550 F.2d 17 | Ct. Cl. | 1977
delivered the opinion of the court:
This suit is based on a contract between plaintiff-Miller Brothers (Miller)
After thorough examination of the testimony at trial, the documents submitted by the parties, and all briefs filed by counsel, we hold that Miller is entitled to recover in part. The amount is reduced, however, by the Government’s False Claims Act counterclaim, which we find meritorious, again in part. As to the remaining two counterclaims, the Government appears to have abandoned its claim for overpayment, so we do not consider it. The fraud claim, we deny.
Facts
The facts of this case are complicated and require thorough elaboration. We begin with the incredible devastation wrought on Plaquemines Parish, where Hurricane Camille struck this southeastern part of Louisiana on August 17, 1969. Virtually surrounded by water (three sides by the Gulf of Mexico and split lengthwise by the Mississippi River), the Parish was inundated. Wind, water and tornado combined to destroy virtually 100% of all homes. The communities of Venice, Boothville, Triumph and Pilottown were completely ruined. Buras and Empire were 80% and 60% lost.
As a result, the Parish was declared a major disaster area by the Federal Government on August 19, 1969.
From its inception until December 1969, when the last victims of the disaster were assigned trailers, the Emergency Relief Housing Program was administered by regular
In December 1969, HUD issued an advertised competitive solicitation (VC-1-70) for repair and preventive maintenance on the approximately 1,800 mobile homes in the Hurricane Camille Disaster Area for the period December 23, 1969 or date of award (whichever was later) through August 18, 1970. The Miller brothers, as a partnership, were awarded the contract effective January 30, 1970.
The agreement contained provisions making the Service Contract Act, 41 U.S.C. §351 (1970), applicable. That Act requires the contractor to meet minimum wage standards and to maintain specified employment records. In addition, special provisions of the , contract required Miller to use only new parts and materials or rebuilt parts with prior Government approval. Further, the contractor agreed to perform all work with competent mechanics, experienced and qualified to work on the specified equipment.
The contract provided that Miller would make periodic inspections of the mobile homes to check, clean and adjust all equipment including plumbing, heating, electrical systems and furniture furnished with the mobile homes. During such inspection, the contractor would also check the level of the trailer, re-level as required, and make any other needed repairs or replacements subject to a $50.00 cost limitation.
The contract also called for Miller to make service calls on the mobile homes at the direction of the Housing Manager. Service calls were to include, but were not limited to, repair or replacement of mechanical equipment, plumbing, electrical equipment, wiring and household fixtures, and appliances covered under the HUD mobile home lease. Also included in service calls were repairs to carpentry, sheet metal, painting, floor covering and roofing items. Each call was to be made within ten hours after
The Housing Manager, Ballay, and his assistant, Turlich, were authorized by the contract to administer its provisions on behalf of the Contracting Officer, Leonard E. Church, HUD Deputy Regional Administrator in Fort Worth, Texas. The authorization did not, however, allow Ballay, the Housing Manager, to modify any contract terms or specifications.
Performance under the contract began on January 31, 1970. Miller assigned workmen to make the periodic inspections. Not one of these workmen was qualified to make repairs. At the outset, this situation was not a problem, even though the contract specified that certain repairs were to be made in conjunction with periodic inspections. Mr. Ballay, it appears, initially instructed Miller not to make repairs during inspection visits. It should be noted that Mr. Ballay was without authority to alter the contract in this regard. In March or April of 1970, Mr. Ballay changed his instructions to conform to the contract.
Service calls were made by David Miller or one of his workmen upon receipt of a complaint form from the HUD Housing Office in Buras. HUD trailer tenants phoned in complaints to that office, where a complaint form was prepared. Miller picked up the forms daily from the Housing Office and distributed them to his workmen for action. The workmen supposedly made the requested repairs and listed the work done, materials used, and time expended.
The complaint forms were then returned to Miller’s trailer office where Sally Miller, David Miller’s wife, prepared an invoice for HUD. Mrs. Miller supplied the cost of materials on the HUD invoice by looking up the cost of the material in a purchase book in which all purchases were supposedly recorded.
Miller made continuing purchases of contract materials at varying prices, but maintained no inventory program. Thus Mrs. Miller had no way of knowing, when she
For service calls costing in excess of $50.00 in labor and materials, the contract required Miller to secure the Housing Manager’s, or his assistant’s, approval before making the repairs. Approval was obtained by Miller telephoning the HUD Housing Office and receiving an "oral OK.” Later Ballay and Turlich would review Miller’s invoices, rejecting those over $50.00 for which neither HUD agent could remember granting approval. Over the course of the contract, 36 invoices were summarily rejected.
For the period of contract performance, January 31, 1970 through the June 10, 1970 termination date, Miller submitted five consolidated billings — one for each month of performance. In preparing each of the final billings, Miller submitted all invoices for the month to the HUD Housing Office in Buras. Mr. Ballay again looked over the invoices, and after discussion with David Miller, rejected still more invoices about which he had doubt. The remainder were totaled and submitted to HUD for payment.
The amounts submitted by Miller, approved by Ballay, and paid (or remaining unpaid) by the United States are as follows:
Submitted by Approved by Paid by U.S. Miller Ballay
Jan. 31-Feb. 26, 1970 $9,156.82 $8,163.89 $8,163.89
Feb. 27-Mar. 31, 1970 20,193.36 13,555.16
Apr. 1-Apr. 29, 1970 8,101.36 8,041.18
Apr. 30-May 31, 1970 16,974.12 7,490.20
June 1-June 10, 1970 2.019.69 1.782.31
$56,445.35 $39,032.74
-8.163.89 -8.163.89 $8,163.89
Unpaid $48,281.46 $30,868.85
Mr. Church ordered a study of the situation in Plaquemines Parish. Bruce Gipson, a HUD maintenance engineer (and a registered professional engineer in the State of Texas) was assigned to make the study. Mr. Gipson found that Miller did not keep payroll records or tallies of Social Security and Federal income tax withholdings as required by the Service Contract Act. In addition, while spot-checking invoices, Gipson discovered a number of instances where Miller had billed the Government not only for materials not furnished and work not done, but also billed for both a periodic inspection and a service call when only a periodic inspection billing was justified.
Mr. Gipson reported the results of his inquiry to the CO and recommended that Miller be investigated for possible fraudulent billings and that the contract be terminated. Based upon Gipson’s report, the CO, by letter of May 28, 1970, notified Miller that the contract was terminated as of June 10, 1970. Miller does not dispute the termination.
Following termination of the contract, Miller was made the subject of a special HUD audit. Due to the chaotic (and sometimes non-existent) nature of Miller’s records, this thorough audit took more than twice as long as the average HUD audit of this type — a total of 50 man-days. Upon conclusion of the audit, the HUD auditors determined (disallowing certain charges) that Miller had unpaid billings of $46,111.64. From this amount must be subtracted $8,163.89, already paid by defendant, leaving a final figure of $37,947.75 in unpaid billings.
