District Court Grants Motion to Dismiss Relators’ Claims in One of the First Post-Escobar Decisions
The District Court for the Eastern District of Washington recently granted the defendants’ Motion to Dismiss relators’ claims in a consolidated False Claims Act lawsuit against Monaco Enterprises, Inc. (“MEI”). MEI provides security and fire detection products, installation, and services to a variety of customers, including the U.S. military.
The lawsuit, brought by former employees of MEI, alleges that MEI fraudulently overbilled the government, charged the government for good and services that it did not provide, made misrepresentations related to the goods and services, and provided goods and services that did not meet the contractually required standards. The government joined the relators only on the allegations that MEI billed the government for services not actually rendered and concealed deceptive charging practices with regards to travel costs. In a lengthy complaint spanning more than 100 pages, the government also brought additional claims against MEI for breach of contract, unjust enrichment, and payment by mistake.
Defendants brought a motion to dismiss the relators’ claims in April 2016, prior to the Supreme Court’s decision in Escobar. That decision clarified that misrepresentations must be material in order to support an FCA claim under the implied-certification theory. The district court’s opinion included an analysis of Escobar, noting the Supreme Court’s holding that materiality standard applied to federal pleading requirements as well as to decisions on the merits. Under this standard, a pleading is insufficient if it merely alleges “the Government made the statutory, regulatory or contractual requirement a condition of payment or would have the option to decline payment if it knew of the noncompliance.” The court found that the relators’ complaints did not meet this heightened pleading standard, “fail[ing] to identify the allegedly false statement, the materiality of the statement, or allege facts to establish a causal link between the false statements and payments or approval of a claim.” The Court’s decision contains little in the way of gloss on the Supreme Court’s standard. The Government’s claims, however, remain pending and subject to further briefing, meaning the Court may have further occasion to identify the contours of the implied-certification doctrine.
The case is United States ex rel. Voss v. Monaco Enterprises, Inc., No. 12-046 (E. D. Wash.).