Don’t Delay, Appeal Today!

The United States Court of Appeals for the Second Circuit has issued a decision holding that, for determining the deadline for the filing of an appeal, the United States is not a “party” to a qui tam case in which the government has not formally intervened.   The name of the case is U.S. ex rel. Eisenstein v. City of New York.  The underlying False Claims Act case was brought by a qui tam relator against the City of New York.  The United States declined to intervene.  The district court then dismissed the case, holding that the type of wrongdoing alleged in the complaint did not fit within the False Claims Act.  The relator (or his lawyers) then waited 54 days to file an appeal with the Second Circuit.

Here’s the problem: the rule that sets deadlines for appeals says that an appeal must be filed within 30 days, unless the United States is a “party,” in which case the appeal must be filed within 60 days.  So, by waiting 54 days to file his appeal, the relator forced upon the Second Circuit the issue of whether the United States should be considered a “party” to a False Claims Act case in which it has not intervened.  Three other Courts of Appeals (the Fifth, Seventh and Ninth Circuits) had previously considered this issue, and had reasoned that because the United States is the “real party in interest” in qui tam cases, the United States could be considered a “party” even when it has not intervened, and that applying the 60-day deadline to qui tam cases would avoid any possible confusion about the deadline.

But the Second Circuit apparently woke up on the wrong side of its collective judicial bed, and decided that even if the United States is the “real party,” it is not really a “party,” and thus that the 30-day deadline applies.  And on the issue of “confusion” about the deadline, the Second Circuit took a swipe at the relator’s counsel, stating that “counsel of minimal competence” would at least recognize the potential problem, and further stating that “[e]ven if doubt existed, any reasonable counsel would allay these concerns by sensibly a notice of appeal within 30 days.”  The implication being that the relator’s counsel in this case was not minimally competent?   Even though three other Circuit Courts had already held that the 60-day period applied?  Hmmmm.   Anyhow, now that the Second Circuit has created a nice clean circuit split on this issue, the Supreme Court may feel compelled to waste its valuable time sorting it out.  In this writers opinion, unfortunate.

Conflict-of-Interest = False Claims Act Violation?

In what appears to be a somewhat novel case, the government sued Science Applications International Corporation (SAIC) under the False Claims Act for failing to disclose conflicts-of-interest.  SAIC was awarded a contract by the Nuclear Regulatory Commission (NRC) to help the NRC draft a rule relating to recycling of radioactive materials.  But SAIC, at the same time, had business relationships with other companies that would have been directly impacted by the proposed rule.  The theory of the False Claims Act case appears to have been that by failing to disclose that conflict, SAIC tricked the NRC into awarding the contract to SAIC or making payments to SAIC under that contract.  Read the NRC’s press release on the case.

W.W. Grainger Pays $6 million For Overcharging Government And Selling Goods To GSA Manufactured in China and Taiwan

The Department of Justice recently announced a $6 million settlement in a False Claims Act case against W.W. Grainger Inc.  The case was brought by qui tam relator Brian M. Holbrook.  In his complaint, Holbrook alleged two types of False Claims Act violations.  First, he alleged that Grainger had entered into a contract with the government pursuant to which Grainger would be paid a 26% mark-up above its costs for certain types of goods, but had routinely sold goods to the government at much higher mark-ups.  Second, he alleged that Grainger had violated the Trade Agreements Act and the Buy American Act by selling goods to the federal government (through the GSA’s website, http://www.gsaadvantage.gov) that were manufactured in China or Taiwan, which are not approved countries under those laws.  These violations of the Trade Agreements Act and Buy American Act also violated the False Claims Act because, according to the complaint, Grainger’s contracts with GSA required Grainger to submit sworn statements that the products sold through the GSA website complied with those laws.  If you are interested in the Trade Agreements Act/Buy American Act issue, you might want to take a look at the GSA’s own website, which addresses these issues.