United States Ex Rel. Green v. Service Contract Education & Training Trust Fund

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

________________________________

)

UNITED STATES OF AMERICA, )

ex rel. GORDON GREEN, )

)

Plaintiff, )

)

v. ) Civil Action No. 09-738 (RWR)

)

SERVICE CONTRACT EDUCATION )

AND TRAINING TRUST FUND, et al., )

)

Defendants. )

________________________________ )

MEMORANDUM OPINION

Gordon Green filed a complaint against the Service Contract

Education and Training Trust Fund (“SCETTF”), the Laborers’

International Union of North America (“LIUNA”), and twenty-nine

government contractors, alleging that the defendants violated the

False Claims Act (“FCA”), 31 U.S.C. §§ 3729-33, by engaging in a

scheme to defraud the United States by submitting false and

fraudulent claims concerning fringe benefit programs that SCETTF,

at the behest of LIUNA, provided to the contractor defendants in

connection with federal service contracts. The United States

elected not to intervene in the action. Following notice of that

decision, Green dismissed voluntarily his claims against twenty-

four of the contractors. SCETTF, LIUNA, and four of the five

remaining contractors –- Integrity Management Services, Inc.,

Crothall Healthcare, Inc., Kentucky Building Maintenance, Inc.,

and National Maintenance, Inc. (the “contractor defendants”) –-

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moved to dismiss the complaint for lack of subject matter

jurisdiction and failure to state a claim.1 Green’s complaint

alleges two bases for concluding that defendants misrepresented

to government officials that training the defendants provided

qualified as a bona fide fringe benefit under applicable law:

first, because the contractor defendants were reimbursed for a

substantial portion of training costs, and second, because the

contractor defendants used on-the-job training funds to

compensate employees for work required under their government

contracts. Because Green’s reimbursement claim is based upon the

public disclosure of transactions from the news media and Green

is not an original source of the information underlying his

allegations, that claim will be dismissed for lack of subject

matter jurisdiction.2 The on-the-job training claim will be

dismissed because Green fails to plead fraud with particularity.

1

A fifth contractor defendant, Hospital Klean, filed an

answer. The resolution of the other defendants’ motions to

dismiss disposes of the claims against Hospital Klean.

2

In the course of briefing the motions to dismiss, two

defendants filed motions to adopt their co-defendants’ motions.

Green opposed on grounds that his claims as to the contractor

defendants differ from those as to SCETTF and LIUNA and the

motions failed to specify which arguments the movants seek to

adopt. Because the applicability of the arguments to the

contractor and non-contractor defendants is sufficiently clear,

the motions to adopt co-defendants’ motions will be granted nunc

pro tunc.

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BACKGROUND

The complaint and accompanying materials set forth the

following allegations and background. Green was employed by

defendant LIUNA as its International Representative from 1999

through 2001 and employed by defendant SCETTF as its Director

from 2001 through 2004. (Compl. ¶ 4.) LIUNA is an international

labor union for workers in a variety of fields, including in the

service industries. (Id. ¶ 7.) SCETTF was established by LIUNA

in 1978 to provide training and educational opportunities for

LIUNA’s members. (Id. ¶¶ 8-10.) To join SCETTF, a contractor

must have a collective bargaining agreement (“CBA”) with LIUNA

representing its service employees. (Id. ¶ 28.) Membership in

the two organizations thus is linked. When a contractor becomes

a member of LIUNA, it executes an agreement with LIUNA providing

that the contractor will submit contributions to SCETTF in

accordance with a set schedule and that both the contractor and

LIUNA will be bound by SCETTF’s Agreement and Declaration of

Trust. (Id. ¶ 29.) In addition, the contractor executes an

agreement with SCETTF that obligates it to contribute to SCETTF

the compensation from its government contracts that go toward the

costs of those fringe benefits financed by SCETTF. (Id. ¶ 30.)

Integrity Management Services, Crothall Healthcare, Kentucky

Building Maintenance, National Maintenance, and Hospital Klean

are each commercial contractors that, at relevant times, were

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members of LIUNA, were members of SCETTF, and contracted with

government agencies to provide services. (Id. ¶ 12.)3 Green’s

complaint alleges that SCETTF, LIUNA, and the defendant

contractors defrauded the federal government by providing and

conspiring to provide claims, records, and statements that

falsely or fraudulently represented that fringe benefits provided

to the contractor’s employees complied with the standards of the

McNamara-O’Hara Service Contract Act of 1965, Pub. L. 89-286, 79

Stat. 1034, 41 U.S.C. § 351 et seq. (the “SCA”)4 and related

Department of Labor (“DOL”) regulations.

The SCA applies to certain contracts between an employer and

the United States that have the principal purpose of furnishing

services by service employees. The DOL administers the SCA, and

is responsible for determining wage standards for workers in the

services industries. (Id. ¶¶ 14-17.) The SCA provides, in

relevant part:

Every contract . . . entered into by the United States

or the District of Columbia in excess of $2,500 . . .

the principal purpose of which is to furnish services

in the United States through the use of service

3

In a table, the complaint provides a “Principal Offices”

location and “Contact Person” for each of the defendant

contractors. (Compl. ¶ 12.) In a separate table, the complaint

provides a list of the federal agencies with which the defendant

contractors had service contracts. (Id. ¶ 33.)

4

In 2011, the SCA was recodified at 41 U.S.C.A. § 6702 et

seq, and the relevant provisions were subject to stylistic

revision. This opinion cites to the previous version relied on

by Green in his complaint.

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employees, shall contain . . . [a] provision specifying

the fringe benefits to be furnished in the various

classes of service employees, engaged in the

performance of the contract or any subcontract

thereunder[.]

41 U.S.C.A. § 351(a)(2) (2010). The SCA treats the provision of

fringe benefits to employees covered by a CBA in a distinct

manner. “[W]here a collective-bargaining agreement covers any

such service employees,” the provision specifying the fringe

benefits to be furnished is “to be provided for in such

[collective-bargaining] agreement, including prospective fringe

benefits increases provided for in such agreement as a result of

arm’s-length negotiations.” Id. The SCA defines fringe benefits

non-exhaustively as follows:

Such fringe benefits shall include medical or hospital

care, pensions on retirement or death, compensation for

injuries or illness resulting from occupational

activity, or insurance to provide any of the foregoing,

unemployment benefits, life insurance, disability and

sickness insurance, accident insurance, vacation and

holiday pay, costs of apprenticeship or other similar

programs and other bona fide fringe benefits not

otherwise required by Federal, State, or local law to

be provided by the contractor or subcontractor.

Id. In addition, the SCA permits the federal government to

reimburse a government contractor for a plan providing fringe

benefits to its employees negotiated with its unions under a CBA.

(Compl. ¶ 19.) Additional regulations require that “the

contractor’s contributions for the benefits must be paid

irrevocably to a trust fund or third person pursuant to an

insurance agreement, trust or other funded arrangement,” and that

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“the trust or fund must be set up such that the contractor will

not be able to (i) recapture any of the contributions paid, nor

(ii) in any way divert the funds to its own use or benefit.”

(Id. ¶ 21 (citing 29 C.F.R. 4.171(a)(4)).)

