Petition for Writ of Certiorari — Planning Research Corp. v. United States ex rel. Schwedt

Supreme Court, ve

FILe Dp

OB 8 29 nov 27 1995

ERIE 05 Tig. aueeK

*

No. 95-

IN THE

SUPREME COURT of the UNITED STATES

OCTOBER TERM, 1995

PLANNING RESEARCH CORPORATION INC.

Petitioner,

Vv.

UNITED STATES, ex rel. MERVYN A. SCHWEDT,

pursuant to 31 U.S.C. §§ 3729-3733, QUI TAM RELATOR,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR WRIT OF CERTIORARI

Frederic M. Levy*

Gregory T. Jaeger

Ann M. Begley

MCKENNA & CUNEO, L.L.P.

1575 Eye Street, N.W.

Washington, D.C. 20005

(202) 789-7500

Attorneys for Petitioner

*Counsel of Record

l.

QUESTIONS PRESENTED FOR REVIEW

Whether a contractor’s progress reports submitted to the

government, which neither include nor accompany a

request for payment, constitute "claims" under the civil

False Claims Act, 31 U.S.C. § 3729, and whether the

D.C. Circuit’s decision to this effect is in irreconcilable

conflict with the definition of a “claim” set forth in the

Act and established by this Court in United States vy.

McNinch, 356 U.S. 595 (1958), and United States v.

Neifert-White Co., 390 U.S. 228 (1967), and by other

federal appellate courts.

Whether a contractor’s delivery to the government of

products for which the contractor never requested

payment constitutes a “claim” under the civil False

Claims Act, 31 U.S.C. § 3729, and whether the D.C.

Circuit’s decision to this effect is fundamentally

inconsistent with the definition of a “claim” set forth in

the Act and established by this Court in McNinch and

Neifert-White, and by other federal appellate courts.

Whether the D.C. Circuit’s decision that the penalty

provisions of the civil False Claims Act apply to

statements in support of false claims is in irreconcilable

conflict with the decision of this Court in United States vy.

Bornstein, 423 U.S. 303 (1976), and other federal

appellate court precedent.

ii

RULE 29.6 STATEMENT

Petitioner PRC is a wholly-owned subsidiary of Black &

Decker Corporation. PRC Inc. is the sole owner of all of its

subsidiaries.

iil

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW.................000000008 i

cass csccesorepevseewverecesorrecorvvevecee ii

ee i EID castesnsescececcecccconscercsesesvesecceseorenes Vv

REPORT OF OPINIONS BELOW ..............ccccccsscssssesscseseees l

STATEMENT OF JURISDICTION................cccsscesccecsesesenes 2

STATUTORY PROVISIONS INVOLVED....................:0008 2

RPA RREIE ES COE BEERS CAB cccceccosececccsereceseessscseossescosesonees 3

Og | ED 3

B. Background of This Litigation ......................ccccseeeeees 6

C. The Decisions of the District Court and the

TIE SEMI csccctinescoccsctevnccvesvevseeseovees Se siebiaipoea 8

REASONS FOR GRANTING THE WRIT..................00000++ 10

I itil taateccenecstnseenseesnsescesecsecovcessoccess 12

I. THE D.C. CIRCUIT’S DECISION THAT A

“CLAIM” DOES NOT REQUIRE A REQUEST

FOR MONEY OR PROPERTY, OR AN ACTION

CAPABLE OF INDUCING THE GOVERNMENT

IMMEDIATELY TO PART WITH MONEY OR

PROPERTY, REQUIRES THE INTERVENTION

OF THIS COURT ......c.cccecsse0ee eusensseseesevsnesesenceeseseossesseess 12

A. The D.C. Circuit’s Decision Irreconcilably

Conflicts With Supreme Court Precedent............... 12

B. The D.C. Circuit’s Decision Conflicts With the

Decisions of Other Federal Courts of Appeals........ 15

C. The Express Language of the FCA and Its

Legislative History Establish the Requirement

iV

of a Demand for Payment or Other Conduct

Capable of Inducing the Government

Immediately to Part with Money or Property ......... 18

II. THE D.C. CIRCUIT’S RULING THAT

STATEMENTS IN SUPPORT OF CLAIMS ARE

SUBJECT TO THE FCA’S CIVIL PENALTIES IS

IN IRRECONCILABLE CONFLICT WITH THE

HOLDINGS OF THIS COURT AND THE OTHER

FEDERAL COURTS OF APPEALS .............scscsessesees 21

CONCEAL INS cascensconsseseransonsenetednriemnnrnseniectionnanianamanists 24

Vv

TABLE OF AUTHORITIES

CASES

Blusal Meats, Inc. v. United States, 638 F. Supp.

824 (S.D.N.Y. 1986), aff'd, 817 F.2d 1007 (2d

RRP er Sta ek, SI FRCS ee 18

Brunswick Bank & Trust Co. v. United States, 707

I I Ta i ceeuvereoums 16

Miller v. United States, 550 F.2d 17 (Ct. Cl. 1977)............ 22

Rainwater v. United States, 356 U.S. 590 (1958).......... 19,20

United States v. Bornstein, 423 U.S. 303 (1976)........... 10,22

United States v. Cooperative Grain & Supply Co.,

ss | EE See 23

United States v. Ekelman & Associates, Inc., 532

ee , _seunvienibanbiecaneveenees 15

United States v. Gilliland, 312 U.S. 86 (1941) ............000000 20

United States v. Grannis, 172 F.2d 507 (4th Cir.),

cert. denied, 337 U.S. 918 (1949) ..........ccccssesssecscsseseees 23

United States v. Killough, 848 F.2d 1523 (11th

ies a IT heteteceaidediinatatin Ansaetasianeaiebdiaiehbaainetenicaderdicancsniinse 16

United States v. McNinch, 356 U.S. 595 (1958).......... passim

United States v. Neifert-White Co., 390 U.S. 228

SITTIN sislachicdishelibiieeidaiishaiebtchisteibiniananessbeihddsinansianshinieninaieme passim

vi

TABLE OF AUTHORITIES continued Page

United States v. Rivera, 55 F.3d 703 (1st Cir.

1995) ..cccsssenegiuiieiiiiniseaaias ainsi taiiaiabiamemmtiaiies 15,23

United States v. Rohleder, 157 F.2d 126 (3d Cir.

19GB) ..ccsccncchusosnsdieuianlansalenea a aamnt Ubdesttbhaleestanneinenesines 23

United States v. Tieger, 234 F.2d 589 (3d Cir.),

COFt. GND, Tide Gib: PAN CEO scacenerttitcitinniesseweceees 16

United States v. Woodbury, 359 F.2d 370 (9th Cir.

1966) ....-cucicesesnssdadibdnnediaddiantdeteiasaiiaiiaastlaadeviies 22,23

STATUTES

ERR Fem Ft) Re ee 20

18 U.S.C. § SGRy Ci eacteeelndecdctetadacstativegnverennansnsies 20

28 U.S.C. STE cattle acinseedateannienineenes 2

28 U.S.C. & TDG Ciccteteteaitetialinitebshdiencbenncnmteinesteness 8

31 U.S.C. § 231 Gaus ckeisetaiennetenee AR 20

31 U.S.C. § 250 Ce teeta teetietcettrentecteresiccstenres 20

False Claims Act, 31 U.S.C.A. §§ 3729-3733

(West 1963S & Semtah, Boe ieccceecesscsesesssecereccvsceveccees passim

31 U.S.C.A. § 3729 (West Supp. 1995)............cceeee 3,21

31 U.S .C.AiL Be Fea haediaiaeataesennestinersesccensccess 18

cpROR few HF US Se 18

i]

Vii

TABLE OF AUTHORITIES continued Page

Fe See Bait accbanctihahesnctcscinintnstinescicietebcsonchs 18

31 U.S.C.A. § 3730 (West Supp. 1995) ....ccccccecccsescsseesees 5

Act of Mar. 2, 1863, ch. 67, 12 Stat. 696 .........cccccccseccesceee. 19

Act of Mar. 3, 1973, ch. 241, 17 Stat. 579 .o....cccecseeceseeees 19

R.S. § 3490, Act of Mar. 2, 1877, § 3490, 18 Stat.

ARE ERR Reem ino ace eee 19,20

R.S. § 5438, Act of Mar. 2, 1877, ch. 5, § 5438,

PENSE Se ee 19,20

Act of June 18, 1934, ch. 587, 48 Stat. 996 ooo... ccceceeeees 20

Act of June 25, 1948, ch. 645, § 1001, 62 Stat.

EERSTE Sa i One eee 20

REGULATIONS

Federal Acquisition Regulation (“FAR”) subpt.

ae eel its BU. PA (1 SIE). caceccececcncocsencceveccesveeses 11

41 C.F.R. § 105-68.305(a)(3) (1995) .........cccceccessessessesceeees 11

FAR § 1609.7001(c)(1), 48 C.F.R.

I isc cscnnecnectsetbeespedeniaigube 11

OTHER AUTHORITIES

a ciccesinccnctstesnenshaniuenevennicovencbinnee 2,8

TABLE OF AUTHORITIES continued Page

Hearings on H.R. 5450 Before the House Comm.

on Revision of the Laws, 78th Cong., 2d Sess.

(1944), reprinted in 1948 U.S. Code Cong.

Serv. Special Pamphlet 2661.............cccccccrssoscesseesssosssees 19

S. Rep. No. 345, 99th Cong., 2d Sess., reprinted

We 1SES USEC ATR, FOO tcttetinnstbitcstenecticesdanvevrveee 24

John T. Boese, Civil False Claims & Qui Tam

CTE GIN. TIFF civitcilcinniiinnannninnsibitinsiomenete 18

No. 95-

IN THE

SUPREME COURT of the UNITED STATES

OCTOBER TERM, 1995

PLANNING RESEARCH CORPORATION INC.

