Oracle Agrees to Pay U.S. $199.5 Million to Resolve False Claims Act Lawsuit

According to a Department of Justice Press Release, Oracle Corp. and Oracle America Inc. have agreed to pay $199.5 million plus interest for failing to meet their contractual obligations to the General Services Administration (GSA).

This settlement relates to a contract Oracle entered into in 1998 to sell software licenses and technical support to government entities through GSA’s Multiple Award Schedule (MAS) program.   The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly used commercial goods and services.  To be awarded a MAS contract, contractors must agree to disclose commercial pricing policies and practices, and to abide by the contract terms.  The settlement resolves allegations that, in contract negotiations and over the course of the contract’s administration, Oracle knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, including discounts offered to other customers, and that Oracle knowingly made false statements to GSA about its sales practices and discounts.

Tony West, Assistant Attorney General for the Civil Division of the Department of Justice sates:

“Companies that engage in unlawful or fraudulent practices to secure government business undermine the integrity of the procurement process and create an unfair advantage against the majority of companies that are playing by the rules.  Resolutions like this one – the largest GSA false claims settlement in history – demonstrates our commitment to ensure taxpayers are not overpaying for the products and services they receive.”

The settlement resolves a lawsuit filed on behalf of the U.S. government by former Oracle employee, Paul Frascella, who will receive $40 million as his share of the recovery in the case.   Under the whistleblower provisions of the False Claims Act, private citizens can bring lawsuits on behalf of the United States and share in any recovery obtained by the government.

District Court Judge Rules Three Year Statute of Limitations for False Claims Act Against D.C.

In Saunders v. District of Columbia [link to opinion], Judge Colleen Kollar-Kotelly for the United States District Court for the District of Columbia held that the Federal False Claims Act has a three year statute of limitations when bringing a lawsuit against the District of Columbia.  Congress recently passed the Dodd-Frank Act, which included a provision setting the statute of limitations of the False Claims Act to three years.  However, the court did not address whether this provision retroactively applied to the pending case.  Instead, the court used the old method of applying the statute of limitations of the most similar state law to the Federal False Claims Act.  The court found the D.C. False Claims Act was nearly identical to the Federal False Claims Act, and therefore applied the three year statute of limitations of the D.C. law to the present Federal False Claims Act lawsuit.  Whistleblowers Theresa Saunders, who blew the whistle on deficiencies in how the Office of Chief Technology was using federal funding, may proceed to trial.

D.C. District Court Rejects Employer’s Attempt to Carve New Loopholes Into Whistleblower Protection Statutes

Affirming a jury’s finding that Mohammed Kakeh, a Controller for the United Planning Organization (“UPO”) was terminated for his refusal to engage in fraudulent billing and for providing information to the Office of Inspector General, Judge Kessler rejected several arguments by UPO that would undermine the statutory whistleblower protections under which Kakeh brought his claim, the D.C. Whistleblower Protection Act (“WPA”) and the retaliation provisions of the False Claims Act (“FCA”) and the D.C. False Claims Act (“DCFCA”).
 
Gross Does Not Apply to FCA Retaliation Claims
UPO argued that the Supreme Court’s recent holding in Gross v. FBL Fin. Svcs., Inc., 129 S. Ct. 2343 (2009) requires courts to apply a “but for” causation standard to the retaliation provisions in the Federal and D.C. False Claims Acts.  Judge Kessler held that Gross does not apply to FCA retaliation claims, distinguishing Gross in part on the ground that it is an ADEA case.  The “because of” causation standard in the text of the FCA’s retaliation provision has been construed as a “motivating factor” causation standard, i.e., plaintiff can prevail by demonstrating that the adverse action was motivated, at least in part, by the employee having engaging in protected activity.
 
The “Duty Speech” Doctrine Does Not Apply to FCA Retaliation Claims
UPO argued that Kakeh’s disclosures were not protected because they were made pursuant to his “regular job duties.”  Relying on U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C. Cir. 1998), which sets forth a favorable standard of protected conduct under the FCA’s retaliation provision, Judge Kessler held that “an employee engages in protected activity when he discloses fraud and corruption, as opposed to making a ‘complaint about mere regulatory compliance’. . . Plaintiff  repeatedly stated that he believed that Defendant’s billing practices were fraudulent and . . . . consistently framed these differences as matters of fraud and ethics, rather than routine disagreements about regulatory compliance. Therefore there was sufficient evidence for a reasonable juror to conclude that Plaintiff was engaging in protected activity.”
 
Plaintiff Need Not Use “Magic Words” to Engage in Protected Conduct
Defendant argued that to be covered by the WPA, Plaintiff’s disclosures must use “the language or terminology of fraud, waste, or misuse.”  Judge Kessler concluded:  “As Plaintiff correctly states, however, Plaintiff was not obligated to use “magic words” to trigger the protections of the WPA. As the WPA indicates, a disclosure is protected if the employee “reasonably believes” that he is revealing a gross misuse of public funds or a violation of a law, rule, regulation, or contract term. D.C. Code 2-223.01(7).”
 
Disclosure of Public Information Can Constitute Protected Conduct
UPO asserted that plaintiff did not disclose to his supervisor any information that “was not already known as [sic] result of the prior year-end audit reports, Mr. Eboda’s preliminary report, the Head Start monitoring review and/or The Washington Post articles.”   Judge Kessler held that “[e]ven if this information was already public and even if Jones already had knowledge of it, Plaintiff was the one responsible for disclosing it in the first instance.”