A contractor with a CBA presents the information regarding

the fringe benefits to be provided by submitting a form known as

an “Addendum A” to a federal agency from which it seeks a

services contract. (Id. ¶¶ 23-24.) When the federal agency

awards a contract, that contract includes a provision specifying

the fringe benefits to be furnished, and the contractor is

compensated for the cost of the fringe benefits as part of the

contract. (Id. ¶ 25.) The DOL Division of Wage Determinations

maintains information regarding the terms of the service

contract, including the fringe benefits agreed upon in a CBA.

(Id. ¶ 26.)

Green alleges that the defendants engaged in a fraudulent

scheme whereby each of the defendant contractors made

contributions to SCETTF in the amounts paid to the contractors by

the federal agencies with which they contracted and then SCETTF

returned to the defendant contractors ninety percent of those

contributions. (Id. ¶¶ 34-35.) While the purported purpose of

the refund was to finance the contractors’ provision of on-the-

job training, classroom training, and third party training (id.

¶¶ 36, 45), the complaint alleges:

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At all times pertinent to this Complaint, those

portions of above described recaptured contributions

allocated by the Participating Contractors for on-the-

job training were, in truth and in fact, used to

compensate employees for performing tasks required by

the contractors’ service contracts, and thus were

diverted by the Participating Contractors to their own

use and benefit[.]

(Id. ¶ 46.) The complaint further alleges that purported fringe

benefits described as on-the-job training and class room training

“did not meet the definition of ‘fringe benefits,’ and did not

provide any effective or substantial benefit to the contractors’

employees,” regardless of whether those benefits were financed by

the “recaptured contributions.” (Id. ¶ 47.)

In support of these claims, the complaint describes an

SCETTF promotional website, established around 2003 and

accessible until the date the complaint was filed, that allegedly

demonstrated that the purpose of the trust fund was to enable

participants to recapture and divert ninety percent of their

contributions for training. (Id. ¶¶ 37-43.) The website

compares two hypothetical companies, one of which is an SCETTF

participant and one of which is not. The non-participant,

Company A, is listed as having specified hourly costs for an

employee’s “wages,” “health insurance,” “pension,” and

“training,” and does not receive “government reimbursement” or

“trust fund reimbursement.” Company B has the same costs, but is

reimbursed twenty cents by the government and eighteen cents by

the trust fund, SCETTF. Green alleges that the promotional

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website illustrates that the goal of SCETTF was to enable a

contractor to recapture ninety percent -- eighteen cents in the

hypothetical -- of the contractors’ contributions to SCETTF,

which are represented in the hypothetical by the twenty cents of

government reimbursement for those contributions. (Id. ¶ 43.)

Green alleges that, as a result, SCETTF enabled the contractors

“to incur no expenses whatsoever for fringe benefits, by allowing

them to provide no real or effective training.” (Id. ¶ 44.)

In sum, Green alleges that the defendant contractors

fraudulently induced federal agencies to enter contracts by

submitting records in the form of the “Addendum A” to federal

agencies containing statements that the defendant contractors had

CBAs with LIUNA and that the contractors’ service employees were

to receive fringe benefits financed by SCETTF of specified costs.

Green contends that such representations were “false and

fraudulent when so submitted as these [defendant contractors]

then knew that they did not intend to provide such fringe

benefits.” (Id. ¶ 48.) Further, Green alleges that the

defendants negotiated service contracts with federal agencies

that included compensation for the provision of the above-

described fringe benefits, knowingly presented under the

contracts claims for payment in the form of periodic “Vouchers

for Services” to federal agencies that included compensation for

the provision of such fringe benefits, and knowingly and

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deliberately failed to provide such fringe benefits to their

service employees under the service contracts. (Id.) Green

alleges that the federal agencies that negotiated, awarded, and

made payments under service contracts with the defendants “relied

upon the Addendum A records and the statements within such

records” in determining whether to award the contracts and the

compensation for the contracts. (Id. ¶ 49.) Green’s complaint

lists several high-level individuals at LIUNA and SCETTF “who

were aware of, approved of, and participated in the fraudulent

activity described in th[e] Complaint.” (Id. ¶ 11.) He alleges

that a “Contact Person” for each defendant contractor “knowingly

participated in, or knowingly executed the agreement whereby his

Contractor participated in the SCETT Fund, including its

specified provision for on-the-job training, classroom training,

and third party training.” (Id. ¶¶ 12-13.)

The complaint alleges that the defendants concealed the

scheme by forwarding to the DOL’s Division of Wage Determinations

information about the service contracts that contained false

representations about fringe benefits. (Id. ¶¶ 50-51.) The

information provided to the DOL was allegedly “material” to the

decisions of the federal agency to award contracts, “in that such

contracts become valid and enforceable only where the Secretary

of Labor . . . determines that the dollar value of the fringe

benefits included is that prevailing in the locality for the

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classification in which the service employees are working.” (Id.

¶ 52.)5

Green filed his complaint on April 22, 2009, asserting

claims against SCETTF and LIUNA for FCA violations involving

presenting fraudulent claims (Count One), claims against twenty-

nine contractors for FCA violations involving presenting

fraudulent claims (Count Two), claims against SCETTF and LIUNA

for making false statements (Count Three), claims against the

twenty-nine contractors for making false statements (Count Four),

and claims against all defendants for conspiracy (Count Five).

With regard to each count, Green alleges that the activity giving

rise to liability occurred “[d]uring the period beginning in or

about 1978 and continuing until the date of th[e] Complaint.”

(Compl. ¶¶ 57, 61, 65, 71, 77.) Green claims “direct and

independent knowledge” of the information on which his

allegations are based due to his employment with LIUNA and

SCETTF, and asserts that none of the allegations in the complaint

is “based upon a public disclosure.” (Id. ¶ 5.) In 2011, the

United States filed a notice of its election to decline

5

Green’s allegation regarding the role of the DOL misstates

the statutory requirement. The requirement that the Secretary of

Labor or his authorized representative determine that “fringe

benefits to be furnished in the various classes of service

employees . . . be prevailing for such employees in the locality”

applies to service employees not covered by a CBA. 41 U.S.C.A.

§ 351(a)(2) (2010). Where a CBA covers service employees, as is

discussed supra, the fringe benefits to be furnished are “to be

provided for in such [collective-bargaining] agreement[.]” Id.

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intervention in the case. Green later voluntarily dismissed his

claims against twenty-four of the contractors.

SCETTF, LIUNA, Integrity Management Services, Crothall

Healthcare, Kentucky Building Maintenance, and National

Maintenance moved to dismiss under Federal Rule of Civil

Procedure 12(b)(1), arguing that the FCA’s public disclosure bar

eliminates subject matter jurisdiction over the action, and under

Rule 12(b)(6), arguing that Green failed to plead fraud with

particularity as required by Rule 9(b) and failed to plead

factual allegations that any of the defendants presented a false

claim for payment, made any false statements, or conspired to get

the United States to pay a false claim. In opposition, Green

argued that the public disclosure bar does not preclude

jurisdiction because Green falls within the FCA’s original source

exception and that his pleadings are adequate. In support of his

jurisdictional argument, Green submitted a declaration in which

he states that “[a]s Director of the Fund, I became aware of the

manner and means of its operation [sic] the fraudulent conduct of

the Fund, LIUNA, and the contractors named as defendants in the

case, which is the basis of the allegations in my Complaint.”