Petitioner,

Vv.

UNITED STATES, ex rel. MERVYN A. SCHWEDT,

pursuant to 31 U.S.C. §§ 3729-3733, Qul TAM RELATOR,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR WRIT OF CERTIORARI

Petitioner PRC Inc. (“PRC”) hereby petitions for a writ

of certiorari to review the judgment and opinion of the

United States Court of Appeals for the District of Columbia

Circuit in this case. The D.C. Circuit’s decision is reported as

United States ex rel. Schwedt v. Planning Research Corp., 59

F.3d 196 (D.C. Cir. 1995).

REPORT OF OPINIONS BELOW

The opinion by the United States Court of Appeals for

the D.C. Circuit in this case is reproduced in the Appendices

to this Petition at Appendix (“App.”) A at la. The D.C.

Circuit’s opinion affirmed in part and reversed in part the

district court’s decision dismissing the case, and remanded

the case to the district court for further proceedings. App. at

10a.

The opinion by the United States District Court for the

District of Columbia in this case, United States ex rel.

Schwedt v. Planning Research Corp., No. 92-1951-LFO,

1994 WL 118222 (D.D.C. Mar. 31, 1994), is reproduced in

the Appendices to this Petition as App. B at 1b. In that

opinion, the district court granted, in part, Petitioner’s

motion to dismiss pursuant to FED. R. Civ. P. 9(b) and also

granted Petitioner’s motion for summary judgment,

dismissing the qui tam Relator Mervyn A. Schwedt’s

complaint in its entirety. App. at 10b.

STATEMENT OF JURISDICTION

The United States Court of Appeals for the D.C. Circuit

entered judgment in this case on July 7, 1995. Petitioner filed

a timely Petition for Rehearing and Suggestion for Rehearing

En Banc on August 7, 1995. The D.C. Circuit denied the

Petition and Suggestion on August 28, 1995. The jurisdiction

of this Court is invoked pursuant to 28 U.S.C. § 1254(1)

(1988).

STATUTORY PROVISIONS INVOLVED

The federal statute involved in this case is the civil False

Claims Act, 31 U.S.C.A. §§ 3729-3733 (West 1983 & Supp.

1995) (hereinafter “FCA” or “the Act”). The FCA provides

in pertinent part:

(a) Liability for Certain Acts.—Any person who—

(1) knowingly presents, or causes to, be presented, to

an officer or employee of the United States Government

or a member of the Armed Forces of the United States a

false or fraudulent claim for payment or approval;

(2) knowingly makes, uses, or causes to be made or

used, a false record or statement to get a false or

fraudulent claim paid or approved by the Government;

is liable to the United States Government for a civil

penalty of not less than $5,000 and not more than

$10,000, plus 3 times the amount of damages which the

Government sustains because of the act of that

person . .

(c) Claim Defined.—For purposes of this section,

“claim” includes any request or demand, whether under a

contract or otherwise, for money or property which is

made to a contractor, grantee, or other recipient if the

United States Government provides any portion of the

money or property which is requested or demanded, or if

the Government will reimburse such contractor, grantee,

or other recipient for any portion of the money or

property which is requested or demanded.

31 U.S.C.A. § 3729 (West Supp. 1995).

STATEMENT OF THE CASE

A. Summary of This Appeal

This case strikes at the essence of the relationship

between the United States government and its contractors. At

issue is the D.C. Circuit’s ruling that, even absent a request

or demand for payment, a government contractor’s implicit

goal of obtaining payment renders action taken by the

contractor to perform its contract a “claim” under the civil

False Claims Act, 31 U.S.C. §§ 3729-3723, ‘thereby

subjecting the contractor to the civil penalties and treble

damages provisions of that Act.'! Since the goal of every

government contractor ultimately is to obtain payment, the

effect of the D.C. Circuit’s decision is to render any disputed

action or representation by a contractor the basis of a civil

False Claims Act violation.

Prior decisions of this Court and other federal courts of

appeals have required an actual request for money, or an act

capable of inducing the government immediately to part with

money, as a prerequisite to False Claims Act liability. The

opinion of the D.C. Circuit in the case below irreconcilably

conflicts with those decisions. It holds that an implicit goal

of ultimately obtaining payment, coupled with conduct in

furtherance of contract performance, is sufficient to trigger

the False Claims Act. Through this Petition, PRC asks this

Court to review the D.C. Circuit’s inconsistent interpretation

and application of the Act, and to afford PRC relief from the

new standard for liability that the ruling below inflicts.

The profound adverse impact of the D.C. Circuit’s ruling

on the federal contracting relationship is exemplified by the

case at hand. Underlying this case is a simple contract

dispute between a federal agency and one of its contractors.

PRC contracted to design and develop a software system for

the Department of Labor. On four occasions PRC delivered

software to the government for testing. Each time, the

government rejected some or all of the software as non-

compliant. Although PRC never has requested payment for

| The basis for jurisdiction in the court of first instance was the FCA

and 28 U.S.C. § 1331. See Sup. Ct. R. 14.1(g)(ii).

delivery of the rejected software, it disputed the

government’s assessment of the contract requirements and

rejection of the software. Therefore, while continuing to

attempt to meet the government’s demands, PRC also

continued to indicate in its monthly progress reports its belief

that it had completed the software development

requirements.

Ironically, the contracting agency has not rejected PRC’s

position that government changes to the contract

requirements led to the rejection of the software. Thus, the

underlying contract dispute remains unresolved and PRC has

not requested payment from the government for delivery of

the rejected software. Nonetheless, the D.C. Circuit ruled

that PRC’s progress reports asserting its position with regard

to the ongoing dispute, or its continued efforts to meet the

government’s demands and deliver the software, exposes

PRC to the penalties and multiple damages of the civil False

Claims Act. The D.C. Circuit’s opinion is unclear whether

the progress reports or the software deliveries constitute the

actionable claims.

The disruption to the contracting relationship created by

the D.C. Circuit’s inconsistent and erroneous definition of a

claim is heightened by the gui tam provisions of the False

Claims Act. These provisions authorize private individuals to

initiate civil False Claims Act litigation on behalf of the

United States, and reward those individuals (referred to as

“relators”) with a percentage of the amounts recovered by the

government. 31 U.S.C.A. § 3730 (West Supp. 1995). Thus,

not only the government or its legal representative, the

Department of Justice, will determine when a disputed

representation or contract action rises to the level of a

potential False Claims Act violation. Rather, any individual

who becomes aware of a dispute between the government

and one of its contractors can initiate a False Claims Act suit

in the hopes of benefiting personally. Indeed, as noted above,

in the instant case, the contracting government agency has

not ruled against PRC on the underlying contractual dispute,

and the Department of Justice declined to intervene in this

false claims action. The relator responsible for this litigation,

Mervyn Schwedt, is a Department of Labor employee

personally involved in the contractual dispute with PRC. As

more fully demonstrated below, had Schwedt brought this

case in a different circuit, the case would not have been

permitted to proceed. |

The impact of the D.C. Circuit's decision is exacerbated

by its further ruling that FCA penalties apply to false

statements in support of claims, as well as to the claims

themselves. This ruling, which is contrary to the holdings of

this Court and every other appellate court, could result in the

imposition of countless penalties unrelated to the number of

claims involved, and provides further incentive to gui tam

relators.

PRC respectfully urges this Court to issue a writ of

certiorari and reverse the D.C. Circuit’s decision.

B. Background of This Litigation

Pursuant to a Contract between PRC and the General

Services Administration (“GSA”), PRC was awarded a Task

Order which required it to design and deliver a computer

system for the Department of Labor’s Pension and Welfare

Benefits Administration (““PWBA”) that would link the

PWBA’s national and field offices. The deliverables under

the Task Order included hardware components, software

subsystems and miscellaneous deliverables such as training

manuals. App. at 2a. At issue in this litigation are three

progress reports and four software subsystems submitted by

PRC under the Contract and Task Order.

Under the Contract and Task Order, after developing the

software subsystems, PRC was required to deliver the

software to the PWBA for acceptance testing and inspection.

App. 3a. The Contract and Task Order prohibited PRC from

requesting payment for the software, or for any other

deliverable, until the PWBA conducted its testing of the

delivered item and determined it to be contractually

compliant. Jd Only after PWBA notified PRC that the

delivered software had been accepted was PRC permitted to

submit an invoice for payment. Jd.

Pursuant to these procedures, the PWBA rejected the

software subsystems delivered by PRC on four separate

occasions, contending that the subsystems did not comply

with required performance criteria. Jd PRC did not agree

that its software was non-compliant or that the government’s

rejection of the software was appropriate. Nonetheless, in

accordance with the terms of the Contract and Task Order,

and as the court of appeals acknowledged, PRC has never

submitted an invoice, or otherwise requested payment, for

delivery of the rejected software subsystems. App. at 6a.

The Contract also required PRC to submit periodic

progress reports to the GSA. See App. at 2a. The progress

reports included PRC’s assessment of the status of its efforts

on each of the Task Order deliverables, and a report of

PRC’s projected activity for the upcoming month. Even after

the government rejected PRC’s software as non-compliant,

PRC continued to indicate in the progress reports its position

that the contractually required software effort essentially was

complete, but also identified the software development

activities it planned to undertake to meet the government’s

demands. See App. at 3a, 10a. As the court of appeals

acknowledged, the progress reports were not invoices, and

made no claim for payment for the software or any other

deliverable. App. at 6a.

