June 9, 2014 Military Contractor Fraud
District Court Judge Refuses to Dismiss False Claims Act Claim Against Military Contractor
Just last month, a federal District Court in Louisiana declined a dismissal attempt by Masonry Solutions International, LLC in an ongoing False Claims Act case alleging fraud under a contract with the Army. The defendant’s motion hinged on a civil procedure technicality which the court described as “excusable neglect” and permitted the plaintiff additional time. The litigation surrounds allegations of fraud on the part of Masonry Solutions with regard to its contract with the Army for the construction of various pumping stations.
Details of USA ex. rel. Michael Kress v. Masonry Solutions International Inc.
Today’s case involves a qui tam action under the False Claims Act filed in 2012 by a former employee of Masonry Solutions. According to the complaint, Masonry violated two federal statutes – the Buy American Act and the Free Trade Agreements Act – when performing under the contract and its subsequent invoices to the federal government amounted to false claims.
Specifically, Masonry Solutions is alleged to have violated its promise to give preference to domestically-manufactured materials by procuring spiral ties from China, then repackaging the materials at its plant in Maryland. The spiral ties were even repackaged and labeled with the fictitious company name “Gruen Stark” before being used on various projects for the Army Corps of Engineers.
Allegedly, Masonry Solutions billed the government $127.59 for each spiral tie while only paying $3.68 to the manufacturer in China.
Relator Escapes Dismissal
Under one of the several procedural rules governing False Claims Act litigation, a relator is required to serve the defendant with the complaint within 120 days of it being unsealed – which occurs once the government either opts or declines to intervene. In today’s case, the relator missed the 120-day deadline by serving defendants with the complaint 283 days after the complaint was unsealed. Naturally, the defendants motioned to have the case dismissed on the procedural mistake; however, the court concluded the issue was the result of a clerical error within the District Court – not the fault of the relator.
The Court reviewed the record of the case to determine that the court clerk staff had, in fact, delayed in sending the relator notice the case had been unsealed until several months after it occurred in May, 2013. As a result, the relator did not serve Masonry Solutions until February of this year. However, the court sided with the relator and has allowed the False Claims Act case to continue.
Avoid Unnecessary Procedural Mistakes – Work with a Knowledgeable Whistleblower Attorney
Errors like that described in today’s case are sometimes unavoidable. However, by working with an attorney experienced in whistleblower litigation, you can avoid unnecessary civil procedural mistakes that could be potentially fatal to your case. The FCA contains numerous filing and deadline requirements that, if missed, could result in a prompt dismissal.
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