Billing for Underqualified Employees States FCA Claim

A plaintiff who worked for defen­dant defense contractor in Iraq under a Worldwide Protective Services contract as a deputy project manager of opera­tions for the Baghdad Embassy Securi­ty Force Project states a False Claims Act claim with allegations that he was fired in retaliation for reporting the contractor’s practice of keeping person­nel in the highest billable positions, re­gardless of the work they performed, in order to increase billings to the govern­ment; however, the Alexandria U.S. Dis­trict Court dismisses plaintiff ’s claim for violation of the National Defense Authorization Act, which does not apply to the WPS contract.

As defendant correctly contends, plaintiff ’s reprisal claim under the Na­tional Defense Authorization Act, 41 U.S.C. § 4712, must be dismissed be­cause that statute, a temporary statute, applies only to a four-year period and does not apply here. Plaintiff ’s com­plaint alleges defendant sent plaintiff to Iraq to work on the WPS contract in March 2013, more than three months before the effective date of § 4712, and plaintiff ’s complaint fails to allege any facts that support a conclusion that the WPS contract was modified after July 1, 2013 to include a contract clause ex­pressly providing that § 4712 applied. The WPS contract is governed by § 4705, which does not provide a private cause of action.

FCA claim

Turning to plaintiff ’s retaliation claim, the 4th Circuit has long applied the “distinct possibility” standard to determine whether a plaintiff engaged in protected activity. Under that stan­dard, an employee’s actions must relate to company conduct that involves an objectively reasonable possibility of an FCA action from the perspective of the facts known by the employee at the time of the protected conduct.

Although the 4th Circuit has not squarely addressed whether the dis­tinct possibility standard still applies in light of the 2009 amendment, numerous district courts, post-amendment, have applied the distinct possibility stan­dard in determining whether a plaintiff has engaged in a protected activity. It need not be determined here whether the 2009 amendment compels a stan­dard lower than the distinct possibility standard because even under the dis­tinct possibility standard, plaintiff has alleged facts that plausibly support a conclusion that plaintiff engaged in pro­tected activity.

A reasonable employee in plaintiff ’s position could reasonably conclude that defendant’s billing practice amounted to fraud against the government in vi­olation of the FCA. It may well be that defendant’s billing practice did not, in fact, violate the FCA, but a plaintiff need not establish an underlying FCA violation because § 3730(h) protects an employee’s conduct even if the target of an investigation or action to be filed was innocent. Here, there can be no doubt that plaintiff took several steps to re­port what reasonably appeared to be a fraudulent billing practice to plaintiff ’s supervisors and to the U.S. State De­partment. Plaintiff ’s complaint alleges facts that plausibly support the conclu­sion that plaintiff engaged in a protect­ed activity pursuant to § 3730( h).

Further, plaintiff made several re­ports to his supervisors characterizing defendant’s billing practices as fraud­ulent and suggesting that it should be corrected. These allegations plausibly support the conclusion that defendant was on notice of plaintiff ’s protected ac­tivity.

Plaintiff plausibly alleges that defen­dant took adverse actions against him – namely, implementing a rotation sched­ule adverse to plaintiff and terminating plaintiff ’s employment with defendant – as a result of the protected activity in which plaintiff had engaged nearly three months before the first alleged adverse action. The complaint alleges facts that plausibly support a conclu­sion that defendant’s alleged adverse actions, including termination of his employment, were the result of plain­tiff ’s protected activity.

Motion to dismiss FCA claim denied.

Nifong v. SOC LLC (Ellis) No. 1:16cv63, June 6, 2015; USDC at Alex­andria, Va. VLW 016-3-266, 17 pp.