On March 24, 2011 the Ninth Circuit Court of Appeals made it more difficult to bring a complaint claiming a violation of the Federal False Claims Act (FCA). The Court held that FCA complaints must not only “state with particularity the circumstances constituting fraud or mistake” (under Federal Rule of Civil Procedure 9(b)), but must “also plead plausible allegations” (under Federal Rule of Civil Procedure 8(a). In Mary Angela Cafasso v. General Dynamics C4 Systems, Inc. (March 24, 2011) 11 C.D.O.S. 3557 the Court upheld the dismissal of the plaintiffs’ False Claims Act complaint before trial because, although the “complaint alleges unsavory conduct … unsavory conduct is not, without more, actionable under the [False Claims Act].”
A California appellate case published in late February expands the applicability of the California False Claims Act to contractors which submit applications for payment while failing to comply with material contract terms. (SF Unified School District ex rel. Contreras v. Laidlaw Transit, Inc. (February 26, 2010) Cal. App. 2010 LEXIS 249.) The Laidlaw case provides powerful support to public entities in their efforts to avoid fraud on public works projects, as described in more detail below.
A recently published appellate case upholds a 50-year ground lease and related agreements between the Peninsula Health Care District (“District”) and the Mills-Peninsula Health Services (“MPHS”), which will allow the construction of a new hospital that complies with California’s stricter seismic standards. (See Peninsula Guardians, Inc. v. Peninsula Health Care District (2008) 168 Cal.App.4th 75.)
When a homeowners sues a subcontractor for damage caused by the defective waterproofing work on retaining walls that the subcontractor installed, is it a complete answer for the subcontractor to say that it did exactly what the general contractor told them to do (regardless of what the standard of care is) and that the general contractor was satisfied with its work when it finished the job? A recent case holds that it is not.