C. The Decisions of the District Court and the Court

of Appeals

On PRC’s motion, the district court dismissed several of

Schwedt’s allegations under FED. R. Civ. P. 9(b), and the

entirety of Schwedt’s complaint on summary judgment. See

App. at 10b. Since PRC did not request payment for the

allegedly non-compliant software systems, and its invoices

for other contract deliverables were triggered by the

government’s independent determination that those items

met the contract requirements, the district court held that the

Relator’s cause of action failed as a matter of law. App. at

8b-9b.

Schwedt appealed to the United States Court of Appeals

for the District of Columbia Circuit pursuant to 28 U.S.C.

§ 1291. The D.C. Circuit affirmed in part and reversed in

part, and remanded the case to the district court to permit

Schwedt to proceed with the False Claims Act suit. App. at

10a. In doing so, however, the D.C. Circuit had difficulty

identifying the false claim giving rise to the action. The D.C.

Circuit expressly ruled that PRC’s progress reports are

“claims” within the meaning of the False Claims Act. App. at

2a. Thus, in its conclusion, the court stated: “the case is

remanded so that Schwedt may pursue his claim that the

individual progress reports constitute false claims giving rise

to civil penalties and to damages liability.” App. at 10a.

However, the D.C. Circuit’s reasoning in support of its

ruling suggests that it was not the progress reports, but

PRC’s deliveries of the rejected software that are the claims

which sustain this action. Specifically, the Court stated:

We hold that if ... PRC knowingly submitted false

progress reports stating that the software delivered during

the same period was complete when in fact it was not,

then these progress reports would constitute false

statements in support of false claims and would trigger

the Act’s civil penalty. That the progress reports are not

invoices is immaterial. They were submitted during the

same period that the software was delivered, and they

certify the satisfactory completion of that software.

Though PRC did not submit a bill for the software, its

goal of receiving payment was implicit in the submission

of the goods, and the accompanying progress reports had

the purpose of “get[ting] ... [the] claim ... approved.”

31 US.C. §3729(a)2). Accordingly, Schwedt’s

complaint states a claim based on the three progress

reports, and Schwedt may proceed on these claims.

App. at 6a-7a (alterations in original) (emphasis added).

Regardless of whether PRC’s progress reports or the

deliveries of the software constituted the claims, the court of

appeals deemed it “immaterial” that PRC did not invoice or

otherwise request payment for the disputed software. Rather,

it held that PRC’s “implicit” goal of receiving payment

under the Contract is sufficient to trigger application of the

False Claims Act. /d.

Finally, as discussed above, the D.C. Circuit held that

each of PRC’s allegedly false progress reports were subject

to the FCA’s civil penalty provisions. In reaching this

decision, the court of appeals held that the penalty provisions

apply both to false claims and to false statements.

Specifically, the court held that “[e]ach individual false claim

or statement triggers the statute’s civil penalty.” App. at 6a

(citing United States v. Bornstein, 423 U.S. 303, 313 (1976)).

10

REASONS FOR GRANTING THE WRIT

The D.C. Circuit’s decision is in irreconcilable conflict

with the previous decisions of this Court and other federal

appellate courts in two areas of critical importance. First, the

Court’s holding that PRC’s progress reports, or delivery of

allegedly non-compliant software, constitute “claims” under

the FCA, even though PRC never requested payment for that

software, contradicts this Court’s definition of a claim set

forth in United States v. McNinch, 356 U.S. 595 (1958), and

United States v. Neifert-White Co., 390 U.S. 228 (1968). It

also contradicts the standards for a claim established by the

Courts of Appeals for the First, Third, Sixth, Eleventh and

Federal Circuits. As a result, PRC faces substantial liability

and is forced to litigate an action that would be dismissed in

every other federal circuit which has directly addressed this

issue.

Second, the D.C. Circuit’s holding that the FCA’s

penalty provisions apply to statements in support of false

claims contravenes the decision of this Court in United

States v. Bornstein, 423 U.S. 303 (1976), and the decisions

of every federal appellate court to consider the issue,

including the First, Third, Fourth, Eighth and Ninth Circuits.

Thus, PRC is subject to penalties to which it would not be

exposed if this False Claims Act litigation had been brought

in a different federal circuit.

In addition to creating a conflict among the circuits, the

D.C. Circuit’s standard of what constitutes a claim would be

sO vague in application as to create a fundamental unfairness.

The punitive aspects of the civil False Claims Act inherent in

its penalties and treble damages provisions require a clear

standard for application. The D.C. Circuit’s definition of a

claim is not. The D.C. Circuit's decision provides that an

implicit goal of obtaining payment from the government,

11

plus some act to perform the contract, ranging from a

statement contained in progress reports to the submission of

products for testing, constitutes a “claim” within the meaning

of the FCA. Since a goal of every government contractor is

to obtain payment, the D.C. Circuit’s decision potentially

renders any disputed contract performance or statement by a

contractor to a government representative a “claim” under

the FCA. This broad and ambiguous definition of a claim,

combined with the court of appeals’ holding that the FCA

penalties apply to statements in support of a claim, could

result in a limitless number of FCA violations and penalties,

even where there has been no actual request for payment or

action capable of inducing the government immediately to

part with money.

The effect of the D.C. Circuit’s decision is compounded

by the collateral consequences of False Claims Act violations

to government contractors and others that deal with the

government, consequences potentially more severe than the

liability imposed by the Act. For example, a federal

contractor may be debarred and rendered ineligible for future

government business based on a civil False Claims Act

violation. See Federal Acquisition Regulation (“FAR”)

subpt. 9.4, 48 C.F.R. subpt. 9.4 (1994). A federal grantee

may be declared ineligible for future federal grants or

assistance. See 41 C.F.R. § 105-68.305(a)(3) (1995). A

Medicare or Medicaid provider may be excluded from

eligibility from the program. See FAR § 1609.7001(c)(1), 48

C.F.R. § 1609.7001(c)(1) (1994). This Court’s review is

required to provide a consistent and unambiguous definition

of the conduct that could result in substantial punishment

under the FCA and even more severe collateral

consequences.

12

ARGUMENT

I. THE D.C, CIRCUIT’S DECISION THAT A

“CLAIM” DOES NOT REQUIRE A REQUEST

FOR MONEY OR PROPERTY, OR AN ACTION

CAPABLE OF INDUCING THE GOVERNMENT

IMMEDIATELY TO PART WITH MONEY OR

PROPERTY, REQUIRES THE INTERVENTION

OF THIS COURT

In expanding the definition of a “claim” to include PRC’s

progress reports, or the delivery of allegedly non-compliant

software, the D.C. Circuit is in direct conflict with the

decisions of this Court and five other federal appellate courts

that have addressed the issue, as well as with the FCA’s

definition of a “claim” and the legislative history underlying

that definition.

A. The D.C. Circuit’s Decision Irreconcilably

Conflicts With Supreme Court Precedent

This Court first directly addressed the definition of a

“claim” in United States v. McNinch, 356 U.S. 595 (1958).

In that case, the government brought suit under the FCA

against persons who had filed fraudulent loan applications

with a private bank. The bank, which was insured by the

Federal Housing Administration against losses on the loans,

granted the loans based on the fraudulent applications.

The government’s complaint alleged that the defendants

had caused the bank to present a number of false applications

for credit insurance to the FHA, and that these applications

constituted “claims” under the FCA. See 356 U.S. at 597 &

n.4. The McNinch court rejected the government’s theory of

liability, holding that “[i]n agreeing to insure a home

improvement loan the FHA disburses no funds nor does it

13

otherwise suffer immediate financial detriment. It simply

contracts, for a premium, to reimburse the lending institution

in the event of future default, if any.” Id. at 599 (emphasis

added).

In arriving at this conclusion, the Court emphasized that

“ ‘the conception of a claim against the government normally

connotes a demand for money or for some transfer of public

property.”” Jd. (quoting United States vy. Tieger, 234 F.2d

589, 591 (3rd Cir.), cert. denied, 352 U.S. 941 (1956)). Thus,

since the defendants had not defaulted on their loans, thereby

triggering a demand for payment on the United States by the

banks, there were no claims on which to predicate an FCA

action.

The McNinch Court further stated that “it is equally clear

that the False Claims Act was not designed to reach every

kind of fraud practiced on the Government.” 356 U.S. at 599.

The Court observed that its holding was consistent with all of

the courts of appeals and district courts who had considered

the question. /d. at 599-600.

In United States v. Neifert-White Co., 390 U.S. 228

(1968), this Court refined its definition of a “claim.” In

Neifert-White, the defendant had prepared falsely inflated

invoices which were submitted to the government in support

of loan applications. The intiated invoices caused the

government to provide the defendant with loans which

exceeded the amount otherwise justified.

At issue before the Neifert-White Court was whether a

“claim” encompassed a loan request, as distinguished from a

claim for payment of an obligation owed by the government.

The Court declined to adopt this distinction. 390 U.S. at 233.

In holding that the false loan applications, submitted together

with the inflated invoices, were “claims” within the scope of

the FCA, the Court stated that “[i]t is sufficient % sote that

14

the instant case involves a false statement made with the

purpose and effect of inducing the government immediately

to part with money.” /d. at 232 (emphasis added).

Even the broadest readings of McNinch and Neifert-

White do not support the D.C. Circuit's expansion of the

definition of a “claim” to include progress reports or delivery

of software, absent a request or demand for payment for the

allegedly defective software. To the contrary, this case is

directly governed by McNinch. Even if PRC’s progress

reports overstated the software development status, or the

delivered software were not contractually compliant, neither

the reports nor the deliveries included a request for payment.

Absent any action constituting a demand for transfer of

money or property, under McNinch there is no claim and no

basis for an FCA action.

