Litigating Fraud And Other Counterclaim Cases Before the U.S. Court of Federal Claims

“When you strike at a King, you must kill him.”

           — Ralph Waldo Emerson

FCA cases are not limited to qui tam actions and federal district courts. Some of the leading procurement fraud jurisprudence arises from cases decided by the United States Court of Federal Claims (COFC) and its appellate court, the Court of Appeals for the Federal Circuit. See, e.g., Daewoo Eng’g & Constr. Co. v. United States, 557 F.3d 1332 (Fed. Cir. 2009); Commercial Contractors, Inc. v. United States, 154 F.3d 1357 (Fed. Cir. 1998). The COFC possesses exclusive jurisdiction over claims in excess of $10,000 “founded . . . upon any express or implied contract with the United States.” 28 U.S.C. §§ 1346, 1491(a)(1). In such a case, however, the government may pursue monetary counterclaims against a plaintiff contractor based upon just about any cause of action, including fraud-related claims, such as the FCA, the Forfeiture of Fraudulent Claims Act (also known as the special plea in fraud), 28 U.S.C. § 2514, and the fraud provision of the Contract Dispute Act (CDA), 41 U.S.C. § 7103(c)(2). The COFC has jurisdiction over CDA cases pursuant to 28 U.S.C. § 1491(a)(2).

Together, the aforementioned fraud remedies are a powerful weapon in the arsenal of the Department of Justice in defending against contractor claims. In that regard – and consistent with Emerson’s aphorism and the old proverb that when dancing with a bear, you don’t decide when to stop – the government’s assertion of fraud counterclaims may radically alter the settlement position of both parties, if not entirely eliminate any motivation on the part of the government to settle a case. For that reason, contractors and their counsel seeking to sue the government in the COFC must be aware not only of the most salient substantive and procedural issues surrounding fraud counterclaims, but also of the government’s settlement calculus, generally, and in counterclaim cases.

A recently published Briefing Paper authored by Sidley Austin attorney Matthew Solomson – entitled When the Government’s Best Defense is A Good Offense: Litigating Fraud And Other Counterclaim Cases Before the U.S. Court of Federal Claims – addresses basic counterclaim issues with which plaintiffs in the COFC need to be familiar, including, but not limited to: counterclaim initiation and pleading requirements; discovery issues; significant substantive legal issues involving the FCA, the CDA’s fraud provision, and the special plea in fraud; scienter issues; parallel proceeding considerations; and settlement negotiations. The Briefing Paper may be accessed here.