(Docket 70, Decl. of Gordon N. Green (“Green Decl.”) ¶ 4.) He

lists his employment responsibilities at SCETTF as “includ[ing]

the development of literature and other documents for the Fund,

and facilitating card-check elections for the organization of

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unions (as opposed to voting elections),” as well as “also

conduct[ing] training sessions for shop stewards, supervis[ing]

staff, and assist[ing] in contract negotiations.” (Id. ¶ 3.)

Further, he states that he provided the information underlying

his allegations to the government by a submission dated April 2,

2009, before he filed his suit. (Id. ¶ 4.)

DISCUSSION

Under the FCA, a private individual, termed a relator, may

bring a qui tam suit for penalties and treble damages against

anyone who knowingly presents, or causes to be presented, to an

officer or employee of the United States Government, a false or

fraudulent claim for payment or approval, or who knowingly makes,

uses, or causes to be made or used, a false record or statement

material to a false or fraudulent claim. 31 U.S.C.

§ 3729(a)(1)(A)-(B) (2006). A relator may also bring suit for a

conspiracy to violate the FCA. Id. § 3729(a)(1)(C). If the

action is successful, the relator is entitled to share in the

proceeds recovered. Id. § 3730(d)(2).6

6

As is noted above, Green alleges that he was among the

perpetrators of the alleged fraud. (Compl. ¶ 11.) The FCA does

not prohibit a qui tam suit “brought by a person who planned and

initiated the violation of section 3729 upon which the action was

brought.” 31 U.S.C. § 3730(d)(3). Rather, “the court may, to

the extent the court considers appropriate, reduce the share of

the proceeds of the action which the person would otherwise

receive . . . , taking into account the role of that person in

advancing the case to litigation and any relevant circumstances

pertaining to the violation.” Id. A qui tam suit is barred,

however, “[i]f the person bringing the action is convicted of

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I. SUBJECT MATTER JURISDICTION

The FCA grants federal courts subject matter jurisdiction to

hear a limited category of suits brought by relators. 31

U.S.C.A. § 3730(e)(4)(A) (2009). A private individual may not

sue alleging facts that were publicly disclosed before the suit

was filed, where the individual is not an “original source” of

the information. The version of the Act in effect when Green

filed his complaint provided:

No court shall have jurisdiction over an action . . .

based upon the public disclosure of allegations or

transactions in a criminal, civil, or administrative

hearing, in a congressional, administrative, or

Government Accounting Office report, hearing, audit, or

investigation, or from the news media, unless the

action is brought by the Attorney General or the

personbringing the action is an original source of the

information.

31 U.S.C.A. § 3730(e)(4)(A) (2009).7

criminal conduct arising from his or her role in the violation of

section 3729.” Id. Green pled guilty in 2004 to charges of

bribery relating to an employee benefit fund and theft of

employee benefit fund property arising from actions he took while

serving with LIUNA and SCETTF, see United States v. Gordon N.

Green, 2:04-cr-00062-CMR-1 (E.D. Pa. filed Feb. 11, 2004), and

the public record of his conviction is subject to judicial

notice. Covad Commc’ns. Co. v. Bell Atlantic Corp., 407 F.3d

1220, 1222 (D.C. Cir. 2005). There is no indication that his

criminal conduct related to the FCA violations he now alleges.

7

The public disclosure provisions were amended on March 23,

2010, but the Supreme Court held that the amendments were not

retroactive. Graham Cnty. Soil & Water Conservation Dist. v.

United States ex rel. Wilson, 30 S. Ct. 1396, 1400 n.1 (2010).

The version of 31 U.S.C. § 3730(e)(4) in effect at the time

plaintiff’s complaint was filed applies to the present action.

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Jurisdiction is a threshold issue that must be resolved

before the merits of the case may be considered. Rockwell, 549

U.S. at 470 (recognizing that “[w]hether the point was conceded

or not, . . . we may, and indeed must, decide whether [relator]

met the jurisdictional requirement of being an original source”);

Vt. Agency of Nat’l Resources v. United States ex rel. Stevens,

529 U.S. 765, 778 (2000) (noting that “[q]uestions of

jurisdiction, of course, should be given priority –- since if

there is no jurisdiction there is no authority to sit in judgment

of anything else”). The plaintiff bears the burden of

establishing that the court has jurisdiction to consider his

case. Moms Against Mercury v. Food & Drug Admin., 483 F.3d 824,

828 (D.C. Cir. 2007); see also Georgiades v. Martin-Trigona, 729

F.2d 831, 833 n.4 (D.C. Cir. 1984) (“It is the burden of the

party claiming subject matter jurisdiction to demonstrate that it

exists.”)

A suit is jurisdictionally barred under § 3730(e)(4)(A) if

“either the allegation of fraud or the critical elements of the

fraudulent transaction themselves were in the public domain.”

United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14

F.3d 645, 654 (D.C. Cir. 1994). An “allegation” is a “conclusory

statement implying the existence of provable supporting facts,”

while a “transaction” is “an exchange between two parties or

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things that reciprocally affect or influence one another.” Id.

at 653-54. The D.C. Circuit represented the inquiry as follows:

[I]f X + Y = Z, Z represents the allegation of fraud

and X and Y represent its essential elements. In order

to disclose the fraudulent transaction publicly, the

combination of X and Y must be revealed, from which

readers or listeners may infer Z, i.e., the conclusion

that fraud has been committed.

Id. at 654 (emphasis in original). “Allegations or transactions”

that are sufficient to trigger the jurisdictional bar “raise[]

the specter of ‘foul play’” so as to reveal the “questionable

legality” of an allegedly fraudulent practice. United States ex

rel. Findley v. FPC-Boron Employees’ Club, 105 F.3d 675, 687

(D.C. Cir. 1997). The key question is “whether the publicly

disclosed information ‘could have formed the basis for a

governmental decision on prosecution, or could at least have

alerted law-enforcement authorities to the likelihood of

wrongdoing.’” United States ex rel. Settlemire v. District of

Columbia, 198 F.3d 913, 918 (D.C. Cir. 1999) (quoting Springfield

Terminal, 14 F.3d at 654 (internal quotations omitted)). If the

public disclosure could have alerted the government to the fraud,

there is little value in permitting a private individual to sue,

and the FCA accordingly deprives courts of jurisdiction to hear a

qui tam action.

To be subject to the jurisdictional bar, an action must be

“based upon” a public disclosure through the statutorily

specified means. 31 U.S.C.A. § 3730(e)(4)(A) (2009). “[T]he

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statutory phrase ‘based upon’ means ‘supported by,’ not ‘derived

from.’” United States ex rel. Schwedt v. Planning Research

Corp., Inc., 39 F. Supp. 2d 28, 33 (D.D.C. 1999) (quoting

Findley, 105 F.3d at 682). The D.C. Circuit thus has

“constru[ed] . . . the jurisdictional bar to encompass situations

in which the relator’s complaint repeats what the public already

knows, even though [the relator] learned about the fraud

independent of the public disclosures.” Findley, 105 F.3d at

683; see also United States ex rel. Hockett v. Columbia/HCA

Healthcare Corp., 498 F. Supp. 2d 25, 47 (D.D.C. 2007) (quoting

Findley, 105 F.3d at 682) (explaining that “[t]he courts of this

Circuit have . . . [held] that a relator’s lawsuit is ‘based

upon’ a public disclosure if it is ‘supported by’ or is

‘substantially similar’ to the allegations or transactions

contained in the disclosure”).