Since the Government still withheld payment, Miller sued on February 26, 1971, for breach of contract in this court. Plaintiff alleged that he is due the difference
Defendant counters, arguing that, due to fraudulent billing, Miller’s claim is totally forfeit under 28 U.S.C. §2514 (1970). In addition, the Government seeks penalties from Miller for 16 alleged violations of the False Claims Act, supra, note 4.
We hold that Miller is entitled to recover in part,— $46,111.64 (the auditors’ figure), less the contract payment of $8,163.89, minus $10,000.00 for five violations of the False Claims Act, or $27,947.75. We deny the Government’s remaining counterclaim that Miller’s suit be totally forfeit because of fraudulent billings.
Entitlement Under the Contract
Miller’s right to recover is based on a breach of contract theory. The Government entered into an agreement with Miller. Miller was to provide services; the Government was to pay. The contract provides that, in the event of termination, the Government is liable for services rendered to it "prior to the effective date of termination. ” Cf. Acme Process Equipment Co. v. United States, 171 Ct.Cl. 324,359,347 F.2d 509, 530 (1965), rev’d on other grounds, 385 U.S. 138 (1966). Therefore, absent compelling reason to the contrary, Miller should be entitled to recover at least to that extent.
°Fraud Counterclaim
However, the Government contends that Miller’s own actions furnish compelling reasons for denying his claim; that his conduct was fraudulent and his claim should be forfeited. Yet fraud, resulting in forfeiture, can be found only on the basis of clear and convincing evidence. Chelsea Factors, Inc. v. United States, 149 Ct.Cl. 202, 212, 181 F.Supp. 685, 691 (1960). An intent to deceive the Government must be proved. Bar-Ray Products, Inc. v. United States, 167 Ct.Cl. 839, 851 n. 14, 340 F.2d 343, 351 n. 14, (1964).
It is a close question, and the line is hard to draw, but we come down on the side of ineptitude as against a blatant intent to deceive. The Government’s counterclaim in fraud is thereby denied and plaintiffs claim is not forfeited per se.
False Claims Act Counterclaim
The Government contends that Miller owes the statutory penalty of $2,000.00 for each of eleven invoices used in calculating monthly consolidated billings and $2,000.00 for each of the five consolidated billings submitted by Miller for a total penalty of $32,000.00 (16 X $2,000.00). The
The False Claims Act imposes a penalty on a person who:
. . . presents . . . for payment . . . any claim upon or against the Government . . . knowing such claim to be false .... (supra, note 4). (emphasis supplied)
The Eighth Circuit has held that "negligent representation” of a claim falls within the "knowledge” requirement of the Act. United States v. Cooperative Grain & Supply Co., 476 F.2d 47, 60 (8th Cir. 1973); Annot. 26 A.L.R. Fed. 307 (1976).
To use just one of many possible examples, Miller testified that he knew the quantities of materials billed by his workmen were only estimates of what had actually been used. But he did not bother to check his inventory; in fact, he failed to maintain any inventory control. As the auditors determined, the result of this extreme negligence was that the Government was substantially overbilled due to misrepresentation of the amount of materials actually used. Such conduct by Miller is within the scope of that proscribed in Cooperative Grain, supra.
In addition, Miller cannot escape liability by alleging that he relied on the local HUD official’s assistance in preparation of the consolidated billings. Regardless of who actually summarized the individual tally of invoices for submission to the Government for payment, Miller, as the applicant, had the responsibility to make correct representations. Cooperative Grain, supra, 476 F.2d at 60. If this alone were not enough, Miller also signed each consolidated billing, evidencing his agreement to the figures it contained.
Upon a thorough examination of Miller’s operations under the contract, as illustrated by the record, we hold that the Government is entitled to recover under its False Claims Act counterclaim. We must now decide the extent of that recovery.
The Act imposes a penalty for each false claim submitted to the Government for payment. See supra note 4. In the instant case, plaintiff submitted only five such claims — the five consolidated billings. The invoices for which the Government also seeks the statutory penalty were used in determining the total of each claim. In this regard, the invoices are like tally sheets used in calculating a final figure to present to the Government; they are not the claim itself.
In finding five, not sixteen, false claims, we agree with the Ninth Circuit decision in United States v. Woodbury, 359 F.2d 370 (1966). In Woodbury, the court held that separate penalties are not imposed based upon the number of false papers contained in a particular claim made upon the Government. 359 F.2d at 378. The court reasoned that each amount requested from the Government is a claim, so regardless of the number of false invoices that were used in arriving at each demand, only one penalty per demand is imposed. Id.
This position is supported by the recent Supreme Court case, United States v. Bornstein, 423 U.S. 303 (1976)
In fact, the defendant’s argument before this court seems more in line with Justice Rehnquist’s dissent in Bornstein than with the majority opinion. It is the position of the dissent (and the Government in the instant case) that, based upon the facts of a particular case, each false item used in reaching a final figure which is then submitted for payment could be a violation of the Act. We reject this reasoning.
As the court holds only five false claims were submitted, we need not examine the alleged falsity of each of the eleven invoices upon which part of the Government’s counterclaim is based. Rather we need only find that some part of each consolidated billing was false. This we find upon an examination of the auditors’ report.
The audit showed that Miller billed the Government at prices exceeding costs for each of four chief materials used in performing the contract. The materials overbilled were stove control valves (billed at $18.12 instead of cost, $13.96, a total overcharge of $212.16), roof coating (billed at $5.23 per gallon instead of $4.95 per gallon, an overcharge of $99.68), sewer pipe (billed at $1.09 per linear foot instead of $.39, a total overcharge of $1,573.60), and window glass (a total overcharge of $502.91). These excessive charges continued over the life of the contract and were reflected in each consolidated billing. For these overcharges and other false billings, Miller must pay $2,000.00 for each of the five times he sought Government payment — a total of $10,000.00.
We hold that plaintiff has clearly violated the False Claims Act and is subject to its penalties.
Quantum
Up to this point, we have decided that Miller is entitled to recover under the contract, that his claim is not forfeit for fraud, and that he is liable for a $10,000.00 penalty under the False Claims Act. One issue remains, that of the amount due Miller under the contract for services rendered prior to termination. It is only upon calculation of this
Although the Trial Judge appeared, in her opinion, to reserve the determination of quantum for . later proceedings, we will consider the matter at this time. There was no stipulation by the parties to hold determination of amount until a later time. Ct.Cl. Rule 131. Further, an examination of the record reveals sufficient evidence upon which to compute the amount due plaintiff.
The evidence submitted at trial affords three possible ways of calculating the amount due Miller. The first is by using the consolidated billings submitted by Miller to the HUD authorities in Buras, Louisiana. (A total of $56,445.35 minus $8,163.89 already paid, or $48,281.46.)
