The federal government has agreed not to continue appealing claims that a private contractor committed fraud under the False Claims Act after the contractor was granted summary judgment in federal court in North Carolina’s eastern district, defense attorneys report.
Hill Allen of Tharrington Smith in Raleigh and Joe Zeszotarski Jr. of Gammon Howard & Zeszotarski in Raleigh said the government brought the claim against their client, Odyssey Marketing Group, claiming that the business had obtained payment for unauthorized warehousing, logistical, and technical support services for their Army Reserves Family Program.
Allen and Zeszotarski said that this was not a qui tam action by a private relator, but a direct claim by the government. The government asserted damages greater than $9 million under the FCA, and both sides filed cross-motions for summary judgment.
In a lengthy opinion, U.S. District Judge Terrence Boyle granted Odyssey’s motion for summary judgment based on a lack of knowledge of wrongdoing and damages, both of which are required for an FCA claim.
After Boyle denied the government’s motion to reconsider, the government appealed. Before briefing, the government agreed to settle the case in exchange for a release of Odyssey’s claims for attorneys’ fees and costs.
“In essence, our folks dropped a claim for litigation costs that was much less than they would have spent defending the appeal,” Allen said. “The government insisted on protection from certain types of claims to resolve the case. Recovery of attorney’s fees under those claims is not the norm and would have required further expenditures by our clients.”
Allen said the settlement wouldn’t have happened without the federal district court opinion in his client’s favor.
“Through persistent discovery efforts, we were able to demonstrate that government employees had knowledge of Odyssey’s actions and billing, and that the government was not actually damaged,” Allen said. “The case was hotly contested at every stage by excellent counsel for the government, who had a very different view of the case than we did … The resolution completely vindicated our clients.”
Representatives from the U.S. Attorney’s Office for the Eastern District of North Carolina declined to comment.
SETTLEMENT REPORT — FALSE CLAIMS ACT
Amount: $0 (defense verdict)
Injuries alleged: Contracting fraud including false claims and false statements to the Army Reserve Family Program
Case name: USA v. Odyssey Marketing Group, et al.
Court: U.S. District Court for the Eastern District of North Carolina
Case No.: 5:15-CV-510
Judge: Terrence Boyle
Date of settlement: April 23, 2018
Demand: $9 million
Attorneys for plaintiff: U.S. Attorney’s Office for the Eastern District of North Carolina
Attorneys for defendant: F. Hill Allen of Tharrington Smith in Raleigh, Joseph Zeszotarski Jr. of Gammon Howard & Zeszotarski in Raleigh, and Jessica Abrahams of Drinker Biddle in Washington D.C.