Thanks to Whistleblower, Experienced Construction Contractor Caught Defrauding the Government

On October 1, 2012, the Sixth Circuit Court of Appeals rendered an opinion which will no doubt serve as a warning to government contractors–that companies doing government work must play by the government’s rules and be scrupulous in documenting their compliance.

In US ex rel. Wall v. Circle C Const., LLC, the Sixth Circuit held that Circle C, a government construction contractor, violated the False Claims Act (FCA) by submitting false payroll certifications. US ex rel. Wall v. Circle C Const., LLC, 697 F.3d 345 (6th Cir. 2012). Claims under the FCA are often initiated by citizens (called “relators” in these types of cases) who are able to catch violations the government might otherwise miss.

Government construction contracts occupy a unique spot in the marketplace. The Davis-Bacon Act requires most government contractors to pay their workers a “prevailing wage” for working on construction contracts. This prevailing wage is largely determined by guidelines set by the U.S. Department of Labor. By requiring a competitive wage, the legislation aims to ensure quality work on these government projects.

In this case, the United States hired Circle C to build structures at Fort Campbell in Kentucky. Under the Davis-Bacon Act, different types of work require different prevailing wages. The relator in this case, Brian Wall, was an electrician. He worked for a subcontracted company, Phase Tech, on the Fort Campbell project. Circle C was required to submit reports certifying proper payment of employees and subcontractors, according to the law. But there were major problems with Circle C’s “certifications.” They were incomplete, and in some cases, they did not count the Phase Tech electricians as electricians, and thus ended up using the wrong pay-scale–underpaying the electricians by 7-10 dollars per hour.

Circle C had been doing government contract work for two decades, and the court kept this in mind when affirming the lower court’s summary judgment for the relator and the United States. Circle C’s submission of incomplete and false certifications to the government was enough to show a reckless disregard for the truth or falsity of the information, especially because Circle C was an experienced government contractor and should have known better. In the end, there were 62 inaccurate submissions, showing a pattern of deceit that was convincing enough to conclude that Circle C was guilty of defrauding the government.

The court also reviewed the way the district court calculated the damages Circle C would owe to the government, ultimately remanding that issue to the lower court to reconsider. Whatever the damages may be, as a whistleblower, Brian Wall is entitled to a reward of 15-25% of those damages. If you suspect that a company you work for might be defrauding the United States, you might have a reward coming to you, too.

Amanda Narvaes

Amanda P. Narvaes, a Partner, joined Drew Cooper & Anding in 2011. Ms. Narvaes is a civil litigator in the areas of complex commercial litigation, lender liability, copyright litigation, and consumer protection. She graduated cum laude from Carleton College with a bachelor’s degree in history. She earned her law degree at WMU-Thomas M. Cooley Law School, graduating magna cum laude, and received Cooley’s Distinguished Student Award. Ms. Narvaes represents clients before Michigan trial courts across the state and in the Michigan Court of Appeals, and before the United States District Courts for the Western and Eastern District of Michigan. Ms. Narvaes has been a guest speaker in Ron Foster’s “Litigation for Paralegals” class. Ms. Narvaes discusses differences between Federal civil discovery rules and Michigan civil discovery rules.