The second possible manner of arriving at an amount due Miller is by taking the total of the consolidated billings prepared by Miller in conjunction with the local HUD authorities. The sum of the five consolidated billings, $39,032.74, reflects the examination and reduction by Ballay, the HUD Housing Manager, of Miller’s original submission discussed above. Subtracting from this amount the $8,163.89 already paid to Miller by HUD leaves $30,868.85 owing.
As with the figures originally submitted by Miller, this total is also unacceptable. While the local HUD officials made a good faith effort to scrutinize the invoices submitted by Miller, neither official is a trained accountant. Their methods are not available for review. From what information is available, it is obvious that the rejection of some invoices was done on an ad hoc basis from memory alone. We cannot base our determination on such procedures and also reject this method.
This final total audit figure of $46,111.64 reflects analysis and examination by the auditors. It is lower than plaintiffs demand, yet higher than HUD’s earlier ad hoc figure. Subtracting from this amount the $8,163.89 already paid to Miller leaves $37,947.75 owing. We hold that this is the final figure of unpaid billings.
However, because we have already decided that Miller must pay a $2,000.00 penalty for each of five false consolidated billings submitted to the Government, the $37,947.75 must be further reduced by $10,000.00 in order to arrive at the final sum owed Miller — $27,947.75.
In summary, upon examination of the briefs and after an exhaustive review of the evidence submitted in this case, we have determined that the Government did improperly withhold money under a contract with plaintiff for the servicing of mobile homes in Plaquemines Parish, Louisiana. We hold that Miller is entitled to recover $37,947.75 under the contract and that his claim is not forfeit due to fraud. The court also holds that defendant is entitled to recover $10,000.00 on its False Claims Act counterclaim. Plaintiffs ultimate recovery, therefore, is $27,947.75.
FINDINGS OF FACT
1. This is an action under 28 U.S.C. §1491 (1970) on unpaid claims for services rendered and material supplied under a contract between plaintiffs, doing business as
2. Because payment was demanded by plaintiffs and refused by defendant, this action for breach of contract was filed February 26, 1971. Defendant counterclaimed for $32,000 under the False Claims Act, 31 U.S.C. §§231-35 (1970) and for return of an alleged overpayment plus interest on a payment made to plaintiffs; defendant also entered a special plea in fraud under 28 U.S.C. §2514 (1970) for forfeiture of plaintiffs’ entire claim.
3. Hurricane Camille struck the Louisiana coast on August 17, 1969. This natural disaster devastated portions of Louisiana including and especially Plaquemines Parish (hereafter the Parish), a jurisdictional subdivision of the State of Louisiana, located in the southeast corner of the state below New Orleans, Louisiana. The Parish is comprised mainly of a low-lying peninsula extending out into the Gulf of Mexico and is completely surrounded by water. Due to the low-lying topography and its proximity to the Gulf of Mexico, the Parish is subject to the tremendous destructive forces of hurricanes. Testimony indicated that the Parish was like being in a plugged bathtub with water surrounding it. When Camille hit, water poured in with nowhere to drain.
4. The effect of Hurricane Camille on the Parish was that of complete devastation with virtually 100 percent of the Parish’s residences, as well as its commercial or public buildings uninhabitable. After the storm, the Parish had over 15,000 homeless evacuees, temporarily housed in schools and public buildings which had escaped the storm’s destruction. The Parish roads were blocked with debris, severely hampering restoration of services and reconstruction operations. It took several weeks merely to restore utility services.
5. The Parish was declared a major federal disaster area on August 19, 1970 under Presidential authority. 34 Fed.
6. From its inception until December 1969, when the last of the disaster victims were assigned trailers, the Emergency Relief Housing Program was administered by regular HUD employees from Houston and Fort Worth, Texas. By dint of the requirements of the Parish, when the regular HUD employees withdrew from the Parish, the program was administered by Parish employees hired by HUD on a temporary basis. Kermit Ballay and Peter Turlich, both longtime Parish employees, were designated as Housing Manager and Assistant Housing Manager, respectively, and charged with the task of administering the contract at the local level for HUD.
7.“ Following the hurricane, plaintiff David H. Miller (hereafter plaintiff) had been hired by a private contractor along with his own truck to set up trailers acquired by HUD for its disaster relief housing program in the Parish. During this time, plaintiff became acquainted with the officials supervising the program, the geography of the Parish, and the mechanical operation of these trailers. Plaintiff "also became well acquainted with Mr. Turlich, who often accompanied him to direct him to the locations in the Parish where trailers were to be placed.
9. The contract between the parties identified Mr. Ballay as the Housing Manager, while Mr. Leonard E. Church, Deputy Regional Administrator, HUD Region V, Fort Worth, Texas, was identified as Contracting Officer. (DX 2). Mr. Peter Turlich, a Plaquemines Parish resident, was hired as Mr. Ballay’s assistant.
10. The contract (DX 2) contained the following pertinent provisions:
SERVICE CONTRACT ACT OF 1965
* * * * *
THE FOLLOWING PROVISIONS APPLY TO ANY CONTRACT AWARDED UNDER THIS SOLICITATION WHICH IS IN EXCESS OF $2500:
(a) Service Contract Act of 1965: This contract, to the extent that it is one of the character, to which the Service Act of 1965 (79 Stat. 1034, 41 U.S.C. 351) applies, is subject to the following provisions and to all other applicable provisions of the Act and the regulations of the Secretary of Labor thereunder (29 CFR Part 4).
(b) Each service employee employed in the performance of this contract by the contractor or any subcontractor shall be paid not less than the minimum monetary wage and shall be furnished benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or his authorized representative, as specified in any attachment to this contract. * * * Failure to pay such employees the compensation agreed upon by the interested parties or finally determined by the Administrator [of the Wage and Hour and Public Contracts Division of the Department of Labor] or his authorized representative shall be a violation of this contract. No employee engaged in performing work under this contract shall in any event be paid less than*78 the minimum wage specified under section 6 (a)(1) of the Fair Labor Standards Act of 1938, as amended ($1.60 per hour).
(d) In the absence of a minimum wage attachment for this contract, neither the contractor nor any subcontractor under this contract shall pay any of his employees performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor Standards Act of 1938 ($1.60 per hour). However, in cases where section 6(e)(2) of the Fair Labor Standards Act of 1938 is applicable, the rates specified therein will apply. Nothing in this provision shall relieve the contractor or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee.
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(g) The contractor and each subcontractor performing work subject to the Act shall make and maintain for 3 years from the completion of the work records containing the information specified below for each employee subject to the Act and shall make them available for inspection and transcription by authorized representatives of the Administrator of the Wage and Hour and Public Contracts Divisions of the U.S. Department of Labor.
(1) His name and address.
(2) His work classification or classifications, rate or rates or monetary wages and fringe benefits provided, rate or rates of fringe benefit payments, in lieu thereof, and total daily and weekly compensation.
(3) His daily and weekly hours so worked.