An exception to the public disclosure jurisdictional bar

exists where a relator qualifies as an “original source.” The

FCA defines an “original source” to be “an individual who has

direct and independent knowledge of the information on which the

allegations are based and has voluntarily provided the

information to the Government before filing an action . . . which

is based on the information.” 31 U.S.C.A. § 3730(e)(4)(B)

(2009). Under the original source provision, the relevant

“allegations,” which must be supported by information that the

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relator directly and independently knows, are the ones made by

the relator in the complaint, not either the publicly disclosed

“allegations or transactions” referred to in subparagraph (A).

See Rockwell Int’l Corp. v. United States, 549 U.S. 457, 471

(2007). Subparagraph B grants an individual original-source

status where, first, he has “direct and independent knowledge of

the information” on which his own allegations are based, and,

second, he has provided that information to the government before

filing suit. Id. at 470-71. The D.C. Circuit has defined

“direct” knowledge as knowledge “marked by absence of an

intervening agency,” Springfield Terminal, 14 F.3d at 656

(internal quotations omitted), or “first-hand knowledge.”

Findley, 105 F.3d at 690. “[I]ndependent” knowledge is

“knowledge that is not itself dependent on public disclosure.”

Springfield Terminal, 14 F.3d at 656 (internal quotations

omitted). In tandem, the public disclosure bar and original

source exception seek an optimal balance between encouraging

suits by “whistle-blowing insiders with genuinely valuable

information” and discouraging claims by “opportunistic plaintiffs

who have no significant information to contribute of their own.”

Id. at 649.

In addition to the statutory requirements of direct and

independent knowledge of the information underlying a relator’s

allegations and provision of that information to the government

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before filing suit, the D.C. Circuit has inferred a third

requirement for an individual to qualify as an original source:

the individual must also “provide the information to the

government prior to any public disclosure.” Findley, 105 F.3d at

691. The Findley Court reasoned that a relator is not a whistle

blower, entitled to sue, unless he alerts the government to the

alleged fraud before the information is out in the public domain.

In support of its conclusion, the Findley Court interpreted the

“information” of which an original source must have direct and

independent knowledge to be that on which the public disclosure

is based. As is discussed above, the Supreme Court in Rockwell

later held that the relevant “information” is that on which the

relator’s own allegations are based, seemingly foreclosing

Findley’s interpretation of the term. Rockwell, 549 U.S. at 470-

72. The D.C. Circuit has noted that the Rockwell decision “may

call into question the implicit requirement we identified in

Findley.” Davis v. District of Columbia, 413 Fed. Appx. 308, 310

(D.C. Cir. 2011) (per curiam). Nonetheless, “neither the Supreme

Court nor the D.C. Circuit has purported to overrule Findley’s

pre-public disclosure notification requirement,” United States ex

rel. Davis v. District of Columbia, 773 F. Supp. 2d 21, 33

(D.D.C. 2011), and “the central reason for Findley’s holding,

that ‘[o]nce the information has been publicly disclosed . . .

there is little need for the incentive provided by a qui tam

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action,’ still has force[.]” United States ex rel. McBride v.

Halliburton Co., Civil Action No. 05-00828 (HHK), 2007 WL

1954441, at *7 n.16 (D.D.C. July 5, 2007) (quoting Findley, 105

F.3d at 691). As Findley remains the law of this Circuit, Green

is subject to its pre-public disclosure notification requirement.

On a motion to dismiss for lack of subject matter

jurisdiction under Rule 12(b)(1), the plaintiff’s factual

allegations are subject to closer scrutiny than they would be on

a motion to dismiss for failure to state a claim. Flynn v.

Veazey Constr. Corp., 310 F. Supp. 2d 186, 190 (D.D.C. 2004); see

also 5B Charles Alan Wright, Arthur R. Miller, Mary Kay Kane &

Richard L. Marcus, Federal Practice and Procedure § 1350 (3d ed.

2011). In addition, “[i]n 12(b)(1) proceedings, it has been long

accepted that the [court] may make appropriate inquiry beyond the

pleadings to satisfy itself [that it has] authority to entertain

the case.” Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987)

(internal quotations omitted).

A. Public disclosure bar

The defendants argue that the “allegations or transactions”

upon which Green’s suit is based were the subject of “public

disclosure . . . from the news media” within the meaning of

§ 3730(e)(4)(A) because the SCETTF website published in 2003

placed in the public domain information about the operation of

SCETTF and its training program. They also point out that all of

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the SCETTF contractors are listed on the SCETTF website and the

fact that the defendant contractors had service contracts with

federal agencies is readily available on the Internet. Green

contends that the website “was nothing more than a self-promoting

advertisement directed to a select audience, and was not in the

nature of any traditional news source.” (Pl.’s Reply to Defs.’

Joint Resp. in Opp’n to Relator’s Mot. to Amend Exhibit E to his

Opp’n to SCETTF’s Mot. to Dismiss at 4.)8 Because “[s]ection

3730(e)(4) does not permit jurisdiction in gross,” Rockwell, 549

U.S. at 476, the applicability of the public disclosure bar must

be evaluated as to both Green’s reimbursement claim and his

improper on-the-job training claim.

8

In opposing the motions to dismiss, Green did not dispute

the defendants’ proposition that the promotional website is a

public disclosure with regard to all of his claims under the

statute, but contended that jurisdiction is proper because he is

an “original source” of the information upon which the

allegations in the complaint are based. (Pl.’s Consolidated

Opp’n to Defendant Contractors’ Mots. to Dismiss (“Pl.’s

Consolidated Opp’n”) at 6-8; Pl.’s Opp’n to Def. SCETTF’s Mot. to

Dismiss at 18-20.) Some two months after filing his oppositions,

however, in his reply in support of his motion to amend Exhibit E

to his opposition to SCETTF’s motion to dismiss, Green disputed

the proposition that the website was “news media” within the

meaning of the statute and that it constituted a public

disclosure, providing no explanation for his failure to do so

earlier. (Pl.’s Reply to Defs.’ Joint Resp. in Opp’n to

Relator’s Mot. to Amend Exhibit E to his Opp’n to SCETTF’s Mot.

to Dismiss at 4-5.) Even were Green’s belated challenge to be

disregarded, the court “must satisfy [itself] that the parties’

position is correct” because “§ 3730(e)(4) is jurisdictional.”

Rockwell, 549 U.S. at 470.

- 21 -

1. Website as news media

The FCA does not define “news media,” and courts that have

considered the issue have construed the term to include readily

accessible websites. See United States ex rel. Brown v. Walt

Disney World Co., No. 6:06-cv-1943-Orl-22KRS, 2008 WL 2561975, at

*4 (M.D. Fla. June 24, 2008) (finding that a Wikipedia website

qualifies as “news media”), aff’d, 361 Fed. Appx. 66 (11th Cir.

2010) (per curiam); United States ex rel. Unite Here v. Cintas

Corp., No. C 06-2413 PJH, 2007 WL 4557788, at *14 (N.D. Cal.

Dec. 21, 2007) (finding that “[t]he ‘fact’ of the contracts

between [defendant] and the federal government was publicly

disclosed in the news media, as that information was available on

the Internet”); see also United States ex rel. Rosner v.

