Breach of Contract May Lead to False Claims Liability on Public Works Contracts

Posted on July 14, 2010 by Sheppard Mullin

By Robert T. Sturgeon & Edward B. Lozowicki

The California First District Court of Appeal has issued an opinion which may place a heavy burden on public works contractors under the California False Claims Act, Cal. Gov't Code § 12650 et seq. In San Francisco Unified School Dist. v. Laidlaw Transit, Inc., the Court of Appeal applied the federal "implied certification" doctrine to hold that when a contractor on a public works project submits a request for payment to the public entity at a time when the contractor knows it is in breach of the express terms of the contract, the contractor may be held to have submitted a false claim, and may be subject to liability under the state False Claims Act. San Francisco Unified School District ex rel. Manuel Contreras, et al. v. Laidlaw Transit, Inc., 182 Cal. App. 4th 438 (2010)
 

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Federal Circuit Court Rejects Claim That Contractor Violated The False Claims Act By Allegedly Submitting A Fraudulently Low Bid With The Intent Of Later Making Up For The Loss By Submitting Change Orders For Extra Work

Posted on July 27, 2005 by Sheppard Mullin

United States ex. rel. Bettis v. Odebrecht Contractors of California, Inc.
393 F.3d 1321 (D.C. Cir. 2005)

A contractor entered into a contract with the Army Corp of Engineers for construction of the Seven Oaks Dam in San Bernardino County, California. The plaintiff was an alleged "whistleblower" who worked for one of the contractor's consultants. Plaintiff alleged the contractor had violated the federal False Claims Act ("FCA") by fraudulently inducing the government to enter into the contract by knowingly submitting a bid that was too low, with the intent of later making up for the loss by requesting change orders for extra work.

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