(4) Any deductions, rebates, or refunds from his total daily or weekly compensation.
(5) A list of monetary wages and fringe benefits for those classes of service employees not included in the minimum wage attachment to this contract, but for which such wage rates or fringe benefits have been determined by the interested parties or by the administrator or his authorized representative pursuant to the labor standards clause in paragraph (b) of this section. A copy of the report required by the clause in paragraph (k) of this section shall be deemed to be such a list.
(h) The contracting officer shall withhold or cause to be withheld from the Government Prime Contractor*79 under this or any other Government contract with the prime contractor such sums as he, or an appropriate officer of the Labor Department decides may be necessary to pay underpaid employees. Additionally, any failure to comply with the requirements of these clauses relating to the Service Contract Act of 1964 may be grounds for termination of the right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor default with any additional cost.
(i) The contractor agrees to insert these clauses relating to the Service Contract Act of 1965 in all subcontracts. The term "contractor” as used in these clauses in any subcontract, shall be deemed to refer to the subcontractor, except in the term "Government Prime Contractor.”
(j) As usexd (sic) in these clauses relating to the Service Contract Act of 1965, the term "service employee” means guards, watchmen, and any person engaged in a recognized trade or craft, or other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual labor occupations; ....
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INCORPORATION OF FORMS
The following forms are hereby incorporated by reference and made a part of this Invitation for Bids, receipt of which is hereby acknowledged by the bidder. Copies of these forms, if not enclosed, are available upon request from the issuing office shown on page 1 of this Invitation for Bids or from any General Services Administration Business Service Center.
GSA Form 1714; Equal Opportunity Clause, February 1969 edition. (This replaces Clause 18 of Standard Form 32).
SPECIAL PROVISIONS
* * * * *
2. SERVICES AND MATERIALS TO BE SUPPLIED:
a. Materials and Supplies:
*80 (2) All material or parts supplied by the contractor and used in the repair of equipment shall be new and conform to the original equipment manufacturer’s specifications unless otherwise approved by the Government. Rebuilt assemblies may be used in the repair of equipment with prior approval of the Government, when such is standard industry practice, and the rebuilt assembly carries the same warranty as new assembly.
b. Competent Mechanics and Modern Equipment to be Employed: The Contractor agrees that all work will be performed by competent mechanics, experienced and qualified to work on the specified equipment, and that all work will be performed in accordance with the best commercial practices and without unnecessary delays. Contractor must have available suitable modern equipment and tools necessary for the satisfactory repair, preventive maintenance, cleaning, lubrication, and transportation of subject equipment.
c. The contractor shall perform periodic inspection at intervals of 90 days, of each occupied mobile home, as directed by the Housing Manager. During this inspection all equipment, including plumbing, heating, electrical system and furniture, furnished under the Mobile Home Lease, shall be inspected, cleaned, and adjusted, including cleaning or replacement of heating unit filters, and replacement of faucet bibs and commode ball cock washers. Trailers shall be checked for level and releveled as required. Any other needed repairs or replacements shall be made during the inspections; subject to the cost limitation of $50.00.
d. Service calls shall be performed as directed by the Housing Manager, Housing and Urban Development, Hurricane Camille Disaster Relief Area Office, Plaquemines Parish, Buras, Louisiana. Service calls shall include, but are not limited to, repair and/or replacement of mechanical equipment, plumbing, electrical equipment, wiring, and household fixtures and appliances covered under the Mobile Homes Lease. Also included is carpentry, sheet metal, painting, floor covering and roofing repair items. Each service call will be made within 10 hours after notification is given.
Repairs and parts replacements costing in excess of $50.00 including labor and materials must have prior approval of the Housing Manager.
e. Billing for Services Rendered: An invoice shall be prepared for each periodic inspection made and for each service call, showing hours and costs of labor, itemization and cost of parts and cost of other supplies incidental to*81 repairs. Each invoice shall show location by unit number and name of occupant, if occupied. Originals of invoices shall be submitted together with a consolidated billing to the ordering office on the last day of each month. The consolidated billing shall be in original only with each invoice listed as a separate line by number, date and amount. Contractors will be required to present with their invoice adequate proof of the actual cost of parts, paint and other materials used in the performance of this contract. A copy of the suppliers’ invoice which lists all discounts allowed the contractor, will normally be required.
6. CONTRACT ADMINISTRATION: Housing Manager, Housing and Urban Development, Hurricane Camille Disaster Area Relief Office, Plaquemines Parish, Buras, Louisiana, shall act for and on behalf of the Contracting Officer in the administration of this contract with respect to: (1) expediting; (2) resolution of issues that may arise between contractors and ordering agencies in connection with such matters as priority orders, timely deliveries, acceptability of workmanship, and other technical requirements; and (3) evaluation on an overall basis of the acceptability of workmanship and contractor compliance with technical requirements of the contract. This delegation does not authorize the modification of any of the contract terms or specifications. All authorities not herein delegated are reserved to the Contracting Officer.
* # * * *
8. TERMINATION: The Contracting Officer, may terminate this contract in whole or in part by giving the contractor five (5) days written notice when it is in the best interest of the Government. In the event the contract is terminated, the Government shall be liable only for payment in accordance with the payment provisions of this contract for services rendered prior to the effective date of termination.
* * * # *
BID SCHEDULE
ITEM NO. UNIT BID PRICE
1. LABOR:
a. Periodic Inspection
(Includes Labor,
Travel Time,
Mileage Parts and
*82 Materials as defined in 2(c)) Each $3.65
b. Service Call (as defined in 2(d) (1 hour minimum including labor, travel time and mileage) Each $10.65
c. Service Call in excess of 1 hour Man Hour $5.90
2. PARTS AND MATERIALS
All Parts and Materials supplied by the Contractor, other than materials furnished as a part of the periodic inspection, shall be billed at Contractor’s actual cost, plus 15%.
11. Mr. Ballay, as Housing Manager, properly advised plaintiffs of their obligations to carry Workmen’s Compensation Insurance, to comply with the Equal Opportunity Clause of the contract, and to have their electrician licensed by Plaquemines Parish. Plaintiffs, however, viewed these admonitions as harassment on the part of Mr. Ballay. Plaintiffs’ views are without foundation in fact, as are their other allegations of harassment by Mr. Ballay.
12. Kenneth Miller made only one trip to the Parish from his home in Johnson City, Tennessee, for the purpose of joining plaintiff, his brother, David Miller, who was already in the Parish to sign plaintiffs contract. He arrived in the Parish on Wednesday, January 28, 1970. However, actual execution of the contract was delayed by defendant’s Housing Manager until late on January 30, 1970. Kenneth Miller took no active part in the performance of plaintiffs contract and returned to Tennessee after signing the contract.