WB/Stellar IP Owner, L.L.C., 739 F. Supp. 2d 396, 407 (S.D.N.Y.

2010) (holding that a publicly-searchable database on a city

agency’s website was an administrative report subject to public

disclosure bar). In addition, the Supreme Court emphasized

recently that the specified channels of public disclosure

sufficient to trigger the jurisdictional bar should be construed

broadly. See Schindler Elevator Corp. v. United States ex rel.

Kirk, 131 S. Ct. 1885, 1891 (2011). In Schindler, the Supreme

Court interpreted the term “report” inclusively for the purpose

of triggering the statutory bar based on public disclosure by

means of “a congressional, administrative, or Government

- 22 -

Accounting Office report.” Id. In so doing, the Court noted

that “[t]he other sources of public disclosure in

§ 3730(e)(4)(A), especially ‘news media,’ suggest that the public

disclosure bar provides ‘a broa[d] sweep.’” Id. (quoting Graham

Cnty. Soil & Water Conservation Dist. v. United States ex rel.

Wilson, 130 S. Ct. 1396, 1404 (2010)).

The promotional page at issue here was readily accessible to

the public on SCETTF’s external website. According to the

complaint, the website was designed specifically to advertise

participation in SCETTF. (Compl. ¶ 38.) A screen shot of the

website shows a simple Internet address9 and there is no evidence

or contention that access to the website was limited to SCETTF or

LIUNA members or that the website was in any other way

restricted. Cf. United States ex rel. Liotine v. CDW Gov’t,

Inc., No. 05-33-DRH, 2009 WL 3156704, at *6 n.5 (S.D. Ill.

Sept. 29, 2009) (finding that where several steps had to be taken

to locate an article archived on a University’s purchasing

services website, the publication was not a public disclosure by

the “news media”); see also United States ex rel. Radcliffe v.

Purdue Pharma, L.P., 582 F. Supp. 2d 766, 772 (W.D. Va. 2008)

(declining “to conclude that anything posted online would

9

An exhibit submitted by Green shows a screen shot of the

website accessed on March 24, 2009 reflecting an Internet address

of http://www.scettf.org/pages/companyAB.htm. (Green Decl., Ex.

9.)

- 23 -

automatically constitute a public disclosure”). That the SCETTF

website may have been “directed to a select audience” (Pl.’s

Reply to Defs.’ Joint Resp. in Opp’n to Relator’s Mot. to Amend

Exhibit E to His Opp’n to SCETTF’s Mot. to Dismiss at 4),

presumably because of its subject matter, does not detract from

its ready accessibility. It remained unchanged, accessible at

the same Internet address, for approximately six years before

Green filed this suit. (Green Decl. ¶¶ 5-6.) Over this period

of time, thousands of professionals in the government services

industries and other visitors to the main SCETTF website could

have come upon it. While a website may not be a “traditional

news source” (Pl.’s Reply to Defs.’ Joint Resp. in Opp’n to

Relator’s Mot. to Amend Exhibit E to His Opp’n to SCETTF’s Mot.

to Dismiss at 4), this particular website qualifies as news media

in light of the concerns motivating the FCA’s public disclosure

bar, as recognized by this Circuit and the holdings in favor of

broad constructions of its terms.

2. The reimbursement allegation

Green alleges that the defendants are liable for false

claims because the training provided by SCETTF did not constitute

a bona-fide fringe benefit since the cost was reimbursed or

recaptured, in alleged violation of SCA regulations. With regard

to this claim, the SCETTF website was more than sufficient to “to

set government investigators on the trail of fraud.” Springfield

- 24 -

Terminal, 14 F.3d at 655. The FCA provides that a public

disclosure may be either of “allegations or transactions.” 31

U.S.C.A. § 3730(e)(4)(A) (2009); see also Schwedt, 39 F. Supp. 2d

at 32 n.3 (emphasizing “disjunctive nature of 3730(e)(4)(A)”).

The website sufficiently discloses transactions, potential

“exchange[s] between two parties or things that reciprocally

affect or influence one another.” Springfield Terminal, 14 F.3d

at 654. The promotional website clearly illustrates that a

hypothetical trust fund participant would receive reimbursement

from both the government and the trust fund amounting to 90% of

its training costs. From the website, a reader would be able to

infer that SCETTF might be reimbursing participant contractors

for contributions to the training fund and that SCETTF

participants therefore might be recouping contributions in

possible violation of regulations. The SCETTF website

accordingly “raise[d] the specter of ‘foul play’” so as to reveal

the “questionable legality” of the allegedly fraudulent practice.

Findley, 105 F.3d at 687.

Green’s reimbursement claim is also “based upon” the public

disclosure within the meaning of the statute because it is

“supported by” the information on the website. Id. at 682. As

courts of this Circuit have recognized, a suit need not be

“derived from” the public disclosure to come within the

jurisdictional bar. Id. Regardless of whether Green learned of

- 25 -

the alleged fraud from the website, “a relator’s ability to

reveal specific instances of fraud where the general practice has

already been publicly disclosed is insufficient to prevent

operation of the jurisdictional bar.” Settlemire, 198 F.3d at

919. The fact that Green’s complaint, for example, lists 31

specific entities that allegedly participated in the fraud makes

no difference. Because Green’s “complaint merely echoes publicly

disclosed, allegedly fraudulent transactions that already enable

the government to adequately investigate the case and to make a

decision whether to prosecute, the public disclosure bar

applies.” Findley, 105 F.3d at 688.

3. The on-the-job training allegation

With regard to Green’s claim that the defendants

misrepresented the on-the-job training they provided or

facilitated, the promotional page described in the Complaint does

not constitute a public disclosure of relevant allegations or

transactions. That website simply does not contain any

information about the nature of the training financed by SCETTF.

Defendant Crothall Healthcare described and submitted a screen

shot of another page on the SCETTF website, which advertised that

SCETTF would reimburse “30% of the wages of an employee

designated to train other employees on the job,” “100% of

employees’ wages while attending safety or training meetings,”

and “100% of the costs of a third party instructor.” (Def.

- 26 -

Crothall Healthcare Mot. to Dismiss at 5.) While Green does not

dispute the accuracy of Crothall’s representation of this page,

the record is unclear as to how long this particular page was

available on the Internet. In addition, Green’s allegation

regarding on-the-job training does not necessarily rely on the

SCETTF reimbursement that the page submitted by Crothall

highlights. While he alleges that recaptured funds “allocated by

the Participating Contractors for on-the-job training were, in

truth and in fact, used to compensate employees for performing

tasks required by the contractors’ service contracts,” he also

emphasizes that the training benefits provided were illegitimate

“whether or not financed by the . . . recaptured contributions.”

(Compl. ¶¶ 46-47.) Because the second website does not suffice

to alert a reader that training funds might be used to compensate

employees for contract-mandated work, the public disclosure bar

does not preclude jurisdiction over this claim.10 Green’s on-

10

The defendants argue that two other obstacles bar

jurisdiction over all of Green’s claims, including that regarding

the nature of the purported on-the-job training. First, SCETTF

argues that the court lacks jurisdiction because the Secretary of

Labor has exclusive, discretionary authority over the

interpretation, administration, and enforcement of the SCA.

