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Fourth Circuit Rules In Custer Battles

April 13, 2009

The Fourth Circuit in United States ex rel. DRC, Inc. v. Custer Battles, LLC (4th Cir. April 10, 2009), affirmed summary judgment in the contractor's favor in a qui tam case alleging that Custer Battles (represented by C&M) had fraudulently induced the Coalition Provisional Authority to issue it a contract worth $17 million for security services at the Baghdad International Airport, agreeing "with the district court that the relators have not presented evidence sufficient to support a finding that Custer Battles violated the False Claims Act …." However, the Fourth Circuit also reversed judgment as a matter of law in favor of Custer Battles related to another contract Custer Battles had with the CPA for support services for the Dinar Exchange Program and remanded for further proceedings based on its findings that the district court erred in limiting the relators' claims to $3 million by using a "source-of-funds" analysis and in its presentment analysis under sections 3729 (a)(1) and (a)(2) of the FCA, including its holding that presentment must be proven under sections 3729 (a)(2) of the FCA, as the Supreme Court found to the contrary in Allison Engine while the case was on appeal.

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