13. Periodic inspections were largely performed by Mr. Jack Thompson and, after he left plaintiffs’ employ, by Mr. Larry Foulk. After inspecting a mobile home, they filled out a periodic inspection report listing anything which needed to be repaired. The inspection reports were then turned over to Mr. Ballay in the local HUD office at the end of the day. In the morning, they would be delivered to
14. Apparently, plaintiffs were at first directed by Mr. Ballay not to perform repairs in conjunction with a private inspection. Later, however, sometime in March or April 1970, plaintiffs were instructed by Mr. Ballay to perform needed repairs in the course of making a periodic inspection. At no time did the Contracting Officer authorize Mr. Ballay to modify the contracting provisions regarding the billing of periodic inspections and service calls.
15. When occupants of mobile homes leased by HUD had problems with those mobile homes, they phoned in their complaints to the local HUD office which recorded the information on complaint forms. The complaint forms would then be turned over to Mr. David Miller who assigned them to the appropriate workman or workmen who handled the particular problem(s) noted on the complaint form. After making the necessary repairs, the workmen would record, on the complaint form in half hours, the amount of time they had worked making the repair as well as the materials used in making the repair. A number of the materials used, e.g., roof coating, glass, and sewer pipe, were such that the quantities used on a particular repair job could be estimated only. Plaintiff David Miller had previous experience with one of those materials, roof coating, and was aware that the quantities recorded by his workmen were estimates only. Mr. David Miller checked a considerable amount of the work of his employees and performed some of the work himself, notably some of the plumbing and all of the stove or furnace problems after mid-March 1970.
16. After the workmen had examined what had to be repaired, if it appeared that the repairs on a single mobile home would cost in excess of $50.00 in materials and labor, plaintiffs’ workmen were supposed to request and receive the approval of the Housing Manager, Mr. Ballay, or his duly authorized delegate, Mr. Turlich, before proceeding with the repairs. That could be accomplished by phoning
17. Plaintiffs’ books and records were kept by Mrs. Sally Miller, the wife of plaintiff David Miller. When plaintiffs’ workmen turned in the complaint form or work order on a completed repair job, Mrs. Miller would make out the service invoice or billing using, in part, the information recorded by the workmen on the complaint form or work order. In filling out the service invoice, Mrs. Miller priced the materials used according to the prices on billings received from the manufacturers from whom plaintiffs purchased their supplies. For each material, she would use the price of one supplier until plaintiffs changed to another supplier.
18. The cost of materials used on the contract fluctuated quite a bit during the contract period. Plaintiffs also used different brands and different suppliers with different prices for the same material.
19. When invoicing the Government for material used, Mrs. Miller had no way of knowing which brand of a material a workman had taken with him and used on a repair job. Nor, since plaintiffs maintained no inventory control, did she have any idea of inventory on hand — i.e., of how much of each particular material plaintiffs had on hand. As a consequence, she did not know when the supply of a material purchased at one price had been exhausted so that the workmen would be using the supply of the same material which was purchased at a different price.
20. Plaintiffs billed the Government for a total of 74 stove control valves. In fact, however, plaintiffs purchased 87 stove control valves and had a closing inventory of 36 valves, leaving a net of 51 stove control valves which could have been furnished under the contract. Therefore, plaintiffs overbilled the Government for 23 valves. Plaintiffs billed the Government an average of $18.12 for stove control valves. The total amount of overbilling involved for stove control valves per se, therefore, was $416.76. In addition, however, plaintiffs charged an overhead and profit rate of 15% of cost, for a total of $62.51, plus 1 hour labor per stove control valve at a rate of $5.90 per hour, for
21. With respect to the 51 stove control valves which plaintiffs presumably replaced, 12 were returned to Brown Stove Works, Cleveland, Tennessee, the manufacturer, which gave plaintiff a credit memorandum dated April 25, 1970 in the amount of $145.20 to be applied against future purchases. No such credit was passed on to HUD, ás required by the contract.
22. Plaintiffs billed the Government for a total of 547 gallons of roof coating. In fact, however, plaintiffs purchased 381 gallons of roof coating and had a closing inventory of 25 gallons, leaving a net of 356 gallons which could have been furnished under the contract. Plaintiffs, therefore, overbilled the Government for 191 gallons of roof coating. Plaintiffs billed the Government an average of $5.23 for a gallon of roof coating or a total of $998.93 for the 191 gallons billed, but not purchased. In addition, however, plaintiffs charged an overhead and profit rate of 15% of cost, for a total of $149.84, plus 210 hours of labor, at $5.90 per hour, for a total of $1,239.00. Therefore, the aggregate overbilling for the 191 gallons of roof coating amounted to $2,387.77.
23. With respect to each of the 4 main materials used in performing the contract, plaintiffs billed the Government at prices which exceeded their costs:
A. Stove Control Valves: Plaintiffs billed the Government an average of $18.12 for stove control valves whereas their average cost in purchasing stove control valves was only $13.96 — a difference of $4.16 per valve for a total overbilling of $212.16 for the 51 valves furnished by plaintiffs.
B. Roof Coating: Plaintiffs billed the Government an average of $5.23 a gallon for roof coating whereas their average cost for purchasing roof coating was only $4.95 per gallon — a difference of $0.28 per gallon for a total overbilling of $99.68 for the 356 gallons furnished by plaintiff.
C. Sewer Pipe: Plaintiffs billed the Government an average of $1.09 a linear foot for the 2,248 feet of sewer pipe which they claimed to have furnished, whereas, in*86 fact, their average cost per linear foot on the 2,920 feet of sewer pipe purchased was only $0.39 — a difference of $0.70 per linear foot for a total overbilling of $1,573.60 for the 2,248 linear feet billed.
D. Window Glass: Plaintiffs billed the Government a total of $1,656.65 for window glass whereas they purchased a total of $1,153.74 worth of glass — for a total overbilling of $502.91.
24. The invoices for service calls, when completed by Mrs. Miller, were turned in to Mr. Ballay at the local HUD office.
25. Much the same procedure was used with respect to the invoices for periodic inspections — Mrs. Miller prepared the invoices based on the inspection reports turned in by the inspectors and the invoices, when completed by Mrs. Miller, were turned in to Mr. Ballay at the local HUD office.
26. When plaintiffs’ service invoices were submitted to the local HUD office, the Housing Manager and his assistant, Messrs. Ballay and Turlich, respectively, went over the invoices and initialed those invoices in excess of $50.00 for which either of them could remember having granted prior telephone approval. No written records were kept; initialling took place up to a month after oral approvals were given. Over the course of the entire contract period, they discovered a total of 36 service invoices in excess of $50.00 for which plaintiffs had not requested and obtained prior approval before making the repairs.
27. The Housing Manager and his assistant also found a number of invoices in which plaintiffs had performed and billed the Government for repair work in addition to or other than what the complaint form directed them to repair.