(Def. SCETTF’s Mot. to Dismiss at 11-19.) However, there is

scant support for the proposition that FCA actions predicated on

a contractor’s alleged misrepresentation of adherence to arguably

clear SCA regulations are precluded. See, e.g., United States ex

rel. Head v. Kane Co., 798 F. Supp. 2d 186 (D.D.C. 2011)

(permitting FCA action alleging that contractors avoided payment

of wages required under the SCA). The correctness of Green’s

interpretation of the fringe benefits regulations is certainly

not without doubt; however, his complaint can reasonably be read

- 27 -

the-job training allegation therefore will be evaluated on the

merits. See Section II, infra.

B. Original source exception

Because the public disclosure bar applies to Green’s

reimbursement claim, subject matter jurisdiction exists over that

claim only if Green demonstrates that he is an original source by

establishing that he has direct and independent knowledge of the

information underlying his allegations and that he provided the

information to the government before filing his suit and before

the public disclosure.

1. Direct and independent knowledge

Green must demonstrate direct and independent knowledge of

“any essential element of the underlying fraud transaction” on

which his allegations are based. Springfield Terminal, 14 F.3d

at 657. As Green affirmed in his briefing, he “alleges that the

to allege (although not with the particularity required under

Rule 9(b), see Section II, infra) that the defendants did not

provide training at all, but used funds allocated for that

purpose to pay for contract-required work. This is a clear

enough violation of regulations requiring that fringe benefits be

provided to service employees. Second, SCETTF argues that

jurisdiction is barred by 31 U.S.C. § 3730(e)(3), which provides

that “[i]n no event may a person bring a [qui tam suit] which is

based upon allegations or transactions which are the subject of .

. . an administrative civil money penalty proceeding in which the

Government is already a party.” (Def. SCETTF’s Mot. to Dismiss

at 19-20.) The defendant’s proffered declaration and accompany

exhibits (id., Decl. of Terese M. Connerton) establishing

SCETTF’s communication with DOL and the U.S. Air Force regarding

SCETTF’s bona fide fringe benefit status does not suffice to

establish that any “administrative civil money penalty

proceeding” had been undertaken by the government.

- 28 -

contractors lied to the Government by stating to victim agencies

they would provide bona fide fringe benefits to their employees,

on service contracts awarded by those agencies.” (Pl.’s Opp’n to

LIUNA at 6.) The contractors’ representations and subsequent

claims for payment under the service contracts were allegedly

“lie[s]” because “[t]he benefits that they actually provided, and

intended to provide at the time the statements were made, did not

and could not qualify as bona fide fringe benefits” because the

cost of the benefits was “ultimately recaptured by, or reimbursed

to, the contractors[.]” (Id.) As Green brings claims against

SCETTF, LIUNA, and the contractor defendants, he must demonstrate

direct and independent knowledge of the information underlying

his allegations with respect to each one.

Green alleges in general terms that he “has direct and

independent knowledge, within the meaning of 31 U.S.C.

3730(e)(4)(B), of the information on which the allegations set

forth in this Complaint are based derived through his employment”

at SCETTF and LIUNA. (Compl. ¶ 5.) In briefing, Green further

contends that he qualifies as an original source because “[he]

was the individual who designed and posted th[e] information on

the Fund’s website.” (Pl.’s Consolidated Opp’n to Defendant

Contractors’ Mots. to Dismiss (“Pl.’s Consolidated Opp’n”) at 7

(emphasis omitted).) This argument misunderstands the focus of

the direct and independent knowledge inquiry. As the Supreme

- 29 -

Court explained in Rockwell, original source status hinges on

whether the relator has direct and independent knowledge of the

information underlying his own allegations, not the information

underlying the public disclosure. Rockwell, 549 U.S. at 470-72;

see also Hockett, 498 F. Supp. 2d at 51 (explaining that “the

inquiry is not about whether relator was a source of the [public

disclosure], but whether she had direct and independent knowledge

of the information underlying her own . . . allegation of

fraud”).

Green’s general assertion that he has direct and independent

knowledge “derived through his employment” (Compl. ¶ 5) does not

suffice to explain the basis of his knowledge of any elements of

the alleged fraud committed by these defendants. Green alleges a

vast scheme, beginning in or about 1978 and continuing until

April 22, 2009, the date he filed the complaint. (Compl. ¶¶ 57,

61, 65, 71, 77.) Green’s own employment with LIUNA and SCETTF

spanned the years of 2001 to 2004 only. (Compl. ¶ 4.) In

briefing, Green concedes that a six-year statute of limitations

applies and that alleged claims arising before April 22, 2003 are

time barred. (Pl.’s Consolidated Opp’n at 9.) Even if the

relevant period is limited to April 22, 2003 through Green’s

tenure at SCETTF in 2004, Green fails to demonstrate direct and

independent knowledge of the alleged fraudulent activity. And he

does not begin to explain how he could have had first-hand

- 30 -

knowledge of what SCETTF, LIUNA, or any of the defendant

contractors were doing after his tenure at SCETTF concluded.

With regard to LIUNA and SCETTF, Green’s complaint lists

several high-level individuals “who were aware of, approved of,

and participated in the fraudulent activity described in th[e]

Complaint.” (Compl. ¶ 11.) But Green does not explain how he

came to learn of any specified individual’s awareness, approval,

or participation in the alleged fraud. He does not describe any

meetings he attended, communications to which he was privy, or

any other source of knowledge. Cf. United States ex rel.

Hutcheson v. Blackstone Medical, Inc., 694 F. Supp. 2d 48, 60 (D.

Mass. 2010) (finding relator an original source where the

complaint alleged that relator “[i]n the regular course of her

job duties . . . had access to email and internal documents and

data which reflected the conduct discussed in the complaint,

including communications and documents circulated among upper

management”).

With regard to the defendant contractors, the basis for

direct and independent knowledge is similarly unexplained. Green

does not, for example, explain the nature or regularity of any of

his interactions with any particular defendant contractor. He

merely lists a “Contact Person” for each defendant contractor, in

each case the contractor’s President, and alleges that such

person “knowingly participated in, or knowingly executed the

- 31 -

agreement whereby his Contractor participated in the SCETT Fund,

including its specified provision for on-the-job training,

classroom training, and third party training.” (Compl. ¶¶ 12-

13.) This general allegation that the defendant contractors were

members of SCETTF leaves no basis for inferring that Green had

first-hand knowledge of the false or fraudulent

misrepresentations they are alleged to have made.

By way of comparison, in United States ex rel. Davis, a

court considered a qui tam suit alleging that District of

Columbia Public Schools (DCPS) had submitted Medicaid

reimbursement claims without maintaining adequate supporting

documentation. Id., 773 F. Supp. 2d at 22. The court found that

the plaintiff had direct and independent knowledge of the lack of

such documentation, an essential element of the claim, where the

plaintiff’s complaint alleged that plaintiff’s firm, which was

responsible for collecting and maintaining necessary

documentation, and of which plaintiff was the chairman, itself

retained the supporting documentation and never provided it to

either DCPS or the firm that DCPS subsequently retained to

replace plaintiff’s firm. United States ex rel. Davis, 773 F.

Supp. 2d at 32 (citing United States ex rel. Davis v. District of

Columbia, 591 F. Supp. 2d 30, 37 (D.D.C. 2008)). Green has not

pled that he observed first-hand the pay vouchers or supporting

- 32 -

documentation allegedly submitted by defendant contractors with

false representations about the reimbursement scheme involved.