In reaching a contrary result, the D.C. Circuit relied on

this Court’s statement in Neifert-White that the FCA

“ ‘reaches beyond “claims” which might be legally enforced,

to all fraudulent attempts to cause the Government to pay out

sums of money.’” App. at 6a (quoting Neifert-White, 390

U.S. at 233). That reliance is erroneous. As noted above, the

issue before the Court in Neifert-White was whether the FCA

extended beyond the government’s financial obligations, i.e.,

“legally enforceable claims,” to loan applications. In ruling

that the FCA also covered fraudulent loan applications,

Neifert-White did not extend the FCA to cover false

statements alone. Rather, Neifert-White, like McNinch,

requires as an element of an FCA violation conduct capable

of inducing the government immediately to part with money.

As acknowledged by the D.C. Circuit, neither PRC’s

progress reports nor its software deliveries had that purpose,

see App. at 6a-7a, and, accordingly, this action should not be

permitted to proceed.

OOOO LE

15

B. The D.C. Circuit’s Decision Conflicts With the

Decisions of Other Federal Courts of Appeals

The federal Courts of Appeal uniformly have followed

the rationale articulated in McNinch and Neifert-White,

requiring a demand for money or property, or other action

capable of inducing the government immediately to part with

money or property. For example, in a recent decision, the

First Circuit held that the defendants had caused a false claim

for mortgage insurance loan benefits to be presented to a

government agency. United States v. Rivera, 55 F.3d 703

(Ist Cir. 1995). In determining whether the limitations period

had expired, the First Circuit held that the claim was not filed

when defendants submitted their false statements to the

lenders, or when the lender notified the government of the

default and of its intent to seek insurance proceeds. 55 F.3d

at 707-08. Rather, a claim was presented when the lender

submitted an application to the government specifying the

amount of insurance proceeds the lender expected to receive.

The court reasoned that, like an invoice or a bill, the

application was capable of inducing the government to part

with its money immediately. /d. at 710.

The Sixth Circuit also has upheld the requirement that a

claim must have as a characteristic the purpose and effect of

immediately inducing the government to part with money. In

United States v. Ekelman & Associates., Inc., 532 F.2d 545

(6th Cir. 1976), the Sixth Circuit determined that a lending

institution’s application to the FHA for credit insurance on a

home loan did not constitute a “claim” against the

government under the FCA. Relying on McNinch and

Neifert-White, the Sixth Circuit held that no violation of the

FCA arises until the mortgage holder presents a claim to the

government for payment on the guaranty or insurance. 532

F.2d at 552.

16

Similarly, the Federal Circuit Court of Appeals held that

applications for government guaranties submitted to the

government did not violate the FCA. Brunswick Bank &

Trust Co. v. United States, 707 F.2d 1355, 1364-65 (Fed. Cir.

1983). The court held that to determine whether a false claim

for payment has been presented upon the United States, “a

court must focus on the actual claim for reimbursement,” and

whether the alleged misrepresentation made the claim invalid

or false in any respect. Jd. at 1365 n.13.

The D.C. Circuit's ruling also conflicts with the Third

Circuit’s decision in United States v. Tieger, 234 F.2d 589

(3d Cir.), cert. denied, 352 U.S. 941 (1956). There, the Third

Circuit affirmed dismissal of an FCA suit alleging that the

government fraudulently was induced to guarantee

repayment of real estate improvement loans by the

defendant. The court held that the “promise of the United

States to make good if a borrower shall default” is not a

claim under the FCA. 234 F.2d at 591. The Third Circuit

further observed that “the conception of a claim against the

government normally connotes a demand for money or for

some transfer of public property.” Jd Since the loans had

been repaid in full, a demand for payment had not been made

to the government, and an FCA action could not be

sustained.

The Eleventh Circuit considered the definition of a claim

in United States v. Killough, 848 F.2d 1523 (11th Cir. 1988).

The case involved a kickback scheme in which falsified

invoices were submitted to the government for

reimbursement in connection with hurricane relief efforts. In

holding the invoices to be actionable “claims” under the Act,

the Eleventh Circuit held that “[c]Jase law on this issue

indicates that each separate fraudulent submission by a

defendant demanding payment from the government is a

‘claim.’ ” Jd. at 1533 (emphasis added).

17

In the present case, neither the progress reports nor the

submission of the software satisfies the “immediacy”

standard required for a claim by the circuit decisions

discussed above, or by this Court. It is undisputed that PRC’s

progress reports made no request for payment. There simply

is nothing in the progress reports that reasonably could be

construed to be an attempt to induce the government

immediately to part with money.

Similarly, the submission of the software for testing does

not constitute a “claim” as defined by the courts of appeals

identified above, or by this Court. The D.C. Circuit

acknowledged that PRC never submitted a bill for the

rejected software. App. at 6a-7a. The D.C. Circuit’s

reasoning that an implicit “goal of receiving payment,”

coupled with some act of contract performance, constitutes

an FCA claim, App. at 7a, is directly contrary to the standard

articulated by the other courts of appeals and this Court. The

D.C. Circuit’s ruling renders actionable any statements or

acts in performance of a contract, regardless of whether

conduct has occurred that is capable of causing the

government to part with money or property. In essence, the

D.C. Circuit seeks to punish inchoate claims based on

anticipated conduct.

It is clear from the foregoing case law that the Relator’s

cause of action would not survive in the First, Third, Sixth,

Eleventh and Federal Circuits because there is no “claim” in

this case upon which to base an FCA action. Unfortunately

for PRC, however, this action was brought in the D.C.

Circuit, and PRC must continue to litigate. This Court should

redress the injustice which has resulted from this lack of

uniformity.

18

C. The Express Language of the FCA and Its

Legislative History Establish the Requirement of a

Demand for Payment or Other Conduct Capable

of Inducing the Government Immediately to Part

with Money or Property

The “immediacy” standard articulated by this Court in

McNinch and Neifert-White, and by the various courts of

appeals discussed in the preceding section, implements the

express language of the FCA and the objectives of Congress

as demonstrated by the Act’s legislative history.

The FCA establishes liability for a person who

“knowingly presents . . . a false or fraudulent claim for

payment or approval,” 31 U.S.C.A. § 3729(a)(1) (West Supp.

1995), or who knowingly uses “a false record or statement to

get a false or fraudulent claim paid or approved by the

Government,” id. § 3729(a)(2). To violate either of these

provisions, the express language of the statute and existing

case law require, inter alia, the presentation of a false or

fraudulent claim for payment to the United States. See, e.g.,

Blusal Meats, Inc. v. United States, 638 F. Supp. 824, 827

(S.D.N.Y. 1986), aff'd, 817 F.2d 1007 (2d Cir. 1987); see

also John T. Boese, Civil False Claims & Qui Tam Actions

2-11 (Supp. 1995).

Section 3729(c) of the FCA defines a “claim” as

—including “any request or demand, whether under a contract

or otherwise, for money or property . . . if the United States

Government provides any portion of the money or property

which is requested or demanded.” 31 U.S.C.A. § 3729(c)

(West Supp. 1995). Neither PRC’s progress reports, nor its

delivery of the software for testing, incorporated or

accompanied any request or demand for money or property.

Thus, in the instant case, neither the progress reports nor the

19

software deliveries meets the definition of a claim set forth in

the statute.

Further, the legislative history of the FCA indicates that

it was not intended to cover statements or representations,

absent a demand for payment. The first False Claims Act

imposed both civil and criminal liabilities for false claims,

for preparing a written instrument that contained fraudulent

or fictitious statements with the purpose of aiding in the

payment or approval of such a claim, or for conspiring to

defraud the government by obtaining payment of allowance

of a false claim. Act of Mar. 2, 1863, ch. 67, 12 Stat. 696.

In 1873, all federal laws were repealed, then re-enacted

in a revised form and embodied in what was then entitled the

Revised Statutes (R.S.). This was Congress’s first attempt to

categorize laws according to subject matter.2 In conformance

with this new subject matter format, the civil sanctions of the

False Claims Act were codified as R.S. § 3490, Act of Mar.

2, 1877, § 3490, 18 Stat. § 691, while the criminal provisions

were separately enacted as R.S. § 5438, Act of Mar. 2, 1877,

ch. 5, § 5438, 18 Stat. 1054; see Rainwater v. United States,

356 U.S. 590, 592 n.8 (1958) (explaining separation of

criminal provision from civil sanctions of False Claims Act).

At that time, the requirement for a claim was identical in

_ both the civil and criminal False Claims Acts. In fact, the

civil statute, R.S. § 3490, incorporated by reference the

* See Act of Mar. 3, 1873, ch. 241, 17 Stat. 579: see also Hearings on

H.R. 5450 Before the House Comm. on Revision of the Laws, 78th

Cong., 2d Sess. (1944), reprinted in 1948 U.S. Code Cong. Serv. Special

Pamphlet 2661 (containing Act of June 25, 1948, ch. 645, legislative

history, reviser’s notes, and congressional debates).

20

language in the criminal provision, R.S. § 5438, to identify

the acts that created the civil liability. Rainwater, 356 U.S. at

592 n.8. When the United States Code was recodified again

in the.early 1900s, the civil and criminal false claims

provisions remained unchanged, and the civil statute

continued to incorporate by reference the new criminal

section. See 31 U.S.C. § 231, 18 U.S.C. § 80 (1926).

In 1934, only the criminal false claims provision, 18

U.S.C. § 80, was amended for the express purpose of making

false statements to the government a crime in and of

themselves. See Act of June 18, 1934, ch. 587, 48 Stat. 996.