28. The Assistant Housing Manager, Mr. Turlich, determined that on a number of invoices, plaintiffs billed the Government too many hours for the amount of work done. Mr. Turlich’s basis for that determination was the amount of time such repairs had taken other contractors who had maintained and serviced the HUD-leased mobile homes in
29. Mr. Turlich’s main area of responsibility was to work in the field checking the repair work done by plaintiffs. As soon as plaintiffs submitted invoices for service calls, Mr. Turlich would take those invoices and, concentrating on those in excess of $50.00, start checking the actual repair work done on the service calls for which the invoices were submitted.
30. In the course of checking the repair work for which plaintiffs had billed the Government, Mr. Turlich discovered a number of instances in which plaintiffs had billed the Government for work which had not been done and material which had not been furnished:
A. Plaintiffs submitted an invoice dated March 3, 1970 for HUD Trailer No. 689 on which the Government was billed for a burner control valve, an oven control valve, and an oven control knob. When Mr. Turlich went to the trailer to check the work, he found that the materials had not been furnished and the work had not been done.
B. Plaintiffs submitted an invoice dated March 6, 1970 for a service call to HUD Trailer No. 1360, occupied by Miro Slavich, on which the Government was billed for a sheet of celotex. When Mr. Turlich checked the work done on the trailer, he found that the sheet of celotex had never been furnished.
C. Plaintiffs submitted an invoice dated March 7, 1970 for a service call to HUD Trailer No. 996, occupied by a Mr. and Mrs. Henderson, on which the Government was billed for 3 door glasses. When Mr. Turlich checked the trailer, he found that only 1 door glass could have been furnished since the door on that trailer contained only 1 glass.
D. Plaintiffs submitted an invoice dated May 8, 1970 for a service call to HUD Trailer No. 265, occupied by a Mr. and Mrs. Lawrence Bansy, on which the Government was billed for a heating element and 2 window screens. When Mr. Turlich checked the trailer, he found that the heating element and window screens had not been installed.
32. The information relayed to Mr. Kraft evidently made its way up the chain of command to the Contracting Officer, Mr. Church, for he instructed Mr. Callahan to have a study made of the circumstances in Plaquemines Parish. Mr. Bruce Gipson, a maintenance engineer employed by HUD and a Registered Professional Engineer of the State of Texas, was assigned to make the study. Before going to Plaquemines Parish, Mr. Gipson discussed with Mr. Kraft the contract and the problems which had developed.
33. Mr. Gipson arrived in the Parish late on the afternoon of April 13, 1970 and spent the following three days there. Since he was only able to make a spot check of plaintiffs’ billings in the time available, he chose 67 billings from the month of March 1970 as a representative sample. His purpose was to see whether there was some evidence of fraudulent billing or incompetent work.
34. Mr. Gipson first attempted to verify plaintiffs’ billings for labor by comparing them to the plaintiffs’ payroll records. He was unable to make that comparison, however, because plaintiffs did not have any payroll records — all they had was a small, ruled notebook with a list of names and some figures after them which he was told was the weekly salaries. Plaintiffs had no record of any Social Security and federal income tax withholdings from their employees’ salaries.
35. Mr. Gipson attempted to verify plaintiffs’ billings for materials used by checking the invoices to see what material was supposed to have been used and then checking the particular trailer to see whether the material had actually been used. He discovered a number of instances in which plaintiffs had billed the Government for materials not furnished or work not done:
*89 A. Plaintiffs billed the Government for 1 tube of caulking material for HUD Trailer No. 1556 and for 3 tubes of caulking material for HUD Trailer No. 1149. When Mr. Gipson inspected the trailers, however, he discovered that the windows had not been caulked.
B. Plaintiffs submitted an invoice dated March 17, 1970 for HUD Trailer No. 1096 on which the Government was billed for the replacement of an oven control. When Mr. Gipson inspected the trailer, however, he discovered that no new oven control had been installed.
C. Plaintiffs submitted an invoice dated March 26, 1970 for HUD Trailer No. 189, occupied by one Willie Tony, in which they billed the Government for a new commode. Mr. Gipson inspected this work in response to a complaint by the tenant that one of plaintiffs’ workmen had, in the course of cleaning up the trailer at an earlier date, broken the previous commode, which was subsequently replaced with a green commode in the tenant’s beige-colored bathroom. Mr. Gipson’s inspection disclosed that the handle on the supposedly new commode had been damaged by fire. He also found a burned-out trailer which contained a beige commode in a green bathroom, the base of which beige commode was broken. A reasonable inference is that the green commode installed by plaintiffs was not a new commode purchased by plaintiffs, but a used commode which had been taken from the burned-out trailer leased by HUD.
36. Mr. Gipson also discovered that plaintiffs billed the Government for both a periodic inspection and a service call when, during a periodic inspection, their workers performed necessary repairs on a mobile home. He found other instances where plaintiffs billed the Government a service call for repair work which was not, but should have been, done at the same time as the periodic inspection.
37. Due to their suspicions of the truthfulness of plaintiffs’ billings, Messrs. Gipson and Turlich placed an X mark on a trailer oven control in perfect operating order. They then filled out a tenant’s complaint form regarding the oven control and placed the form in the complaint box for plaintiffs to pick up. Mr. Gipson then had to return to
38. Within a few weeks after Mr. Gipson’s return to Texas, plaintiffs submitted an invoice dated April 29, 1970 for a service call on HUD Trailer No. 1096 on which they represented that they had replaced the oven control. This was the same trailer on which plaintiffs had charged the Government for installing a new oven control only 43 days earlier. Unless they are defective, oven control valves should last several years. They are customarily guaranteed by the manufacturer for a minimum of 90 days and are replaced by the manufacturer if they fail sooner. Plaintiffs did, in fact, return 12 defective oven control valves to the manufacturers and received 12 new oven control valves to replace them. Plaintiffs, nonetheless, charged the Government for a new oven control which was allegedly installed in HUD Trailer No. 1096 on or about April 29, 1970.
39. Mr.. Gipson reported the results of his inquiry to his immediate supervisor, Mr. Joseph Kemble. Copies of his report were also sent to Mr. Roy Kraft and to the Contracting Officer, Mr. Leonard Church. In his report, Mr. Gipson recommended: (1) that the Labor Relations Officer investigate plaintiffs for possible violation of the Davis-Bacon Act by reason of their failure to keep the required payroll records, (2) that the HUD Special Investigator send someone to look into the fraudulent billings submitted by plaintiffs, and (3) that the contract be terminated.
40. Based upon the contents of Mr. Gipson’s report and conversations with persons who. had made earlier trips to Plaquemines Parish, the Contracting Officer, Mr. Church, decided it was in the best interests of the Government to terminate plaintiffs’ contract. By letter of May 28, 1970, plaintiffs were notified that their contract was terminated effective June 10, 1970 pursuant to Paragraph 8 of the contract. The date of June 10, 1970 was selected to allow
41. At the end of each month during the life of the contract, a consolidated billing, listing invoices for service calls and periodic inspections, was prepared by the local HUD office. A total of 5 such consolidated billings was prepared by the local HUD office and signed by Mr. David Miller on behalf of the plaintiffs with the knowledge that they were to be presented to the Government for payment.
