Yesterday, the Sixth Circuit issued an opinion affirming summary judgment in favor of a plaintiff under the Federal False Claims Act in U.S. ex rel. Wall v. Circle C Construction, L.L.C., but remanded the case to the district court for a recalculation of damages. The false claims allegation stemmed from Circle C’s agreement with the Army to construct buildings on Fort Campbell, a military base. The district court found that Circle C submitted inaccurate or false payroll certifications that did not properly describe work done by its subcontractors, and that its certifications also contained hourly wages for subcontractor employees that did not meet federal guidelines for prevailing wages under the Davis-Bacon Act.
In affirming summary judgment, the Sixth Circuit agreed with the district court that primary jurisdiction did not prevent plaintiffs’ FCA suit alleging Davis-Bacon Act violations because determination of Circle C’s intent to defraud the government did not require agency expertise and the applicable regulations explicitly allow FCA claims based on false payroll certifications. The Sixth Circuit found that Circle C violated the FCA by making false statements with reckless disregard for the truth of the statements, and that the statements were material to the government’s decision to pay Circle C.
The Sixth Circuit remanded the case for a recalculation of damages. The District Court had awarded treble damages for every dollar the government alleged was attributable to electrical work on the contracts. The Sixth Circuit held that this estimation was “lacking in detail” and did not “accurately represent the difference between what the government actually paid to Circle C and the payments to which Circle C would have been entitled in the absence of fraud.”