This amendment was sought because of the “lack of a law

under which prosecutions might be had ‘for the presentation

of false papers.’ ” United States v. Gilliland, 312 U.S. 86, 94

& n.8 (1941) (quoting letter from Secretary of Interior to

Chairman of Senate Judiciary Comm. of Feb. 7, 1934); see

generally id. at 91-95.3

Significantly, the change in the criminal false claims

provision to cover false statements intentionally was not

extended to the civil False Claims Act. Instead, the civil

False Claims Act was changed no longer to incorporate by

reference the new criminal False Claims Act, but rather to

maintain the pre-existing language setting forth the conduct

which would establish civil False Claims Act liability. See

31 U.S.C. § 231 (1934). That language is virtually identical

to. the language in the current civil False Claims Act.

Compare 31 U.S.C.A. § 3729 (West Supp. 1995).

> The new false statement provision was separately codified at 18

U.S.C. § 1001 as part of a revision of the Criminal Code in 1948. See Act

of June 25, 1948, ch. 645, § 1001, 62 Stat. 683, 749.

21

It is clear from the foregoing legislative history that

Congress considered and rejected extending coverage of the

civil False Claims Act to representations or conduct not

connected to a request or demand for money or property. The

D.C. Circuit’s holding that PRC’s progress reports or

software deliveries may constitute “claims” accomplishes

precisely the result which Congress rejected, i.e., it

eliminates a request or demand for money or property as an

element of a civil False Claims Act violation.

fl. THE D.C. CIRCUIT’S RULING THAT

STATEMENTS IN SUPPORT OF CLAIMS ARE

SUBJECT TO THE FCA’S CIVIL PENALTIES IS

IN IRRECONCILABLE CONFLICT WITH THE

HOLDINGS OF THIS COURT AND THE OTHER

FEDERAL COURTS OF APPEALS

The D.C. Circuit ruled that “if. . . PRC knowingly

submitted false progress reports stating that the software

delivered during the same period was complete when in fact

it was not, then these progress reports would constitute false

statements in support of false claims and would trigger the

Act’s civil penalty.” App. at 6a. In so reasoning, the court

held that “[eJach individual false claim or statement triggers

the statute’s civil penalty.” Jd. (emphasis added) (citing

United States v. Bornstein, 423 U.S. 303, 313 (1976)).

The court’s conclusion here completely departs from

well-established case law. This Court, the Ninth Circuit, and

all other appellate courts considering this issue have held that

FCA penalties attach only to false or fraudulent claims for

payment, and not to false statements accompanying those

claims.

The leading case on this issue is the Ninth Circuit’s

decision in United States vy. Woodbury, 359 F.2d 370 (9th

22

Cir. 1966). In Woodbury, the Ninth Circuit upheld the district

court’s award of statutory penalties for ten false applications

for payment submitted to the government. The government

contended that the FCA’s “false records” provision required

an additional twenty-two penalties—one for each of twenty-

two documents attached to the false applications. See id. at

377-78. The Ninth Circuit rejected the government’s

argument and held that the government was not entitled to

penalties for the false records. Jd. at 378 (citing United States

v. National Wholesalers, 236 F.2d 944, 950-51 (9th Cir.

1956), cert. denied, 353 U.S. 930 (1957)).

The Ninth Circuit’s holding was favorably cited by this

Court in United States v. Bornstein, 423 U.S. 303, 309 n.4

(1976). In Bornstein, this Court observed that “the number of

imposable forfeitures has generally been set at the number of

individual false payment demands that the contractor has

made upon the Government.” Jd. The Bornstein court further

held that this result was in accord with prior Supreme Court

authority holding that “ ‘the conception of a claim against the

government normally connotes a demand for money or for

some transfer of public property.’” Jd. (quoting McNinch,

356 U.S. at 599).4

* At least one court has interpreted Bornstein to be an affirmation that

penalties apply to “claims,” but not to statements made in support of

claims. In Miller v. United States, 550 F.2d 17 (Ct. Cl. 1977), the Court

of Claims imposed penalties upon a contractor for the submission of five

false invoices, but not for eleven false papers used to support the

invoices. The court stated:

In finding five, not sixteen, false claims, we agree with the

Ninth Circuit decision in United States v. Woodbury, 359 F.2d 370

(1966). In Woodbury, the court held that separate penalties are not

(Footnote cont'd on next page)

aXe

23

All appellate courts considering this issue are consistent

with Woodbury. In United States v. Grannis, 172 F.2d 507,

515-16 (4th Cir), cert. denied, 337 U.S. 918 (1949), the

Fourth Circuit held that the government was entitled to one

penalty for each of ten vouchers, and not one penalty for

each of 130 false schedules attached to the vouchers. In

United States v. Rohleder, 157 F.2d 126, 131 (3d Cir. 1946),

the Third Circuit held that, where the subcontractor

submitted ninety false bids under sixteen subcontracts, the

government only could recover statutory forfeitures on the

sixteen subcontracts. See also United States v. Cooperative

Grain & Supply Co., 476 F.2d 47, 65 (8th Cir. 1973)

(imposing only one penalty for each claim, and not for each

related false statement); United States v. Rivera, 55 F.3d 703,

709 (Ist Cir. 1995) (FCA “attaches liability, not to the

underlying fraudulent activity or to the government’s

wrongful payment, but to the ‘claim for payment’ ay

Further, in passing the 1986 Amendments to the FCA,

Congress clearly stated its intent that the statutory forfeitures

apply only to false claims, and not to false records. The

(Footnote cont'd from previous page.)

imposed based upon the number of false papers contained in a

particular claim made upon the government. 359 F.2d at 378. The

court reasoned that each amount requested from the government is a

claim, so regardless of the number of false invoices that were used in

arriving at each demand, only one penalty per demand is imposed.

Id.

This position is supported by the recent Supreme Court case,

United States v. Bornstein... .

550 F.2d at 24.

24

Senate Report states that the forfeiture provisions in the FCA

“lare] not intended, however, to provide additional penalties

where only a false statement has occurred.” S. Rep. No. 345,

99th Cong., 2d Sess. 20, reprinted in 1986 U.S.C.C.A.N.

5266, 5285.

The D.C. Circuit’s holding that FCA penalties apply to

statements made in support of claims is in irreconcilable

conflict with the decisions of this Court and every other

federal appellate court that has considered the issue. As a

result, the court of appeals’ decision has created conflict

among the federal appellate courts, and inconsistent

standards of liability. The D.C. Circuit’s decision has

subjected PRC to penalties under a standard that has been

rejected by every other circuit.

If allowed to stand, the D.C. Circuit’s decision regarding

penalties will vastly increase the scope of liability under the

FCA. Every statement or representation, written or oral,

made by a contractor could serve as the basis for a penalty,

regardless of the number of claims involved. The result is to

impose penalties unrelated to the number of violations of the

prohibited conduct, i.e., the submission of a false or

fraudulent claim. This in turn will create a flood of new suits

by opportunistic qui tam relators hoping to profit from the

greatly expanded penalty provisions. This Court should grant

this Petition and restore uniformity to the law among the

Circuits

CONCLUSION

Two vital public policy concerns are at stake in this case.

First, it is imperative that government contractors be able to

perform their contracts without being subjected to False

Claims Act litigation, initiated by either the government or

qui tam relators, any time a contractor's performance or

25

representations to the government are disputed. The public

has an interest in ensuring that federal contracts are properly

performed and free of fraud, waste and abuse. The D.C.

Circuit's decision, however, neither serves the public interest

nor achieves the objectives underlying the civil False Claims

Act. Rather, the decision subjects every government contract

dispute to a False Claims action. The result will be a

significant increase in litigation and disruption to the

contracting process, and increased costs of contract

performance that ultimately will be borne by the public.

Second, it is imperative that liability for a civil False

Claims Act violation, which includes penalties and multiple

damages as well as extensive collateral consequences, be

imposed uniformly, predictably, and fairly. The D.C.

Circuit’s vague definition of a claim, which conflicts with

the precedent of this Court and other federal circuits, does

not achieve that objective.

This Court can provide the guidance necessary to address

both of these concerns by granting this Petition and issuing a

writ of certiorari. PRC urges this Court to grant this Petition.

Respectfully submitted,

Frederic M. Levy*

Gregory T. Jaeger

Ann M. Begley

MCKENNA & CUNEO, L.L.P.

1575 Eye Street, N.W.

Washington, D.C. 20005

(202) 789-7500

Attorneys for Petitioner

*Counsel of Record

APPENDIX

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Me a, ye

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la

UNITED STATES of America ex rel.,

Mervyn A. SCHWEDT, Appellant,

Vv.

PLANNING RESEARCH

CORPORATION, a Virginia

Corporation, Appellee.

No. 94-7091.

United States Court of Appeals,

District of Columbia Circuit.

Argued April 7, 1995.

Decided July 7, 1995.

Appeal from the United States District Court

for the District of Columbia (No. 92cv01951 ).

William G. Kopit, Washington, DC, argued the cause and

filed the briefs for appellant. Mervyn A. Schwedt entered an

appearance pro se.

Frederick M. Levy, Washington, DC, argued the cause

for appellee. With him on the brief was Gregory T. Jaeger,

Washington, DC.

Before: EDWARDS, Chief Judge; WALD and

GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

Mervyn A. Schwedt, Director of the Office of

Information Management at the Department of Labor’s

Pension and Welfare Benefits Administration (“PWBA”),

brought this action against Planning Research Corporation

(“PRC”) under the qui tam provision of the False Claims Act

2a

(“Act”), 31 U.S.C. § 3729 et seq. (1988 & Supp. V 1993).

