Thursday, August 5, 2010

U.S. ex rel. Lemmon v. Envirocare of Utah, Inc.

Aug 4: In the U.S. Court of Appeals, Tenth Circuit, Case No. 09-4079. Brought under the False Claims Act (FCA), 31 U.S.C. § 3729(a)(1) and (2), this suit involves qui tam [i.e. lawsuit by a private citizen against a person or company who is believed to have violated the law in the performance of a contract with the government] claims against Defendant-Appellee Envirocare of Utah, Inc. (Envirocare) by one of its former employees and two former employees of an Envirocare subcontractor (Plaintiffs). The suit arises from Envirocare's hazardous-and-radioactive-waste-disposal contracts with the federal government (government). Plaintiffs allege that, between June 2000 and June 2001, Envirocare repeatedly violated its contractual and regulatory obligations by improperly disposing of the contracted for waste. In spite of these violations, Plaintiffs contend, Envirocare falsely represented to the government that it had fulfilled its obligations and, based on its false representations, improperly received payment from the government.
    The district court dismissed under Rules 8(a), 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff contends that the district court overlooked "her implied-certification (of false claims) theory and erred in rejecting her express-certification theory." The Appeals Court reversed the district court decision.
    The Appeals Court explained, "Envirocare expressly certified that the payments requested were only for work performed in accordance with the specifications, terms, and conditions of the contract . . .  In so arguing, Envirocare seeks to hold Plaintiffs to a higher standard than is required. The federal rules do not require a plaintiff to provide a factual basis for every allegation. Nor must every allegation, taken in isolation, contain all the necessary information. Rather, to avoid dismissal under Rules 9(b) and 8(a), plaintiffs need only show that, taken as a whole, a complaint entitles them to relief. See, e.g., Twombly, 550 U.S. at 554-56. The complaint must provide enough information to describe a fraudulent scheme to support a plausible inference that false claims were submitted. Because Plaintiffs have provided sufficient factual detail to demonstrate the viability of their FCA claims, the dismissal under Rule 9(b) was error."
    Access the complete opinion (click here).