United States of America ex relator Clifford Westbrook v. Westbrook v. Navistar Defense, et. al.

Lan Kennedy-Davis was co-counsel for Plaintiff Trustee. This was a qui tam action brought on by a bankruptcy Debtor Westbrook. The Trustee took over as Plaintiff in this action. Westbrook was a former contractor for Navistar Defense, a government contractor. Navistar Defense invoiced and received payment from the United States government for goods and services that did not comply with the government’s mandatory specifications. The U.S. government had solicited contract bids for the manufacture of Mine Resistant Ambush Protected (MRAP) vehicles to be used for the transport of troops in Iraq and Afghanistan. The U.S. government had awarded Navistar Defense a contract to produce MRAP vehicles. The contract provides that “all vehicles shall have a 686A tan, chemical agent resistant coating, non-reflective paint for the exterior per MIL-DTL-53072.” The application of the CARC system requires four steps: (1) cleaning, (2) pretreating, (3) priming, and (4) top coating. The primer used to complete the third step must be one of five epoxy primers included on the military’s Qualified Products List. It was the failure to apply epoxy primer to the MRAP vehicle parts that formed the basis of relator’s FCA claims. Notwithstanding its decision to forego application of the epoxy primer, Navistar Defense and its subcontractors submitted invoices with misleading statements that it had applied the epoxy primer, and received payments for the 7000 MRAP vehicles that Defendants delivered without application of the epoxy primer. 

The case was dismissed with prejudice because the court concluded that Plaintiff had failed to allege with particularity any fraud on the part of Navistar Defense and failed to allege a False Claims Act claim based upon an express certification of compliance. Westbrook filed an appeal arguing that Trustee should not have been appointed as the exclusive relator in this case. The Fifth Circuit Court of Appeals found in our favor that the district court did not abuse its discretion in substituting Trustee Spicer as the relator. Trustee also filed an appeal that the case should not have been dismissed with prejudice because FAR clause 52.246-2 rendered each delivery an express false statement that Navistar Defense had inspected the MRAP and confirmation that the MRAP conformed to contract requirements. 

Lan Kennedy-Davis and co-counsel further argued that the delivery of the nonconforming MRAPs along with false invoices representing conformity to the contract was adequate to sustain a cause of action under FCA, based upon the implied federal certification theory. The Fifth Circuit denied our appeal and stated that “a false certification of compliance, without more, does not give rise to a false claim for payment unless payment is conditioned on compliance.” The Fifth Circuit was not persuaded that it should recognize the implied false certification theory as a basis for FCA liability. Subsequent to the dismissal of our client’s First Amended Complaint, on June 16, 2016, the United States Supreme Court, in Universal Health Services, Inc. v. United States, et al. ex rel. Escobar, et al. entered a ruling supporting our position. It held that the implied false certification theory can be a basis for False Claims Act liability when a defendant submitting a claim makes specific representations about the goods or services provided, but fails to disclose non-compliance with material statutory, regulatory or contractual requirements that make those representations misleading with respect to those goods and services. Our case was dismissed based in part on the Court’s refusal to recognize the implied false certification theory as a basis for FCA liability. The U.S. Supreme Court agreed with our position but it was after our case had been concluded. 
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