Schwedt claims that in the course of performance of a con-

tract under which PRC was to design a software system for

the PWBA, PRC submitted false progress reports about the

status and success of the system, inducing the government to

pay for various components of the project that it would not

otherwise have accepted. The district court dismissed most of

Schwedt’s complaint and granted summary judgment to PRC

on the remainder. See United States ex rel. Schwedt v.

Planning Research Corp., Inc., No. Civ. 92-1951-LFO, slip

op. at 8, 10, 1994 WL 118222 (D.D.C. Mar. 31, 1994). We

hold that Schwedt has made sufficient allegations to proceed

on his claim that PRC’s progress reports constitute false

claims under the Act, for which he may pursue the statutory

civil penalty, and on his claim that these progress reports

caused the government to accept and pay for various items

under the contract that were worthless on their own, for

which he may pursue treble damages under the Act.

I. BACKGROUND

In 1989, the PWBA entered into a contract with PRC

under which PRC was to design and put into place a com-

puter software system that would link the PWBA’s national

and field offices. The terms of this agreement are embodied

in two documents, a Task Order and a Contract. Under the

Task Order, PRC is to complete seven sequential segments,

termed “milestones,” running from the initial design of the

system through production of software and manuals to pres-

entation of a final report. Task Order at 5-12, reprinted in

Appellee’s Supplemental Appendix (“S.A.”) at 13-20. The

Task Order also sets out a series of individual “deliverables,”

such as the software, training manuals, and reports, each of

which is due at a particular stage of the project and is to be

3a

paid for upon acceptance by the government. Task Order at

12, reprinted in S.A. at 20.

The Task Order and Contract establish an acceptance and

payment system for each of the deliverables. Upon receipt of

the software, for instance, the government has a 20-day

“Client Acceptance Period” during which it will “complete

review of each deliverable and accept or reject the deliver-

able in writing. [It] will have the right to reject or require

correction of any deficiencies that are contrary to the infor-

mation contained in the contractor’s accepted proposal.”

Task Order at 20, reprinted in S.A. at 28. Under the agree-

ment, the government will accept the software only “if it is

complete, comprehensive and complies with” the contract

specifications. /d. Finally, no payment can be requested or

made absent such acceptance: “[a]ny deliverable products

under this contract will be accepted or rejected” in writing by

the government, Contract § E.1, reprinted in S.A. at 61, and

“[pjayment of invoices will be made based upon acceptance

by the Government,” Contract ] D.a., reprinted in S.A. at 62.

In the course of performing the contract, PRC made four

deliveries of the software and submitted three progress re-

ports. The first and last of these progress reports represented

that the software was “100%” complete; the second repre-

sented that each of the four software components was either

“99%” or “100%” complete. Progress Report of July 9, 1990,

at 2, reprinted in S.A. at 64; Progress Report of Dec. 5, 1990,

at 2, reprinted in S.A. at 67; Progress Report of Mar. 11,

1991, at 2, reprinted in S.A. at 70. According to allegations

in the complaint and affidavit filed by Schwedt, who was

responsible for overseeing the contract, the government re-

jected the software after testing on each of these occasions.

At some point after the fourth delivery, however, the gov-

ernment did accept and pay $145,534 for one of the four sub-

parts of the software. During this same period, the govern-

4a

ment also accepted and paid an additional $364,000 for other

non-software deliverables. Over the course of performance,

according to allegations in Schwedt’s affidavit, PRC submit-

ted two written requests for “equitable adjustments” ap-

proaching $2 million in excess of the original contract

amount and made two oral demands for payment for the

software. Schwedt Aff. 9] 14-18, reprinted in Appellant’s

Appendix (“A.A.”) at 32-33. The filings do not detail the

basis on which PRC claimed entitlement to the equitable

adjustments.

In 1992, Schwedt filed this qui tam action, alleging that

PRC violated the False Claims Act by “unlawfully and

knowingly on no less than four occasions present[ing] and

caus[ing] to be presented non-functional and non-compliant

software to representatives of the United States while wrong-

fully and knowingly misrepresenting that said software was

compliant and functional.” Complaint 4 25, reprinted in A.A.

at 12.

The district court dismissed the bulk of Schwedt’s com-

plaint under Federal Rule of Civil Procedure 9(b) for failure

to meet the heightened pleading requirements for fraud and

granted summary judgment on the only claim it believed to

be adequately pleaded. It held that several of the alleged

“false claims”—the $364,000 in payments for unidentified,

non-software deliverables and the two requests for equitable

adjustment—were not identified with adequate specificity to

meet the heightened pleading requirements for fraud. FED. R.

Civ. P. 9(b). With respect to the single alleged “false claim”

it found to be adequately pleaded—PRC’s invoice for the

one software component accepted by the government—it

concluded that, even if it were a “false claim,” Schwedt

could not show any damages, because under the terms of the

contract the government had to inspect and approve any PRC

submission before payment. The district court did not discuss

Sa

whether the progress reports themselves might constitute

“false claims” or “statements” under the Act, and it neglected

to address the provision of the Act imposing a civil penalty

for the mere submission of a false claim, whether or not that

claim brings about any damages.

II. ANALYSIS

The False Claims Act provides that:

Any person who

(1) 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] (2) knowingly makes, uses,

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

statement to get a false or fraudulent claim paid or

approved by the Government . . .

is liable to the United States Government for a civil pen-

alty of not less than $5,000 and not more than $10,000,

plus 3 times the amount of damages which the

Government sustains because of the act of that per-

son...

31 U.S.C. § 3729(a) (1988). Thus, the Act imposes two sorts

of liability. First, the submitter of a “false claim” or

“statement” is liable for a civil penalty, regardless of whether

the submission of the claim actually causes the government

any damages; even if the claim is rejected, its very submis-

sion is a basis for liability. Second, the submitter of the claim

is liable for damages that the government sustains because of

the submission of the false claim.

6a

A. “False Claims”

The Act penalizes the presentation of a “false or fraudu-

lent claim for payment” or the use of “a false record or

statement to get a false or fraudulent claim paid.” 31 U.S.C.

§ 3729(a). A submission need not be an actual invoice to be a

“claim” or “statement” under the Act. As the Supreme Court

explained in United States v. Neifert-White Co., 390 U.S.

228, 233, 88 S. Ct. 959, 962, 19 L. Ed. 2d 1061 (1968),

“{t]his remedial statute reaches beyond ‘claims’ which might

be legally enforced, to all fraudulent attempts to cause the

Government to pay out sums of money.” Each individual

false claim or statement triggers the statute’s civil penalty.

See United States v. Bornstein, 423 U.S. 303, 313, 96 S. Ct.

523, 530, 46 L. Ed. 2d 514 (1976).

Schwedt’s complaint identifies the false claims on which

he bases his action: “on no less than four occasions [PRC]

present{ed] and cause[d] to be presented non-functional and

non-compliant software to representatives of the United

States while wrongfully and knowingly misrepresenting that

said software was compliant and functional.” Complaint

§ 25, reprinted in A.A. at 12. In dismissing the bulk of this

complaint, the district court failed to consider that the indi-

vidual progress reports, though not in themselves actual in-

voices, might constitute “false claims” or “statements” under

the Act.

We hold that if, as Schwedt alleges, PRC knowingly

submitted false progress reports stating that the software

delivered during the same period was complete when in fact

it was not, then these progress reports would constitute false

statements in support of false claims and would trigger the

Act’s civil penalty. That the progress reports are not invoices

is immaterial. They were submitted during the same period

that the software was delivered, and they certify the satisfac-

7a

tory completion of that software. Though PRC did not sub-

mit a bill for the software, its goal of receiving payment was

implicit in the submission of the goods, and the accompany-

ing progress reports had the purpose of “get[ting] ... [the]

claim ... approved.” 31 U.S.C. § 3729(a)(2). Accordingly,

Schwedt’s complaint states a claim based on the three pro-

gress reports, and Schwedt may proceed on these claims.

From Schwedt’s affidavit, but not his complaint, it is

possible to discern allegations of a distinct set of false

claims. This filing can be read to claim that PRC made an

initial misrepresentation about its capability to perform the

contract in order to induce the government to enter into the

contract and that this original misrepresentation tainted every

subsequent claim made in relation to the contract, including

PRC’s claims for payment for the non-software deliverables

and its claims for equitable adjustments. Cf United States v.

Marcus ex rel. Hess, 317 U.S. 537, 543, 63 S. Ct. 379, 384,

87 L. Ed. 443 (1943) (where original contract was obtained

through collusive bidding, initial “taint entered into every

swollen estimate which was the basic cause for payment of

every dollar paid”). At oral argument, however, Schwedt

declined to pursue this theory, informing the court that the

allegedly false progress reports constitute the heart of his

suit. We therefore hold that any fraud in the inducement

claim potentially discernible from Schwedt’s affidavit is

waived. !

' Because we find that the only theory on which the equitable

adjustments and the invoices for accepted goods are potentially relevant

as “false claims” is waived, we need not address the district court’s

conclusion that these “claims” were inadequately pleaded under Federal

Rule of Civil Procedure 9(b).

8a

B. Damages

Schwedt claims that PRC is liable not only for the statu-

tory civil penalty for each progress report submitted, but also

for damages that the government suffered because of these

progress reports. He alleges that he made, on behalf of the

government, a total of approximately $500,000 in payments

for various deliverables under the contract because of PRC’s

progress report representations that the project would ulti-

mately come together and that these payments are therefore

damages recoverable under the Act: “But for the progress

reports and representations by PRC, I would not have ac-

cepted and paid for the milestone products which are worth-

less without contractually compliant software.” Schwedt Aff.

{ 10, reprinted in A.A. at 31.

