bay, IPC, Smurfit. | NISH/ supplier defendants argue public disclosures foreclose jurisdiction for those claims. | Public-disclosure bar deprives jurisdiction over NISH, Green Bay, IPC, Smurfit. |
| Original-source exception sufficiency | Ahumada argues he qualifies as an original source for some claims. | Defendants contend he lacks direct and independent knowledge for most claims. | Ahumada qualifies for Weyerhaeuser; fails for NISH, Green Bay, IPC, Smurfit. |
| Amendment futility | Ahumada contends leave to amend could cure pleading and jurisdictional defects. | Defendants assert proposed amendments would be futile given public-disclosure bar and pleading insufficiency. | District court did not abuse by denying leave to amend; amendments futile for most defendants. |
| Viability of Weyerhaeuser FCA claims | Ahumada asserts Weyerhaeuser aided and conspired to defraud the Government. | Weyerhaeuser argues lack of concrete, pleaded fraudulent conduct and lack of scienter/conspiracy proof. | Second amended complaint fails to plead viable FCA claims or conspiracy against Weyerhaeuser. |
Key Cases Cited
- United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694 (4th Cir. 2014) (requires four elements for FCA claims and defines public-disclosure scope)
- United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337 (4th Cir. 2009) (public-disclosure bar burden on relator and partial-disclosure basis)
- Grayson v. Adv. Mgmt. Tech., Inc., 221 F.3d 580 (4th Cir. 2000) (defines direct and independent knowledge for original-source)
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (Supreme Court 2007) (original-source limits jurisdiction and prohibits claim smuggling)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (clarifies pleading requirements for FCA § 3729(a)(2) and conspiracy elements)