On May 16, 2017, the Fourth Circuit issued a decision in United States ex rel. Omar Badr v. Triple Canopy, holding that the Government had properly alleged an implied certification claim under the standard articulated by the Supreme Court in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016). In the eleven months following the Supreme Court’s landmark ruling on the implied certification theory of liability, Escobar has been cited in nearly 100 court opinions. (Our recent Feature Comment in the Government Contractor highlights some of the key cases and developing trends).
In Badr, the relator alleges that a security contractor responsible for ensuring the safety of an air base in a combat zone employed Ugandan guards who were unable to meet the required marksmanship scores on a U.S. Army qualification course. According to the relator, Triple Canopy knowingly falsified marksmanship scorecards and presented claims to the government for payment for those guards.
Procedural Posture
At the district court level, Triple Canopy prevailed on a motion to dismiss after demonstrating that the government failed to plead that it ever reviewed — and therefore ever relied on — the allegedly false scorecards. United States ex rel. Badr v. Triple Canopy, Inc., 950 F. Supp. 2d 888 (E.D. Va. 2013). But the Fourth Circuit reversed, explaining: “[c]ommon sense strongly suggests that the Government’s decision to pay a contractor for providing base security in an active combat zone would be influenced by knowledge that the guards could not, for lack of a better term, shoot straight ... If Triple Canopy believed that the marksmanship requirement was immaterial to the Government’s decision to pay, it was unlikely to orchestrate a scheme to falsify records on multiple occasions.” 775 F.3d 628, 637–38 (4th Cir. 2015). After the Fourth Circuit issued that decision, Triple Canopy petitioned for a writ of certiorari.
In the meantime, the Supreme Court granted certiorari in Escobar to resolve the circuit split on whether and to what extent the implied certification theory was valid under the FCA. On June 16, 2016, the Court issued its decision which recognized the viability of the implied certification theory but narrowed its application to truly “material” misrepresentations, stating that the FCA’s materiality requirement is both “rigorous” and “demanding” because the FCA is not ‘‘a vehicle for punishing garden-variety breaches of contract or...
