Supreme Court Rules that a Lawyer’s Improper Public Disclosure Does Not Mandate Dismissal of False Claims Act Case
Plaintiffs, Cori Rigsby and Kerri Rigsby, filed a False Claims Act complaint, alleging that State Farm attempted to defraud the Government through the National Flood Insurance Program by categorizing Hurricane Katrina wind damage as flood damage. The Plaintiffs filed the complaint under seal as required by the Qui Tam rules. This meant that the Complaint could not be publicly disclosed until the Government decided whether to take on the case itself.
State Farm asked the Supreme Court to hear its appeal to dismiss the False Claims Act case because Plaintiffs' lawyer publicly disclosed facts about the case to news reporters. The Supreme Court held that this public disclosure, even though in violation of the court seal, did not automatically result in dismissal of a Qui Tam action. The Supreme Court cited the Fifth Circuit’s approach that “no provision of the False Claims Act explicitly authorizes,” much less requires, “dismissal as a sanction for disclosures in violation of the seal requirement.” Lujan, 67 F.3d at 245; Smith, 796 F.3d at 430. The Supreme Court’s decision thus leaves it to the lower courts to determine if dismissal of a Qui Tam case is appropriate. One factor would be whether the improper public disclosure has prevented the Government from performing its own investigation of the case.
ASBCA Finds Contractor Entitled to Damages Due to Unsuitable Soil Conditions
Tetra Tech Facilities Construction LLC (“Tetra Tech”) entered into a contract with the Army for the design and construction of an addition at the Maryland Army Aviation Support Facility. The solicitation included a geotechnical report on the subsurface conditions. This was the only source of information of subsurface conditions made available to bidders. The geotechnical report told bidders to expect "medium to stiff constructible soils with close to ideal moisture content for compaction.”
During construction, however, Tetra Tech encountered unsuitable wet soil conditions. As a result, Tetra Tech had to remove or replace unsuitable soils at a significant additional cost. Tetra Tech argued that the Army must pay this additional cost. The Government refused to pay, claiming that Tetra Tech should have expected wet soil conditions from “natural sources, such as a high, natural water table or adverse weather.”
The Armed Services Board of Contract Appeals held that the Government’s geotechnical report “told bidders to expect medium to stiff constructible soils with close to ideal moisture content for compaction and warned neither of saturated soupy soils nor leaking infrastructure at the site.” The Board therefore held that the Government is responsible for the additional costs to address the unsuitable wet soil conditions.
Of interesting note, is the fact that the geotechnical report included a disclaimer telling bidders not to rely on it:
NOTE: The subsurface data provided by the government to support the RFP is general in nature and is not intended to be an adequate representation of the entire site. The Design-Builder must insure adequate subsurface information to determine the construction feasibility of the project.
The Board held that this disclaimer did not shield the Government from liability stating that, “the fact that representations as to subsurface conditions are labeled as "for information only" or that the contract contains a requirement that the contractor perform further subsurface investigation after award does not deprive a contractor of the right to rely on the government's pre-contract representations.”
Tetra Tech Facilities Construction, LLC, ASBCA Nos. 58568, 58845 (November 15, 2016)