This case is closer to Hockett, another FCA action brought

by a relator alleging Medicare fraud. There, a court found the

relator’s assertion that she heard an alleged perpetrator of the

fraud making incriminating statements insufficient to constitute

direct and independent knowledge of certain information in the

amended complaint because it “relie[d] on several layers of

hearsay” and was “highly conclusory in nature, asserting legal

conclusions rather than what was actually said.” Id., 498 F.

Supp. 2d at 53. Green does not refer to any statements made by

the individuals he lists at all, and his allegations are entirely

conclusory. That SCETTF promoted a program in which participants

would be reimbursed for training was a matter of public

disclosure since at least 2003 when the website was published.

Green’s allegations do little more that conclude, based on

Green’s own interpretation of the applicable regulations, that

the reimbursement program that SCETTF promoted was not in

compliance with the SCA. Nowhere, however, does Green explain

how he knows, rather than merely speculates, that the defendants

misrepresented the nature or operation of SCETTF in order to get

allegedly false or fraudulent claims paid. “‘[T]he relator must

possess substantive information about the particular fraud,

rather than merely background information which enables a

- 33 -

putative relator to understand the significance of a publicly

disclosed transaction or allegation.’” Findley, 105 F.3d at 688

(quoting United States ex rel. Stinson, Lyons, Gerlin &

Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1160 (3rd

Cir. 1991)).11

Finally, that Green includes himself among the alleged

perpetrators of the fraud does not obviate the statutory

requirement that an original source’s direct and independent

knowledge be demonstrably of “the information on which the

allegations are based.” 31 U.S.C.A. § 3730(e)(4)(B) (2009)

(emphasis added). Green lists his name among those “who were

aware of, approved of, and participated in the fraudulent

11

The declaration Green submitted provides no better

explanation than does his complaint. Green states that the

general job responsibilities he held at SCETTF included

“develop[ing] literature and other documents for the Fund, and

facilitating card-check elections for the organization of unions

(as opposed to voting elections),” as well as “conduct[ing]

training sessions for shop stewards, supervis[ing] staff, and

assist[ing] in contract negotiations.” (Green Decl. ¶ 3.)

However, Green does not tie any of these duties to his

allegations of fraud. He does not, for example, state that he

supervised staff involved in the fraud or that he assisted in any

of the contracts allegedly negotiated on the basis of fraudulent

representations about providing fringe benefits. And he does not

detail how he or anyone else perpetrated a fraud, stating only

that “[a]s Director of the Fund, [he] became aware of the manner

and means of [SCETTF’s] operation [sic] the fraudulent conduct of

the Fund, LIUNA, and the contractors named as defendants in the

case, which is the basis of the allegations in [the] Complaint.”

(Id. ¶ 4.) Simply asserting that Green’s leadership position

made him aware of the fraud, without more, does not provide a

basis for concluding that Green had first-hand knowledge of the

fraudulent scheme alleged.

- 34 -

activity described in th[e] Complaint” (Compl. ¶ 11), but his

sole specific contention with regard to his own role is that he

created a website illustrating a hypothetical by which

participating contractors would receive 90% reimbursement for

training. (Pl.’s Consolidated Opp’n at 7.) Direct and

independent knowledge of the creation of a website promoting a

reimbursement program that may or may not provide fringe benefits

that comply with the SCA is not direct and independent knowledge

of an essential element of the fraudulent transaction, namely,

submitting false claims, making or submitting false records or

statements, or conspiring to do either. Since Green plainly need

not await discovery before setting forth information about his

own actions, his reliance on generalities is significant.

Green’s failure to explain what knowledge he has that he, or

anyone else at SCETTF, LIUNA, or the defendant contractors

submitted or caused others to submit false claims, provided or

caused others to provide or make false records or false

statements to get claims paid, or conspired to further a fraud,

precludes a finding that Green has “direct and independent

knowledge” of the information underlying his allegations.

2. Provision of information to the government

Green’s complaint does not assert that Green provided the

information underlying his allegations to the government before

filing suit as required by § 3730(e)(4)(B). In his declaration,

- 35 -

however, Green contends for the first time that he “provided all

of th[e] information [on which the allegations are based] to the

United States Department Justice before filing my Complaint . . .

by the submission of a sixteen page, single spaced memorandum,

with exhibits, prepared by and transmitted by my attorney, dated

April 2, 2009.” (Green Decl. ¶ 4.) Green does not include a

copy of the memorandum submitted or any proof of mailing or

receipt. Rather, he attaches to his declaration “Exhibit 9 [to

the] memorandum,” which is a print out of the SCETTF website, and

“Exhibit 1 to the memorandum,” which is a piece of SCETTF

literature including a description of reimbursement for on-the-

job training. (Id. ¶¶ 5, 7.) Defendant Integrity Management

argues that Green’s representation of submission should not be

credited because Green has “not produced proof of the submission

and evidence of the Justice Department’s receipt of the

submission prior to April 22, 2009.” (Def. Integrity

Management’s Reply at 6.)

It is within a court’s discretion to credit a plain

statement made by a relator in a complaint that information was

disclosed timely to the government. See, e.g., United States ex

rel. Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377, 384 n.8

(1st Cir. 2011) (“[Relator’s] complaint stated that she disclosed

the allegations to the United States Attorneys’ Office for the

Middle District of Florida in the ‘Summer of 2006’ ‘prior to

- 36 -

filing.’ This is more than enough.”) In this case, however, the

assertion of disclosure was absent from Green’s complaint, and

the declaration specifies only that the disclosure was “dated

April 2, 2009,” where the complaint was filed on April 22, 2009,

and lacks an affirmative representation regarding the date of

submission or any verification of receipt. On such an issue of

jurisdictional import, the omission from the complaint of a

representation concerning disclosure to the government and

Green’s decision to append only two exhibits to the memorandum

that Green purportedly sent to the government and not the

memorandum itself is troubling. However, defendants cite no

authority for the proposition that proof of voluntary disclosure

to the government need be any more rigorous than submission of a

sworn declaration. Green’s sworn representation that he

disclosed the information underlying his allegations to the

government on April 2, 2009 therefore will be credited.12

12

Two months after submitting his declaration, Green, in a

footnote in his reply in support of his motion to amend Exhibit E

to his opposition to SCETTF’s motion to dismiss, represented that

he is “prepared to provide a copy of his disclosure memorandum

. . . to the Court, if required, in an ex parte, in camera,

submission.” (Pl.’s Reply to Defs.’ Joint Resp. in Opp’n to

Relator’s Mot. to Amend Exhibit E to his Opp’n to SCETTF’s Mot.

to Dismiss at 5 n.4.) Such a representation more properly would

have been made by Green at the same time that he submitted his

declaration. Since his disclosure representation in the

declaration is being credited, in camera review of the disclosure

memorandum is unnecessary.

- 37 -

However, Green’s representation of submission in April 2009

aside, Green clearly has not complied with this Circuit’s

requirement that he provide the information to the government

before the public disclosure. Contrary to Green’s arguments,

Findley remains binding precedent. See supra at 17-18.

“[N]either the Supreme Court nor the D.C. Circuit has purported

to overrule Findley’s pre-public disclosure notification

requirement, and this Court will not ‘lightly infer an abrogation

of settled precedent.’” United States ex rel. Davis, 773 F.