The statute holds the submitter of a false claim or state-

ment liable for “3 times the amount of damages which the

Government sustains because of the act of that person.” 31

U.S.C. § 3729(a). We hold that if Schwedt is able to prove

that he relied on the progress reports’ representations that the

project was nearing successful completion in deciding to pay

for the individual components, those payments may consti-

tute damages under the Act. PRC urges that because the con-

tract between PRC and the government allowed for payments

only upon the government’s own inspection and acceptance

of the deliverables, Schwedt cannot establish that these pay-

ments are “because of” the alleged false statements and thus

cannot claim them as damages under the Act. This argument,

however, misstates the logic of Schwedt’s claim. Under

Schwedt’s allegations, it is immaterial that the government

found the individual components to be contractually compli-

ant or even that they were, in fact, compliant. He urges that

even if, say, the manual was in perfect form, it was useless to

the government without the whole package, and he would

not have paid for it if not for PRC’s representations that the

9a

whole package was imminently available. If Schwedt is able

to establish what he alleges, he has surely established dam-

ages “because of” the allegedly false progress reports.

PRC further points to several circuits that have concluded

that the Act does not contemplate liability for all damages

that would not have arisen “but for” the false statement. See

United States v. Miller, 645 F.2d 473, 475-76 (Sth Cir.

1981); United States v. Hibbs, 568 F.2d 347, 351 (3d Cir.

1977). Surely, we agree. Schwedt’s claim, however, survives

under the more restrictive standard adopted in those cases.

The Third and Fifth Circuits there concluded that the submit-

ter of a false claim should be liable only for those damages

that arise because of the falsity of the claim, i.e., only for

those damages that would not have come about if the defen-

dant’s misrepresentations had been true. See Miller, 645 F.2d

at 475-76; Hibbs, 568 F.2d at 351. In this case, if PRC’s

misrepresentations had been true—that the software, which

formed the heart of the contract, was at or near successful

completion—then the government’s payments for various

goods would not have been damages—money spent on use-

less goods. The payments would have been money well

spent. Thus, we conclude that Schwedt may proceed on his

claim that the false certifications in the progress reports led

him to accept and pay for the various deliverables and that

these payments constitute damages under the Act.

We pause to note, however, that our conclusion on this

point might have been different if PRC could demonstrate

that the contract was structured in such a way that, regardless

of any misrepresentations it may have made about its pro-

gress in performing the other aspects of the contract, the

government was contractually required to pay for any deliv-

ered components that met the contract’s specifications. If the

contract has been so structured, then the alleged misrepresen-

tations concerning PRC’s ability to perform the rest of the

10a

project would not have caused any damages at all; they

would simply be irrelevant. PRC cannot make such a demon-

stration, however, because the contract empowers the go-

vernment to terminate the contract for default if the contrac-

tor’s performance is defective and the contractor fails to take

steps to “ensure future performance in conformity with con-

tract requirements.” Contract J E.2(e), reprinted in S.A. at

61. Absent PRC’s (alleged) misrepresentations concerning

its ability to perform the rest of the contract, the government

could have, by terminating the contract prior to accepting

those deliverables that it ultimately concluded met the con-

tract specifications, avoided making payment (and thus in-

curring damages).

Ill. CONCLUSION

In accordance with the discussion above, the opinion of

the district court is affirmed in part and reversed in part and

the case is remanded so that Schwedt may pursue his claim

that the individual progress reports constitute false claims

giving rise to civil penalties and to damages liability.

Remanded.

Ib

UNITED STATES ex rel.

Mervyn A. SCHWEDT, Plaintiff,

v.

PLANNING RESEARCH CORP., INC., Defendant.

Civ. A. No. 92-1951-LFO.

United States District Court, District of Columbia.

March 31, 1994.

MEMORANDUM

OBERDORFER, District Judge.

This qui tam action was brought under the False Claims

Act by an employee of the Department of Labor against a

computer software designer, Planning Research Corp., Inc.

(PRC). PRC has filed a motion to dismiss, and in the alter-

native, a motion for summary judgment. The United States

declined to intervene, but at the request of the Court, has

filed a brief as amicus curiae.

PRC’s Memorandum establishes, without substantial

contradiction, that it agreed to develop a software subsystem

to enable the Pension and Welfare Benefits Administration (a

division of the Department of Labor) to communicate via

computer with its field offices. The contract, or Task Order,

separated PRC’s performance into seven separate segments,

denominated as “milestones,” each containing specified de-

liverables. Central here, the Task Order established a proce-

dure by which the government was entitled to inspect, test,

and reject most of the deliverables before it made any pay-

ment to the PRC. Altogether, there were twenty deliverables

under the Task Order. Sixteen deliverables were accepted (or

2b

otherwise completed). PRC invoiced the Department and a

total of $509,650: was paid by the government. Of particular

interest here are four items of software subsystem deliver-

ables, each separately priced, and denominated in the con-

tract as: 3.12 CMIS Development, 3.13 EAS Interface

Subsystem, 3.14 FO EAS Subsystem and 3.15 No EAS

Access Subsystem.

PRC repeatedly submitted these four deliverables to the

government for testing. After both the June 8, 1990 and the

December 7, 1990 deliveries, the department rejected the

entire set of deliverables. On May 17, 1991, a third shipment

resulted in the government’s “acceptance” of one item, the

3.15 software for which PRC presented an invoice and was

paid $145,534.' The other three deliverables were rejected.

On September 13, 1991, PRC resubmitted the three previ-

ously rejected items, the government not only rejected those

three again, but, on November 7, 1991 issued a Stop Work

Order. No more work has been performed under the Task

Order. PRC subsequently requested two “equitable adjust-

ments” totalling $2.1 million. At a May 29, 1992 meeting

PRC representatives made an oral demand for $2.1 million.

On August 24, 1992, plaintiff filed this action, as a qui

tam relator, under the False Claims Act, 31 U.S.C. §§ 3729-

33 (1988 & Supp. 1991). Plaintiff alleges that “PRC did un-

lawfully and knowingly on no less than four occasions pre-

sent and cause to be presented non-functional and non-

compliant software to representatives of the United States

while wrongfully and knowingly misrepresenting that said

' This cost for the 3.15 deliverable is included in the total figure of

$509,650 disbursed by the government.

3b

software was compliant and functional.” Complaint at 4 25.

Plaintiff further alleged that “PRC did knowingly submit

misleading and factually incorrect written reports.”

Complaint at § 26. According to plaintiff, “as a result of

PRC’s actions, the government incurred substantial expenses

and cost that would not have been incurred, absent PRC’s

misrepresentations.” Complaint at § 28.

Il.

PRC argues that plaintiff is attempting to convert a con-

tract dispute into a False Claims Act case. PRC also raises

two technical defenses that plaintiff has not properly alleged

the elements of a cause of action under the False Claims Act.

First, PRC argues that the “requests” referred to in the com-

plaint and in plaintiff's Memorandum are not “claims” as

contemplated by the False Claims Act. Second, PRC argues

that plaintiff did not plead with sufficient specificity for an

allegation of fraud.

II-A.

In order to sustain a cause of action under the False

Claims Act, a plaintiff must prove that a claim for payment

was made and that the claim was based on a misrepresenta-

tion or was otherwise fraudulent. See, e.g. United States ex

rel. Glass v. Medtronic, Inc., 957 F.2d 605, 608 (8th Cir.

1992). PRC argues, in essence, that a “claim” must be an

invoice and PRC never invoiced the Department for any of

the rejected software.

Plaintiff responds first that PRC is reading the statute too

narrowly. There is significant authority for plaintiff's posi-

tion. The term “claim” “reaches beyond ‘claims’ which

might be legally enforced, to all fraudulent attempts to cause

the Government to pay out sums of money.” United States v.

Neifert-White Co., 390 U.S. 228, 244 (1968). “[A]ny actions

4b

which have the purpose and effect of causing the

Government to immediately pay out money are clearly

‘claims’ within the purpose of the Act.” United States v.

Silver, 384 F. Supp. 617, 620 (E.D.N.Y.1974), aff'd, 515

F.2d 505 (2d Cir. 1975). Plaintiff concludes that actual in-

voices are not required.

Plaintiff also contends that PRC made several requests

for funds that are claims as contemplated by the statute. In

plaintiffs view, PRC’s “claims” include the invoice and

payment for the accepted software, an oral demand for pay-

ment for the software on May 29, 1992, and the requested

“equitable adjustments” for costs related to the software.

Pl.’s Mem. at 18-19, nn. 9 & 10. Plaintiff also notes that

PRC submitted invoices for the approximately $364,000 for

deliverables related to software. Pl.’s Mem. at §] 3, 5 & 17.

The government, in its amicus brief, concludes that the

invoices for $145,534 (accepted software) and approximately

$364,000 (related deliverables) are “certainly captured within

the broad definition of a claim under the FCA.” Amicus

Brief at 7. The government also concludes that PRC’s re-

quest for $2,160,000 in “equitable adjustment” is also a

claim under the FCA. However, the government does not

regard the oral demands cited by plaintiff as claims in them-

selves. PRC’s oral requests, as documented, “merely echo

claims that PRC had already submitted . . . or intended to and

eventually did submit.” /d. at 8. The government’s conclu-

sions are limited to the nature of a claim and do not go to the

issue of falsity. In support of its broad interpretation the

government relies on United States v. Neifert-White Co., 390

U.S. 228, 233 (1968) and the legislative history of the 1986

amendments to the False Claims Act. S. Rep. No. 345, 8-10,

99th Cong., 2d Sess. (1986), reprinted in 1986 U.S.C.C.A.N.

5266.

Sb

The government’s reasoning is persuasive. PRC’s dis-

positive motion based on the definition of “claim” under the

statute is granted only with respect to the oral requests for

payment. The invoice for the accepted software, the invoices

for related materials, and the requests for “equitable adjust-

ment” are ail “claims,” though not necessarily false claims.

