Veridyne Corporation v. United States, 758 F.3d 1371

Veridyne sued the government to recover on its contract; the Claims Court held its contract claim forfeited under the Special Plea in Fraud Act but allowed quantum meruit for pre-stop-work payments.
MARAD awarded Veridyne a cost-plus-award-fee contract extension (Mod 0023) based on Veridyne’s proposal data, which falsely underreported costs to stay under SBA’s $3,000,000 sole-source threshold.
Veridyne’s proposal contained false cost data; MARAD and SBA officials were aware of the threshold workaround and that the data did not reflect MARAD’s actual needs, but SBA was not aware of the fraud.
After a stop work order in December 2004, Veridyne submitted invoices 260–267; some were not paid and later asserted as CDA claims; the government argued fraud and sought penalties under FCA and CDA.
The Claims Court found Veridyne’s invoices 265–267 were unsupported and awarded FCA penalties and CDA damages, while also allowing quantum meruit recovery before the stop order.
On appeal, the Federal Circuit held that quantum meruit cannot be recovered where the contract claim is forfeited for fraud, and affirmed FCA and CDA penalties while reversing quantum meruit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Can quantum meruit exist after forfeiture for fraud	Veridyne argues quantum meruit recovery is permissible despite forfeiture.	Government argues forfeiture bars quantum meruit under Mervin and related authority.	No; quantum meruit is unavailable when the contract claim is forfeited for fraud.
Validity of FCA penalties based on Mod 0023 invoices	Veridyne contends no false claims existed due to intent and SBA knowledge gaps.	Government asserts 127 false claims tainted by fraud in obtaining the contract and subsequent invoices.	The FCA penalties for 127 false claims are affirmed.
Validity of CDA penalties for invoices 265–267	Veridyne claims no misrepresentation occurred in 265–267 due to lack of opportunity to confirm funding.	Invoices 265–267 misrepresented fund allocation and rebilled expenses; thus penalties are warranted.	CDA penalties for 265–267 are affirmed.
Can a single false act support both FCA and CDA liability	Not needed; claim may be source of liability under both statutes.	United States position that a single misrepresentation can trigger both FCA and CDA liabilities.	Yes; a single misrepresentation can support liabilities under both FCA and CDA.

Daewoo Engineering & Construction Co. v. United States, 557 F.3d 1332 (Fed. Cir. 2009) (preponderance standard; fraud taints subsequent claims; review de novo for legal questions)
United States v. Marcus, 317 U.S. 537 (Sup. Ct. 1943) (fraud in obtaining contract taints subsequent claims; each payment ruled as a separate claim)
United States ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 908 (4th Cir. 2003) (initial false certification taints subsequent invoices; FCA applicability)
United States ex rel. Alexander v. DynCorp, Inc., 924 F. Supp. 292 (D.D.C. 1996) (fraudulent contracts taint claims for payment under FCA)
Mervin Contracting Corp. v. United States, 94 Ct. Cl. 81 (Ct. Cl. 1941) (fraud forfeiture bars quantum meruit recovery)
Little v. United States, 152 F. Supp. 84 (Ct. Cl. 1957) (fraud in contract precludes splitting recovery between contract and quantum meruit)
Amdahl Corp. v. United States, 786 F.2d 387 (Fed. Cir. 1986) (quantum meruit recoveries in cases of invalid contract; distinguishes fraud contexts)
Commercial Contractors, Inc. v. United States, 154 F.3d 1357 (Fed. Cir. 1998) (procurement fraud and FCA theory; relevance to falsity and fraud elements)
UMC Electronics Co. v. United States, 249 F.3d 1337 (Fed. Cir. 2001) (FCA and CDA interplay; single false act can trigger both)