42. The consolidated billings, as prepared by the local HUD office, did not include all the invoices for service calls and periodic inspections submitted by plaintiffs. Those invoices which were not approved by Messrs. Ballay and Turlich for one reason or another were set aside and were not included in the consolidated billings. Mr. Ballay stored the unapproved invoices in a separate file drawer.
43. For the period of contract performance, January 31, 1970 through February 26, 1970, plaintiffs submitted invoices totalling $9,156.82. The local HUD Housing office in Buras, Louisiana, under the direction of Mr. Ballay, assisted in preparation of the consolidated billing for submission to HUD’s Regional Office for payment. In preparing these consolidated billings, Mr. Ballay rejected with notification and explanation to plaintiffs some of plaintiffs’ invoices for the above period and submitted his own consolidated billing for payment in the amount of $8,163.89. Mr. David Miller signed the billing to evidence his agreement. Plaintiffs received a Treasury Department check dated March 19, 1970 in the amount of $8,163.89.
44. For the period February 27, 1970 through March 31, 1970, plaintiffs submitted invoices totalling $20,193.36 ($2,982.05 for periodic inspections; $17,211.31 for service calls). Again Mr. Ballay prepared a memorandum of acceptance dated April 13, 1970 for $13,555.16 of the invoiced amount. Plaintiffs, however, received no payment for labor or materials invoiced for the above time period, although the contract required monthly payments.
45. Between April 1, 1970 and April 29, 1970, plaintiffs submitted invoices in the amount of $8,101.36. The
46. Plaintiffs submitted invoices for the period April 30, 1970 through May 31, 1970 in the total amount of $16,974.12 ($813.95 for periodic inspections; $16,160.17 for service calls). In preparing the consolidated billing and memorandum of acceptance for this period, Mr. Ballay approved payment of only $7,490.20. Defendant made no payment on any of plaintiffs’ invoices for this period.
47. Plaintiffs continued contract performance through the June 10, 1970 termination date and submitted invoices for labor and materials supplied under the contract for the period June 1, 1970 through June 10, 1970 in the amount, of $2,019.69. On July 21, 1970, Mr. Ballay prepared and, as with each of the others, Mr. Miller signed a memorandum of acceptance and consolidated billing approving $1,782.31 of plaintiffs’ invoices for this period. Plaintiffs received no payment for any billings submitted for this period.
48. Following termination of the contract, plaintiffs’ records of contract performance were investigated by agents of the Federal Bureau of Investigation (hereafter FBI) and HUD auditors. Plaintiff in good faith and without hesitation turned over his contract books for inspection by FBI agents, after being advised of his rights including his right to refuse the agents access to the books. Plaintiff was not subsequently subpoenaed, charged or indicted on any matter connected with this contract.
49. HUD auditors Mr. Allen Cash and Mr. William York each spent approximately 25 man-days from June 11, 1970 until July 16, 1970 conducting a special audit of plaintiffs’ contract performance. Special audits are conducted when the Office of the HUD Inspector General receives indications of improprieties or at the request of the HUD program personnel and typically take approximately 10 man-days.
50. After their special audit of plaintiffs’ contract, the HUD auditors concluded that out of plaintiffs’ total unpaid billings of $47,379.47, $9,431.72 were disallowable charges
51. The figures presented by plaintiffs, and those approved by the local housing managers are illustrated below:
Period Billed by Plaintiffs Approved by Local Housing Managers, but Unpaid Paid by D
1/31/70-2/26 $9,156.82 $8,163.89 $8,163.89
2/27-3/31 20,193.36 13,555.16
4/1-4/29 8,101.36 8,041.18
4/30-5/31 16,974.12 7,490.20
6/1-6/10 2.019.69 1.782.31
$56,445.35 $39,032.74
-8.163.89 -8.163.89 $8,163.89
Bal. Unpaid $48,281.46 $30,868.85
The termination letter of May 28, 1970 was effective June 10, 1970.
52. The exact results of the audit are as duplicated below:
Audit Report Period January 31, 1970, to June 10, 1970
Billings:
Service Calls $51,469.96
Inspections 4.073.40
Total Billings $55,543.36
Less: Payments by
HUD 8.163.89
Unpaid contractor billings $47,379.47
Audit disallowances:
Unauthorized repairs $809.26
Improper charges for service calls 2,170.80
Quantities of materials billed in excess of purchases 3,538.82
Pricing of materials in excess of cost 2,746.66
*94 Used material and material not furnished _166.18 _$9.431.72
Unpaid billings $37,947.75
53. The auditors attempted to verify plaintiffs’ payroll records. Plaintiffs failed, however, to keep payroll records sufficient to permit a determination of the hours worked or the hourly rate of compensation or the total compensation paid individual employees. Plaintiffs’ records also failed to indicate the work classifications of their employees.
54. The auditors investigated an invoice dated March 12, 1970 for a service call on HUD Trailer No. 1448, occupied by a Mrs. Alice Buras, on which invoice the Government was billed for $36.80 ($32.00 actual cost plus 15%) for a "fauset (sic) set in kitchen.” The work billed on that invoice was allegedly performed by Mr. David Miller and Mr. Jack Anderson. In fact, however, plaintiffs neither paid for the water faucet nor installed it. The water faucet was purchased at Sears, Roebuck & Company by Mr. Tom Ochella, a friend of Mrs. Buras, who also installed it for her. Mrs. Buras paid Mr. Ochella a total of $30.00 for the cost of the faucet and his time and trouble in installing it. Plaintiffs never repaid Mrs. Buras for her expense on the water faucet. When plaintiffs’ repairmen next visited her mobile home on another matter, she returned the broken faucet to them.
55. Plaintiffs submitted an invoice dated March 16, 1970 for a service call on HUD Trailer No. 189, occupied by one Willie Tony, for which they billed the Government for a new sofa and chair. Plaintiff David Miller told the HUD auditors that he could provide evidence supporting the purchase of a new sofa and chair for HUD Trailer No. 189. Plaintiff failed to provide any such evidence. In fact, the sofa and chair installed in HUD Trailer No. 189 were both used.
56. Plaintiffs had submitted a total of 36 invoices in excess of $50.00 for which they had failed to obtain prior approval from the Housing Manager or his deputy. The repairs involved on 12 of those • invoices were such that approval would necessarily have had to have been given in
57. In 216 instances, plaintiffs did additional repair work in the course of performing a periodic inspection. In each instance, plaintiffs billed the Government for both a periodic inspection and a service call. The contract provided that the contractor was to make periodic inspections of each occupied trailer at intervals of 90 days, during the course of which periodic inspection certain specified work was to be performed plus "any other needed repairs or replacements . . . subject to the cost limitation of $50.00.” Service calls, on the other hand, were to be performed only when directed by the Housing Manager. The minimum fees charged by plaintiffs for periodic inspections and service calls both included an allowance for labor, travel time, and mileage. Inasmuch as periodic inspections and service calls are separate and distinct items and necessary repairs were to be done as part of a periodic inspection, plaintiffs should not have billed the Government for a service call when it did some repair work concurrently with a periodic inspection. The total amount of overbilling involved is $2,170.80, i.e., 216 service call billings times the $10.05 minimum fee for a service call.
