In their most recent article, Seyfarth’s Anthony LaPlaca (Construction) and Teddie Arnold (Government Contracts) team up to address the evolving legal landscape surrounding surety liability under the False Claims Act (FCA). Through a review of key judicial decisions, Anthony and Teddie highlight how government whistleblowers have managed to sustain fraud claims against sureties, emphasizing the
Seyfarth’s Anthony LaPlaca, Teddie Arnold, and Jason Smith recently published the 2025 annual update of the Thomson Reuters state law survey of construction laws and customs for the District of Columbia. This survey contains questions and answers about frequently asked questions concerning construction projects governed by D.C. law, including prompt pay and retainage requirements, stop
Jason Smith and Teddie Arnold, partners in Seyfarth’s Washington, DC office, have co-authored an updated “United States – Construction” chapter in the 2024 edition of The Legal 500: Country Comparative Guides. Seyfarth continues to participate as an exclusive contributor for this comprehensive overview of construction-specific laws and regulations in the United States. Topics covered
In Lodge Construction, Inc. v. United States, the US Court of Federal Claims (“COFC”) prefaced its 46-page opinion by stating: “This case should serve as a cautionary tale to government contractors.”[1] Our ears perk up any time we read that kind of admonition in a published decision. The Lodge holding is, indeed, loaded with lessons on what to do, and what not to do, when presenting Contract Disputes Act (“CDA”) claims to the government. In particular, federal construction contractors and their performance bond sureties should take heed of the court’s holding in this highly-illustrative fraud case.
In 2010, the Army Corps of Engineers (“Government”) awarded Lodge Construction (“Lodge”) a fixed-price contract to rehabilitate a levee in Florida. To accommodate subsurface work, Lodge designed and constructed a temporary cofferdam based on a geotechnical site inspection and analysis furnished by the Government. The Government accepted Lodge’s final cofferdam design in July 2011. In March 2012, however, water breached two sections of the cofferdam’s sheet pile wall, after which the Government retroactively disapproved of Lodge’s cofferdam design. The Government requested that Lodge submit a new sheet pile design by May 29, 2012.
Continue Reading Fraud and Forfeiture: Cautionary Tales of a Construction Claim Gone Wrong
The federal Miller Act requires government construction contracts over $100,000 to be bonded. This process involves insurance companies, known as “sureties,” who issue payment or performance bonds to contractors, who in turn furnish the required bonds to the federal government. The bonds guarantee that the contractor will comply with the terms of the contract and perform as required. Although the sureties do not interact directly with the federal government, a recent decision from the US District Court in DC suggests that sureties could face liability where the bonded contractor violates the civil False Claims Act (“FCA”), 31 U.S.C. § 3729. In Scollick ex rel. United States v. Narula, No. 1:14-CV-01339-RCL, 2022 WL 3020936 (D.D.C. July 29, 2022) the court held, under the facts of that case, that the sureties had no knowledge of the fraud allegedly committed by the bonded contractor, and thus did not violate the FCA. Although the sureties escaped in this instance, this case demonstrates the expansive reach of the FCA and puts the insurance industry on notice that they are not immune from FCA liability.
Continue Reading Surety Liability Under the False Claims Act
Jason N. Smith and Edward V. Arnold authored a chapter in The Legal 500: Construction Country Comparative Guide, “United States: Construction.” The Chapter provides a comprehensive overview of legal issues in the US construction industry. You can read Seyfarth’s chapter of this year’s guide here.
On May 3, Seyfarth attorneys Teddie Arnold and Anthony LaPlaca are presenting a 1-day session on Government Contract Compliance as part of the Federal Publications Seminars’ Training Academy in La Jolla, California. Seyfarth attorneys Joe Dyer, Stephanie Magnell, and Bret Marfut will also be presenting remotely.
A substantive compliance program can reduce the chances that
The Port of Anchorage Intermodal Expansion Project was envisioned to be a $1 billion project that would replace outdated infrastructure at the Port of Alaska, but defective management, design, and construction derailed the Project. Seyfarth was tasked with prosecuting claims and recovering money spent by the Department of Transportation Maritime Administration (MARAD) for the
Teddie Arnold and Stephanie Magnell spoke about government contractors protecting themselves from government fraud arguments in the February 25th Federal Publications Seminars Podcast “Avoiding Fraud in Federal Contract Claims.”
When contractors file claims against the government, they should make sure they are on solid ground to protect against government claims of fraud. Listen to the
The Fourth Circuit, in United States ex rel. Sheldon v. Allergan Sales, LLC, No. 20-2330, 2022 WL 211172 (4th Cir. Jan. 25, 2022) recently upheld the dismissal of False Claims Act (“FCA”) lawsuit brought by a quit tam relator (“Relator”) against his employer, Forest Laboratories, LLC (“Forest”) alleging that Forest engaged in a fraudulent price reporting scheme under the Medicaid Drug Rebate Statute (“Rebate Statute”).[1]
Notably, the Fourth Circuit adopted the US Supreme Court’s decision in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) in holding that the scienter element of the FCA is subject to an “objective reasonableness” standard, where a defendant can defeat FCA liability by establishing that its interpretation of the applicable statute or regulation was objectively reasonable and that no authoritative guidance from a court or agency could have “warned defendant away” from that interpretation. Just last year, the Seventh Circuit adopted this standard in U.S. ex rel. Schutte v. SuperValu Inc., joining the Third, Eighth, Ninth, and DC Circuits in holding the same.
At issue in Sheldon was the reasonableness of Forest’s interpretation of the Rebate Statute in determining how it calculated certain discounts given to separate customers for purpose of reporting its “best price” to the government. The District Court dismissed the complaint on the basis that Forest’s reading of the Rebate Statute was “objectively reasonable,” there was no authoritative guidance to the contrary, and thus Forest did not act “knowingly” under the FCA. The Fourth Circuit affirmed.[2]
Continue Reading Fourth Circuit Adopts Objective Reasonableness Standard in Determining Scienter Element of the False Claims Act