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False Claims Act Complaint Found Not To Be Clearly Frivolous

Ubl v. IIF Data Solutions
(No. 009-2280 4th Cir. 2011)

by Kevin M. Cox, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Defendant, IIF Data Solutions (“IIF”), was awarded a multi-million dollar government contract authorizing it to perform information technology services for the government. Plaintiff, Thomas Ubl (“Plaintiff”), a former IIF employee, brought a False Claims Act (“FCA”) claim against IIF, alleging that IIF made various material false misrepresentations about its prior pricing and discounting practices: (1) when applying for the contract; (2) when submitting invoices after it obtained the contract; and (3) that it billed the government for hours not worked, for overhead cost, and at higher than industry standard rates. At trial, a jury found in favor of IIF on all counts. Thereafter, the United States District Court for the District of Virginia held that the action was “clearly frivolous,” and ordered Plaintiff to pay IIF approximately $500,000.00 in attorney’s fees. Plaintiff appealed to the United States Court of Appeals for the Fourth Circuit, which reversed the trial court’s decision.

Under 31 U.S.C. § 3729(a)(1)(A) and (B), a defendant may be liable for “knowingly” making or presenting a false claim; thus, the statute’s intent is not to punish honest mistakes or inaccurate claims. Evidence that the government knew about the facts underlying an allegedly false claim serve to distinguish between the knowing submission of a false claim, which generally is actionable under the FCA, and the submission of a claim that turns out to be incorrect, which generally is not actionable under the FCA.

Pursuant to the FCA, attorney’s fees may be awarded to a prevailing defendant if “the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” 31 U.S.C. § 3739(d)(4). Though the standard for clearly frivolous is not defined in the FCA, the proper framework for evaluating fee awards is provided in case law, namely Vuyyuru v. Jadhav, 55 F.3d 337 (4th Cir. 2009). Vuyyuru defines “frivolous” as a claim that clearly had no reasonable chance of success.

In the instant case, the United States District Court denied IIF’s pre-trial Motions to Dismiss on two (2) occasions and further denied IIF’s Motion for Summary Judgment. Additionally, Plaintiff presented evidence that could have supported a verdict in his favor, even if the jury did not find him to be credible. It appeared to the Fourth Circuit that IIF had convinced the jury that any mistakes IIF may have made were not intentional and that IFF lacked the required intent to violate the FCA. Therefore, the prerequisites for the Fourth Circuit to find that the jury had sufficient evidence to determine that Plaintiff’s action was clearly frivolous, or that he had no reasonable chance of success, were not present. Accordingly, the Fourth Circuit reversed the district court’s order awarding attorney’s fees to IIF.


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