58. Plaintiffs billed the Government $37.38 for an allegedly new commode installed in HUD Trailer No. 189, occupied by one Willie Tony, whereas as set forth in Finding No. 35 C., supra, the commode was a used commode taken from a burned trailer and did not represent a cost to plaintiffs. Consequently, plaintiffs overbilled the Government by $37.38.
59. Plaintiffs billed the Government $92.00 (representing $80.00 cost plus 15% profit or $12.00) for an allegedly new sofa and chair installed in HUD Trailer No. 189, occupied by one Willie Tony, whereas the sofa and chair were used, were installed without authority from the
60. Plaintiffs billed the Government $36.80 (representing $32.00 cost plus 15% profit or $4.80) for a faucet set allegedly installed in HUD Trailer No. 1448, occupied by one Alice Buras, which, in fact, as testified to by Ms. Buras, was neither installed nor purchased by plaintiffs and, hence, did not represent a billable cost to the Government.
61. The evidence establishes a pattern of conduct by plaintiffs which constitutes a negligent disregard for the truth in their preparation and submission of invoices upon which the five consolidated billings under the contract were based.
62. The audit conducted by HUD showed that over the life of the contract plaintiffs negligently and irresponsibly, presented, or caused to be presented five false consolidated billings to the Government.
CONCLUSION OF LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover $37,947.75 in accordance with the foregoing opinion. The court also concludes that the defendant is entitled to recover $10,000.00 on its False Claims Act counterclaim. Plaintiffs ultimate recovery, therefore, is $27,947.75 and judgment is entered for that amount.
Throughout the opinion "Miller” is used to stand for the Miller brothers’ partnership. This description not only recognizes that David Miller alone administered the contract, but also takes into account the basic partnership law principle that acts of one partner bind the partnership. H. Ballantine, Ballantine on Corporations, 7 (1946).
A Parish is a jurisdictional and political subdivision in Louisiana, corresponding to counties in other states of the Union.
28 U.S.C. §2514 (1970), which provides:
A claim against the United States shall be forfeited to the United States by any • person who corruptly practices or attempts to practice any fraud against the United States in the proof, statement, establishment, or allowance thereof.
In such cases the Court of Claims shall specifically find such fraud or attempt and render judgment of forfeiture.
United States v. Bornstein, 423 U.S. 303, 305-07 n. 1 (1976), which states:
The False Claims Act was adopted in 1863. Act of Mar. 2, 1863, c. 67, 12 Stat. 696.
It was re-enacted as Rev. Stat. §§3490-3494, 5438. The part of the Act dealing with civil prohibitions is now codified in 31 U.S.C. §231 et seq. The language used in Title 31 differs in some important respects from that contained in the Revised Statutes. Since Title 31 has not been enacted into positive law, the official text of the statute is that which appears in the Revised Statutes. See United States v. Neifert-White Co., 390 U.S. 228, 228-229, n. 1; United States ex rel. Marcus v. Hess, 317 U.S. 537, 539-540, and n. 2.
The relevant statutory provisions are as follows:
§3490. "Any person not in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States, who*62 shall do or commit any of the acts prohibited by any of the provisions of section fifty-four hundred and thirty-eight, Title 'CRIMES,’ shall forfeit and pay to the United States the sum of two thousand dollars, and, in addition, double the amount of damages which the United States may have sustained by reason of the doing or committing such act, together with the costs of suit; and such forfeiture and damages shall be sued for in the same suit.”
§5438. "Every person who makes or causes to be made, or presents or causes to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to be false, fictitious, or fraudulent, or who, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, makes, uses, or causes to be made or used, any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, or who enters into any agreement, combination, or conspiracy to defraud the Government of the United States, or any department or officer thereof, by obtaining or aiding to obtain the payment or allowance of any false or fraudulent claim, dr who, having charge, possession, custody, or control of any money or other public property used or to be used in the military or naval service, who, with intent to defraud the United States or willfully to conceal such money or other property, delivers or causes to be delivered, to any other person having authority to receive the same, any amount of such money or other property less than that for which he received a certificate or took a receipt, and every person authorized to make or deliver any certificate, voucher, receipt, or other paper certifying the receipt of arms, ammunition, provisions, clothing, or other property so used or to be used, who makes or delivers the same to any other person without a full knowledge of the truth of the facts stated therein, and with intent to defraud the United States, and every person who knowingly purchases or receives in pledge for any obligation or indebtedness from any soldier, officer, sailor, or other person called into or employed in the military or naval service any arms, equipments, ammunition, clothes, military stores, or other public property, such soldier, sailor, officer, or other person not having the lawful right to pledge or sell the same, every person so offending in any of the matters Set forth in this section shall be imprisoned at hard labor for not less than one nor more than five years, or fined not less than one thousand nor more than five thousand dollars.”
Section 5438 was repealed in 1909. Act of Mar. 4,1909, c. 321, §341, 35 Stat. 1153. It has continued vitality only insofar as it specifies the acts giving rise to civil liability under §3490. See United States v. Neifert-White Co., supra. The criminal prohibitions were subsequently altered and codified in 18 U.S.C. §§287 and 1001.
34 Fed. Reg. 13770 (1969).
See supra, page 66.
These billings include such items as a faucet that plaintiff never installed but charged the Government for, a used sofa and chair installed when new material was required under the contract, and a used commode taken from a burned-out trailer, installed in a different trailer and billed to the Government as new.
While David Miller testified that he "always checked” his men’s work personally, in view of his other testimony — that he made frequent trips to New Orleans (a ride of several hours) and other surrounding towns to purchase materials and make repairs — it would appear that supervision was lax.
Yet another problem was the Government’s failure to preserve evidence to prove its case. Two HUD officials placed an X mark on a perfectly operating oven control valve, then placed a repair order. Later, after Miller submitted an invoice stating that the valve had been changed, only one of the men returned to check the work, finding the X-marked valve still in place. Yet no records, written (aside from the invoice) or pictorial, were kept of this potentially damaging incident.
We note that the Government seeks only the $2,000.00 penalty, not double the
Penalizing for eleven invoices plus the five consolidations of the same eleven invoices seems clearly a miscarriage of justice. The Act never intended this form of double punishment.
We note that the Supreme Court cites United States v. Woodbury, 359 F.2d 370 (1966) (upon which we rely) with approval for the proposition that the number of false claims is determined by th? number of demands the contractor has made upon the Government. United States v. Bornstein, 423 U.S. 303, 309 n. 4 (1976).
See supra at 66.
Id.
