Supreme Court holds that wartime act does not delay statute of limitations on false claims

Government contractors and health care companies have become increasingly concerned about the application of the Wartime Suspension of Limitations Act (“WSLA”), 18 U.S.C. § 3287, and the Department of Justice’s (“DOJ”) and False Claims Act (“FCA”) relators’ arguments that the statute extends indefinitely the limitation period applicable to civil FCA cases. 31 U.S.C. §§ 3729-3733. Supreme Court

On May 27, 2015, the Supreme Court rejected the unwarranted extension of the WSLA and properly limited the reach of that statute (and suspension of limitations periods) to the context of criminal law. The decision in Kellogg Brown & Root Services, Inc. v. U.S. ex rel. Carter (“KBR”) is an important victory for Government contractors, health care companies and other recipients of federal funding. It provides protection against stale claims, which should be barred by the statute of limitations. It is particularly noteworthy because it removes the risk of stale FCA claims that would otherwise be time barred and that have no connection to wartime activities, such as health care claims, or lawsuits related to other civilian agency programs, e.g., the Department of Agriculture program discussed in United States v. BNP Paribas SA.

The WSLA was enacted shortly after World War I and was reenacted during World War II. Until 2008, it permitted the period of limitations to be suspended during wartime and for three years after the end of hostilities. Prior to 2008, it was not clear whether the WSLA was triggered by the military operations in Iraq and Afghanistan as there had been no declaration of war. Congress expanded the WSLA in 2008 to apply when Congress enacts a “specific authorization for the use of the Armed Forces” and increased the suspension period to five years after the termination of hostilities. Given the ongoing conflicts in which the U.S. has been involved during the past decade, questions have arisen about whether the suspension of the limitations period has become indefinite and is being used for matters that have no connection to wartime.

In KBR, the Supreme Court reversed the Fourth Circuit and held that the WSLA does not toll the statute of limitations in civil fraud cases. In KBR, a former employee who had worked for the company in Iraq, brought a civil False Claims action as a relator, claiming that the contractor had billed the Government for work that was never performed. The Government did not intervene in the case. Before the Supreme Court, Carter and the Government (as amicus) argued that, even though the WSLA is part of Title 18, it applied to civil fraud matters. The Government noted that until 1944, the WSLA applied to offenses that were “now indictable under existing law”—and that the “now indictable” language was removed in 1944. (The district court’s decision BNP Paribasprovides a detailed history of the WSLA.) The Government’s amicus brief also defended application of the WSLA to civil cases based on policy considerations, such as asserting that its time and resources are overtaxed during wartime and that fraud often requires a substantial amount of time to uncover and pursue.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=400298

Justice Dept. gets $9M back from bankrupt vendor

The federal government is exacting a little payback from Global Computer Enterprises in the form of a False Claims Act settlement.

After GCE applied for bankruptcy protection under Chapter 11 in September, the Labor Department and the General Services Administration had to pay the company $23 million to get access to financial systems and data.

Justice Dept. sealNow the Justice Department is collecting $9 million back after GCE and its owner Raed Muslimani agreed to settle charges brought against them.

DoJ said in a May 7 press release that GCE and Muslimani do not admit to any wrong doing, but agreed to pay the $9 million fine.

Justice brought up charges against GCE and Muslimani claiming the company “misrepresented and/or concealed that it was utilizing engineers and other employees who were expressly prohibited from working on the contracts due to their citizenship/immigration statuses,” in contracts with Labor, the Equal Employment Opportunity Commission (EEOC), GSA, the Secret Service and the Coast Guard.

Keep reading this article at: http://www.federalnewsradio.com/130/3855194/Justice-gets-9M-back-from-bankrupt-vendor-GCE

Companies pay millions to settle alleged false billings on GSA Schedule and DoD contracts

At year’s end, the Department of Justice (DOJ) announced multi-million dollar false claims settlements with a pair of large contractors in connection with billing practices on GSA Schedule contracts.

  • Iron Mountain Incorporated and Iron Mountain Information Management LLC (collectively Iron Mountain) has paid $44.5 million to resolve allegations under the False Claims Act that Iron Mountain overcharged federal agencies for record storage services , the DOJ announced Dec. 19, 2014.  Iron Mountain is a records storage company headquartered in Boston.
  • Lockheed Martin Integrated Systems (LMIS) agreed on Dec. 22, 2014 to repay the government $27.5 million to settle over-billing charges brought under the False Claims Act on a contract producing products and services for U.S. troops in Iraq and Afghanistan.

Justice Dept. seal“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” Acting Assistant Attorney General Joyce Branda said. “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”

The settlement with Iron Mountain relates to contracts under which the firm provided record storage services to government entities from 2001 to 2014 through GSA’s Multiple Award Schedule (MAS) program.  The MAS program provides the government with a streamlined process for procurement of commonly used commercial goods and services.  The settlement resolves allegations that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts.  It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements.

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” Branda said of the Lockheed Martin settlement. “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”

LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland.  The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM).  CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland.  The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM.  LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees.  The overbilling allegedly resulted in greater profit for LMIS.

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Former security contractor CEO agrees to pay $4.5 million to settle civil claims

Keith Hedman, 55, of Arlington, Virginia, the former chief executive officer of a Virginia-based security contracting firm, Protection Strategies, Inc. has agreed to pay $4.5 million to settle civil claims relating to his involvement in a fraudulent scheme to create a front company to obtain contracts through the Small Business Administration’s Section 8(a) program.  The Section 8(a) program allows qualified small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, made the announcement after the settlement agreement was signed by both parties. “The civil settlement illustrates the importance of not stopping at a criminal resolution when a defendant has pled guilty to fraud against the government,” said U.S. Attorney Boente.

The settlement resolves civil claims against Hedman relating to the criminal plea entered by him in U.S. v. Hedman,1:13cr74. According to court records, in or about 2001 Hedman formed PSI, which was approved to participate in the 8(a) program based on the 8(a) eligibility of its listed president and CEO, an African-American female. When the listed president and CEO left PSI in 2003, Hedman became its sole owner, and the company was no longer 8(a)-eligible.

Keep reading this article at: http://www.alexandrianews.org/former-security-contractor-ceo-agrees-to-pay-4-5-million-to-settle-civil-claims/

 

Corruption, bribery rampant in government contracting, key witness in case says

Even before he competed for his first government job, the key witness in the largest bribery case in federal contracting history said an associate warned him that he’d have to “pay to play,” according to a recent jailhouse letter.

Alex Cho said he began work as a contractor because he thought doing business with the U.S. government would be an honest way to make a living — a notion he quickly abandoned.

“In planning to get into this field, I actually thought I would be getting away from dishonesty,” Cho told U.S. District Judge Emmet G. Sullivan in a lengthy letter from the D.C. Jail — his first public remarks on the historic $30 million corruption scam that has resulted in 20 guilty pleas.

The ringleader, Army Corps program manager Kerry Khan, extracted millions of dollars in kickbacks from corrupt contractors for years. But Cho said Khan also made other “absurd demands.”

Keep reading this article at: http://www.washingtontimes.com/news/2014/dec/14/corruption-rampant-government-contracting-key-witn/