District Court Rejects FCA Claim Based on “Substandard” Product

By on March 26, 2018
Posted In Uncategorized

On March 13, 2018, the United States District Court for the Eastern District of Oklahoma dismissed U.S. ex rel. Montalvo v. Native American Servs. Corp. In this case, the relators alleged that the defendants performed substandard work at a US Army ammunition plant. Specifically, the relators alleged that the defendant oversaw a construction project in which a subcontractor was ordered to pour concrete into areas that contained tree roots and stems, which allegedly damaged the quality of the concrete.

At summary judgment, the only evidence offered by the relator was an affidavit setting forth the facts above. The only disputed fact was whether the defendant knew about the tree roots and stems when ordering the subcontractor to pour the concrete. Regardless of that factual dispute, the court concluded that the plaintiff had failed to offer sufficient evidence that the defendant had knowingly caused the submission of false claims and granted summary judgment in the defendant’s favor.

In its decision, the court noted that the “Plaintiff has presented no evidence with regard to any express or implied representations Defendant made to the government, no evidence of any contract requirements in any of the contracts between Defendant and the Government, and no evidence of any statutory or regulatory standards applicable to Defendant’s contracts with the Government.”

This case is instructive in that it demonstrates that the mere presence of allegedly substandard work in performance of a government contract does not give rise to liability under the False Claims Act. Absent a specific contractual requirement or certification that is material to the government’s payment decision, relators cannot use allegedly substandard work to establish False Claims Act liability.