Supp. 2d at 33 (quoting McBride, 2007 WL 1954441, at *7 n.16).

Because Green’s submission to the government on April 2, 2009

came years after the public disclosure of the allegedly

fraudulent reimbursement scheme by means of the SCETTF website

published in 2003, Green cannot qualify as an original source.

II. FAILURE TO PLEAD FRAUD WITH PARTICULARITY

“[B]ecause the False Claims Act is self-evidently an

anti-fraud statute, complaints brought under it must comply with

Rule 9(b)[,]” which requires that allegations of fraud be pled

with particularity. United States ex rel. Totten v. Bombardier

Corp., 286 F.3d 542, 551-52 (D.C. Cir. 2002). This requirement

“discourages the initiation of suits brought solely for their

nuisance value, and safeguards potential defendants from

frivolous accusations of moral turpitude.” United States ex rel.

Williams v. Martin-Baker Aircraft Co., Ltd., 389 F.3d 1251, 1256

- 38 -

(D.C. Cir. 2004) (internal quotations omitted). In addition, it

ensures that defendants have sufficient notice of the claims

against which they must defend. Id. Under Rule 9(b), “[the

relator] must set forth an adequate factual basis for his

allegations that the Contractors submitted false claims (or false

statements in order to get false claims paid), including a more

detailed description of the specific falsehoods that are the

basis for his suit.” Totten, 286 F.3d at 552 (emphasis added);

see also Williams, 389 F.3d at 1256 (requiring that “the pleader

. . . state the time, place and content of the false

misrepresentations”) (quoting Kowal v. MCI Commc’ns Corp., 16

F.3d 1271, 1278 (D.C. Cir. 1994).

Green has set forth neither an adequate factual basis nor

any detailed description of the specific falsehoods underlying

his claim that the defendant contractors used the money that

SCETTF reimbursed to them, or used government funds, not to

provide actual on-the-job training, but “to compensate employees

for performing tasks required by the contractors’ service

contracts.” (Compl. ¶ 46.) Notably, Green expressly disclaims

reliance on an implied certification theory of defendants’

liability.13 (See Pl.’s Consolidated Opp’n at 15 n.24 (“Mr. Green

13

False certification claims “rest[ ] on a false

representation of compliance with an applicable federal statute,

federal regulation, or contractual term.” United States v.

Science Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C. Cir.

2010).

- 39 -

does not allege an implied certification; he alleges an outright

lie.”)) Instead, he argues that the defendants affirmatively

lied to the government and are liable on a fraudulent inducement

theory, because they allegedly procured their contracts by means

of false representations, rendering fraudulent all subsequent

claims for payment. (See Pl.’s Consolidated Opp’n at 14-15

(“Relator alleges that the Defendants lied to the government

agencies with which they contracted, stating that they provided

their employees bona [fide] fringe benefits as those benefits are

defined and allowed by the Department of Labor, fraudulently

inducing those agencies to award contracts that included funding

for services that were not provided, i.e., the bona fide fringe

benefits to the contractors’ employees.”)) In addition, he

alleges that the defendants knowingly presented false claims for

payment, and submitted false records and statements in support of

those claims. (Compl. ¶¶ 56-75.)

However, nowhere in the complaint does Green identify with

particularity a single lie, or false representation, regarding

on-the-job training made by any of the defendants to a government

official in order to secure a contract, or in order to get a

claim paid.14 Green simply alleges that, over a period of some

14

In support of his opposition to SCETTF’s motion to

dismiss, Green submitted Exhibit E, identifying various federal

service contracts awarded to certain contractors. He argued that

the purpose of that exhibit was to demonstrate that, in the event

his complaint was found deficient under Rule 9(b), he was

- 40 -

thirty years, every “Addendum A” submitted by the defendant

contractors to secure contracts and every Voucher for Services

submitted to secure compensation under contracts awarded

contained false representations about fringe benefits (Compl.

¶¶ 48-55). This vast time span fails to afford the defendants

notice of which, if any, of the practices they may have

characterized as on-the-job training over that period of years

allegedly constituted work that they were required to perform

under their various government contracts. Green’s complaint

fails to provide even one representative example of an on-the-job

training practice engaged in by any contractor defendant that

constituted work required under a contract. In addition, Green

fails to support his claim of conspiracy with any allegation of

agreement among the defendants.

With regard to the individuals his complaint lists as

involved in the alleged fraudulent scheme, Green fails to

articulate the roles any particular individual played or any lies

prepared to amend it to identify the contracts he alleged were

secured through fraud. (Pl.’s Mot. to Amend Exhibit E to Pl.’s

Opp’n to SCETTF’s Mot. to Dismiss at 3.) After the defendants

filed replies in support of their motions to dismiss, Green moved

for leave to amend Exhibit E, noting that he had omitted records

of the contracts awarded to four of the five defendant

contractors. Green’s motion will be denied. Green’s

contemplated amendment to identify federal service contracts

awarded to the defendants does not support Green’s burden under

Rule 9(b) to state the time, place and content of the false

misrepresentations allegedly made to secure the contracts.

Neither do any of the other exhibits that Green proffered bear on

this point.

- 41 -

or misrepresentations made. In Williams, the D.C. Circuit found

that a complaint had failed to plead fraud with particularity

where it “repeatedly refers generally to ‘management’ and

provides a long list of names without ever explaining the role

these individuals played in the alleged fraud.” Id., 389 F.3d at

1257. The same is true here, where Green lists, without any

supporting details, high-level individuals at SCETTF and LIUNA

“who were aware of, approved of, and participated in the

fraudulent activity described in th[e] Complaint.” (Compl.

¶ 11.)15 Green’s generalized pleading is “an especially

surprising deficiency given that [the relator] worked for . . .

and with [the defendants]” for several years. Williams, 389 F.3d

at 1257. In sum, there is no information in Green’s complaint

that would support a reasonable inference that these defendants

told government officials that they would provide on-the-job

training or other training but instead used funds, either from

SCETTF or the government, to compensate their employees for work

required under their government contracts in violation of the SCA

or DOL regulations.

15

With regard to the defendant contractors, Green’s

allegation that a “Contact Person” for each “knowingly

participated in, or knowingly executed the agreement whereby his

Contractor participated in the SCETT Fund, including its

specified provision for on-the-job training, classroom training,

and third party training” (Compl. ¶¶ 12-13) stops short of even

alleging that the listed individuals were aware of, approved of,

or participated in the alleged fraud at all.

- 42 -

CONCLUSION

The SCETTF website published in 2003 constitutes a public

disclosure from the news media of the reimbursement scheme Green

alleges. Green’s action is based on that publicly disclosed

information, and his conclusory assertions of direct and

independent knowledge of the information underlying his

allegations do not withstand scrutiny. In addition, Green’s

required disclosure of that information to the government was

years too late under the law of this Circuit. Because Green is

therefore not an original source, the public disclosure bar

precludes subject matter jurisdiction over the reimbursement

claim. While Green’s claim that the defendants used on-the-job

training funds to compensate employees for work required under

their government contracts is not jurisdictionally barred, Green

fails to plead the claim of fraud with particularity. That claim

therefore must also be dismissed. A final order accompanies this

memorandum opinion.

SIGNED this 13th day of February, 2012.

/s/

RICHARD W. ROBERTS

United States District Judge