II-B.

The second threshold issue raised by PRC is that the

above-mentioned claims were not referenced in the com-

plaint with sufficient particularity. If plaintiff did not allege

specifically that the invoices for $364,000 of related deliver-

ables, the invoice for the accepted software, and the requests

for equitable assessments were false claims, he arguably

should not be able to base his cause of action on these re-

quests. Plaintiff must also specifically allege that PRC made

a representation that (a) were false; and (b) that resulted in a

government disbursement to PRC. PRC adopts this position

as a defense in its motion by arguing that the complaint does

not properly allege the required elements and by relying on

Rule 9(b) in its reply brief.

In general, claims of fraud must meet the requirements of

Rule 9(b) of the Federal Rules of Civil Procedure: “the cir-

cumstances constituting fraud or mistake shall be stated with

particularity.” The government takes the position that 9(b)

does not apply to allegations under the False Claims Act. In

its amicus brief, the government notes that the FCA ex-

pressly states that “no proof of specific intent to defraud is

required.” 31 U.S.C. § 3729. The government concludes that

a plaintiff suing under the FCA does not face the same bur-

6b

den of proof as a plaintiff claiming fraud under the common

law, and thus the particularity requirements for pleading

common law fraud do not apply to the FCA.?

However, there is authority in this Circuit that a com-

plaint under the False Claims Act must be particularized as

required by Federal Rules Civil Procedure 9(b). United

States ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385 (D.C.

Cir. 1981), cert. denied, 455 U.S. 999 (1982). The rationale

of 9(b) is no less applicable when it is the federal go-

vernment that is the alleged victim of the fraud. As the

Canon court stated, “because ‘fraud’ encompasses a wide

variety of activities, the requirements of Rule 9(b) guarantee

all defendants sufficient information to allow for preparation

of a response.” /d. at 1385. The Canon court also noted that

“(t]he rule serves to discourage the initiation of suits brought

solely for their nuisance value.” /d. In addition, Rule 9(b)

prevents plaintiffs from alleging fraud by hindsight.

The complaint does not identify specific requests for

money. It refers to the series of software deliveries that were

rejected and mentions that $600,000? was paid to PRC. The

complaint does not mention that sixteen deliverables were

“accepted,” and the government received an invoice and

2 The Seventh Circuit held that 9(b) did not apply to a cause of action

predicated on another federal statute (ERISA). Thornton v. Evans, 692

F.2d 1064, 1082 (7th Cir. 1982). The Sixth and Second Circuits have

also held that 9(b) refers only to common law fraud. Marsh v. Armada

Corp., 533 F.2d 978, 983 n. 4 (6th Cir. 1976) cert. denied, 430 U.S. 954

(1977); Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374, 378 n. 8 (2d

Cir. 1974) cert. denied, 421 U.S. 976 (1975).

> The parties later agreed that this amount was approximately

$509,000.

7b

made payment. Among the items invoiced and paid, but not

referenced in the complaint, is the 3.15 software subsystem

deliverable. However, this shipment was part of the series of

software deliveries described in some detail in the complaint.

Also, the total amount received by PRC was mentioned in

the complaint and this amount included the $145,534 for the

3.15 deliverable. Plaintiff filed his complaint pro se, thus

some leniency is in order. Therefore, PRC’s Rule 9(b) argu-

ment will not defeat plaintiff's allegations surrounding the

invoice and payment for the accepted software deliverables.

Plaintiff indirectly refers to the $364,000 of “related

costs” in his complaint by mentioning the total amount of

payments to PRC in the amount of $600,000. However,

plaintiff does not itemize the costs or even describe the

services or materials. Even under a lenient application of

Rule 9(b), plaintiff has failed to properly allege a violation

stemming from these requests.

Similarly, plaintiff does not make any reference to the

equitable adjustment in his complaint.4 PRC’s motion to

dismiss based on Rule 9(b) is granted in regard to the

$364,000 of line items and the equitable adjustment requests.

The only claim or request for funds on which plaintiff can

base his cause of action is the invoice for the $145,534 for

the accepted software.

In addition to identifying a claim, plaintiff also must al-

lege that PRC knowingly made a false statement that resulted

in the government’s disbursement. The complaint alleges the

* Plaintiff acknowledges that he did not allege that the equitable

adjustments were false claims. In a footnote to his Memorandum he

requested leave to amend, if necessary. Pl.’s Mem. at 7 n. 5.

8b

circumstances of the statements and their falsity with suffi-

cient sp-ificity under 9(b), especially by the more lenient

standard applied to a pro se plaintiff. 4 6-11, 14-15, 18-19,

22, 25, 26. Rule 9(b) expressly provides that knowledge and

other states of mind may be averred generally. Thus, PRC’s

motion based on Rule 9(b) will be denied with respect to the

invoice for the accepted software.

Ill.

In a suit under the False Claims Act, plaintiff must show

a causal relationship between the false statement and the

government’s loss. See, e.g., United States v. First Nat'l

Bank, 957 F.2d 1362 (7th Cir. 1992). In the instant case,

plaintiff has the burden of showing that the alleged misrepre-

sentations caused the government to make payments to PRC.

However, it is undisputed that the government protected

itself by compartmentalizing the Task Order and requiring

testing of each element before obligating itself to make pay-

ment. Such a contract is an odd candidate for a False Claims

Act suit. Initial representations by PRC of its capacity to

perform and regular progress reports, whether optimistic

salesmanship or misrepresentation, were not the immediate

cause or impetus of the government’s payment. Indeed, it

was the government’s own testing that resulted in

“acceptance” and eventual payment. Plaintiff argues, that the

government’s sending an “Acceptance Form” to PRC does

not mean that the government determined the product to be

compliant. Nevertheless, that “Acceptance Form” followed a

series of testing and triggered the invoicing procedure. This

testing and acceptance is, in effect, an intervening cause that

makes any prior representations immaterial.

Neither plaintiff, nor more important, the United States

which has submitted a helpful brief amicus, has cited any

False Clair Act case which sustained a complaint in which

9b

the government compartmentalized performance and re-

served and exercised the right to inspect and reject, segment

by segment, the items tendered by a contractor. These criti-

cal, undisputed facts distinguish the case from other prece-

dents and entitle PRC to a summary judgment.

The relationship between the alleged misrepresentations

and payment for the other fifteen deliverables is also too

tenuous to withstand summary judgment. Most of these

items also required the government’s acceptance prior to

invoicing. Thus, even if plaintiff had specifically alleged

fraud resulting in payment of approximately $364,000 for the

related deliverables, he could not prove that the alleged mis-

representations proximately caused those disbursements.

Therefore summary judgment must be granted in favor of

defendant.

IV.

PRC seeks reimbursement for costs and attorneys fees on

the theory that plaintiff's contentions are, in effect, frivolous.

On the contrary, however, the issues here are not free from

doubt, and PRC is not entitled to fee or cost reimbursement.

V.

The False Claims Act provides that “[aJn action may be

dismissed only if the court and the Attorney General give

written consent and their reasons for consenting.” This pro-

vision has been interpreted to refer only to voluntary dis-

missals by a qui tam plaintiff. See, e.g., Minotti v. Lensink,

895 F.2d 100 (2d Cir. 1990). Accordingly, the accompanying

Order grants PRC’s dispositive motions and dismisses the

complaint, while denying PRC’s prayer for fees and costs.

10b

ORDER

For the reasons stated in the accompanying

Memorandum, it is this 31st day of March, 1994, hereby

ORDERED: that defendant’s motion based on plaintiff's

failure to allege a false “claim” as defined by the False

Claims Aci should be, and is hereby, GRANTED IN PART

AND DENIED IN PART; and it is further

ORDERED: that defendant’s motion to dismiss based on

Rule 9(b) should be, and is hereby, GRANTED IN PART

AND DENIED IN PART; and it is further

ORDERED: that defendant’s motion for summary judg-

ment should be, and is hereby, GRANTED; and it is further

ORDERED: that defendant’s motion for attorneys’ fees

and costs should be, and is, hereby DENIED; and it is further

ORDERED: that the complaint should be, and is hereby,

DISMISSED.

lc

United States Court of Appeals

for the District of Columbia Circuit

No. 94-7091 September Term, 1994

USDC CV 92-1951

Filed Aug. 28, 1995

Mervyn A. Schwedt, ex rel United States of America,

Appellant,

Vv.

Planning Research Corporation, a Virginia Corporation,

Appellee

ORDER

Before: Edwards, Chief Judge, Wald, Silberman,

| Buckley, Williams, Ginsburg, Sentelle,

Henderson, Randolph, Rogers, and Tatel,

| Circuit Judges

ORDER

| Upon consideration of appellee's Suggestion for

Rehearing /n Banc, and the absence of a request by any

member of the court for a vote, it is

ORDERED that the suggestion be denied.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY: /s/

Robert A. Bonner

Deputy Clerk

Circuit Judge Tatel did not participate in this order.

iia ian iia ie

2c

United States Court of Appeals

for the District of Columbia Circuit

No. 94-7091 September Term, 1994

USDC CV 92-1951

Filed Aug. 28, 1995

Mervyn A. Schwedt, ex rel United States of America,

Appellant,

v.

Planning Research Corporation, a Virginia Corporation,

Appellee

Before: Edwards, Chief Judge; Wald and Ginsburg,

Circuit Judges

ORDER

Upon consideration of appellee's petition for rehearing

filed August 7, 1995, it is ORDERED that the petition be

denied.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY: /s/

Robert A. Bonner

Deputy Clerk